The Securities and Futures Commission (SFC) has reprimanded and fined Instinet Pacific Limited (Instinet) $8 million for its failure to comply with the reporting requirements of The Stock Exchange of Hong Kong Limited (SEHK) for direct business transactions or cross trades (Note 1).
The SFC’s investigation revealed that between December 2012 and March 2018, Instinet had failed to report 8,817 pairs of cross trades involving transactions worth around $25.9 billion between its clients and affiliated company to the SEHK in accordance with the reporting requirements, in breach of the Code of Conduct (Notes 2 and 3). The SFC also found that during the relevant period, Instinet had no internal policy and procedure requiring, governing, or monitoring the reporting of cross trades to the SEHK, and it did not conduct any review on its trade reporting process.
In deciding the disciplinary sanction, the SFC has taken into account all relevant circumstances, including the duration of Instinet’s failure, the number of unreported cross trades and the sum involved, and Instinet’s initiative to cease the relevant trade flows and cooperation with the SFC in resolving the SFC’s concerns.
Notes:
- Instinet 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. Instinet is also an Exchange Participant registered with the SEHK.
- The Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.
- Please refer to the Statement of Disciplinary Action for the relevant regulatory requirements.
A copy of the Statement of Disciplinary Action is available on the SFC website
