The Securities and Futures Commission (SFC) today published its Annual Report 2020-21 setting out its priorities for maintaining Hong Kong’s status as a leading international financial centre and preserving the overall integrity and stability of the financial system.
Amidst the unprecedented challenges arising from COVID, the SFC has doubled down on its front-loaded regulatory approach to tackle corporate fraud and intermediary misconduct. It is also working with the Hong Kong Police to combat online scams such as “ramp and dump” schemes and raise public awareness about them (Note 1).
The SFC also stepped up its monitoring of conduct and operational risks and carried out more frequent stress tests to assess licensed corporations’ financial resilience. In view of market conditions, the SFC waived its annual licensing fees for the 2021-22 financial year.
“Our core mission is to strengthen Hong Kong’s competitiveness and uphold fair and orderly markets in which investors can have full confidence,” said Mr Tim Lui, the SFC’s Chairman. “The success of Stock Connect and other mutual market access schemes showcases the unique role Hong Kong plays in intermediating global capital between a rapidly developing China and the rest of the world, and this will only increase in importance in the coming years.”
“Delivering on our objectives in a challenging environment requires that we remain flexible and stand ready to recalibrate our operations and priorities,” said Mr Ashley Alder, the SFC’s Chief Executive Officer. “However, the essential attributes of Hong Kong’s regulatory system remain unchanged, as do our core values of independence, integrity and public accountability.”
In a major step to advance the sustainable finance agenda for Hong Kong, the SFC initiated the establishment of the Green and Sustainable Finance Cross-Agency Steering Group (Note 2) to coordinate the management of climate and environmental risks in the financial sector and support the Government’s broader climate strategies.
During the year, the SFC took steps to bolster Hong Kong as an asset and wealth management hub, removing all investment restrictions for private open-ended fund companies (OFCs) and introducing a grant scheme to subsidise the formation of OFCs and the listing of Real Estate Investment Trusts.
In other highlights, the SFC granted the first licence to a virtual asset trading platform in Hong Kong (Note 3) and previewed new licensing functions on WINGS (Note 4), its online platform for electronic forms and submissions, in preparation for the implementation of a fully digital licensing process later this year.
Key statistics for the year (Note 5) include the following:
- The number of licensees and registrants increased to 47,178, of which the number of licensed corporations rose to 3,159
- The SFC authorised 188 collective investment schemes and 146 unlisted structured investment products for public offering
- It vetted 257 listing applications and supervised 469 takeovers-related transactions
- It directly sought information from or expressed concerns with 27 listing applicants, exercising its powers under the Securities and Futures (Stock Market Listing) Rules
- It conducted 304 risk-based on-site inspections of intermediaries and noted 1,350 incidents of breaches of the SFC’s rules
- It made 8,748 requests for trading and account records from intermediaries as a result of market surveillance
- It disciplined 18 firms and 13 individuals and imposed fines totalling $2.81 billion for intermediary misconduct
The Annual Report is available on the SFC website together with a video message from Mr Lui and Mr Alder.
End
Notes:
- “Ramp and dump” schemes are a form of stock market manipulation: fraudsters “ramp” up the price of a stock, use social media to lure unwary investors to buy at an artificially high price and then sell or “dump” the stock to take profits causing the price to collapse.
- The steering group is co-chaired by Mr Alder and Mr Eddie Yue, Chief Executive of the Hong Kong Monetary Authority, and comprises representatives from The Financial Services and the Treasury Bureau, Environment Bureau, Hong Kong Exchanges and Clearing Limited, Insurance Authority and the Mandatory Provident Fund Schemes Authority.
- The platform will only serve professional investors.
- Web-based INteGrated Service.
- The report covers the period from 1 April 2020 to 31 March 2021.
