The Securities and Futures Commission (SFC) today issued consultation conclusions on proposals to introduce investor identification for the securities market in Hong Kong and require reporting of over-the-counter (OTC) securities transactions.
Under the investor identification regime, licensed corporations and registered institutions will submit to The Stock Exchange of Hong Kong Limited (SEHK) the names and identity document information of clients placing securities orders on SEHK (Note 1).
Information on OTC securities transactions in ordinary shares and real estate investment trusts listed on SEHK will be reported to the SFC under a separate regime.
Respondents broadly agreed with the proposals. Having considered the market feedback, the SFC will proceed to implement both regimes (Note 2).
“The new regimes will enable effective and timely surveillance of the Hong Kong securities market,” said Mr Rico Leung, the SFC’s Executive Director of Supervision of Markets. “They will help reinforce market integrity and promote investor confidence, which are vital to Hong Kong’s status as a premier international financial centre.”
The investor identification regime is expected to be launched in the second half of 2022 and the OTC securities transactions reporting regime in the first half of 2023, subject to the completion of system testing and market rehearsals. To provide more time for the industry to prepare, the implementation timelines were extended after taking consultation feedback into account (Note 3).
Notes:
- Including off-exchange orders which are reportable to SEHK.
- To implement the regimes, revisions will be made to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission as set out in the consultation conclusions. The revisions will be gazetted and become effective on a date to be determined by the implementation timelines. The SFC will conduct briefing sessions for the industry and work with the Investor and Financial Education Council to inform investors. The SFC will also issue a circular to the industry on obtaining client consent for the collection and submission of personal data.
- The consultation paper originally proposed implementing the investor identification regime in the first quarter of 2022 and the OTC securities transactions reporting regime in the third quarter of 2022. For a summary of modifications to the original proposals, see pages 1-4 of the consultation conclusions paper.
