Hong Kong Securities And Futures Commission Reprimands And Fines Credit Suisse Securities (Hong Kong) Limited $2.1 Million Over Breaches Of Electronic Trading Requirements

The Securities and Futures Commission (SFC) has reprimanded Credit Suisse Securities (Hong Kong) Limited (CSSHK) and fined it $2.1 million for regulatory breaches related to failures in its electronic trading systems (Note 1).

The SFC found that between 09:39 and 09:47 on 28 February 2019, CSSHK submitted 16,935 erroneous market making quotes to the market, resulting in the execution of 8,042 stock options trades at prices that deviated from the then prevailing market prices.

The incident was caused by a logic error in the symbol mapping programme used by CSSHK, in its capacity as a stock options market maker, in generating market making quotes.

The SFC is of the view that CSSHK’s internal controls and regular tests in place at the time failed to prevent or promptly detect the incident, and these failures constitute breaches of electronic trading requirements under the Code of Conduct (Notes 2 & 3).

In deciding the sanction, the SFC took into account all relevant circumstances, including the prompt remedial actions taken by CSSHK following the incident and CSSHK’s cooperation with the SFC in resolving the SFC’s concerns.

Notes:

1. CSSHK is licensed under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities), Type 4 (advising on securities) and Type 7 (providing automated trading services) regulated activities.
2. Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.
3. Please refer to the Statement of Disciplinary Action for the relevant provisions of the Code of Conduct.