Hong Kong's Securities and Futures Commission Quarterly Report Recounts Key Regulatory Activities

In its Quarterly Report released today, the Securities and Futures Commission (SFC) summed up major regulatory activities taken in strengthening investor protection and raising market standards in the period of July to September 2011.

To minimise counterparty risk exposure that could arise from the use of financial derivatives, the SFC required full collateralisation of all synthetic exchange-traded funds it primarily regulates for public offer. Where equity securities are used as collateral, it also required that their market value be equivalent to at least 120% of the related gross exposure to counterparty risk.

The SFC also consulted the public on issuing a new set of guidelines to help the industry comply with a new ordinance on anti-money laundering and counter-terrorist financing.

During the period, the SFC continued to support Hong Kong’s development as an offshore renminbi centre and to further ties with the Mainland. Spearheaded by the Government, financial regulators have begun work to facilitate the implementation of the initiatives announced during Vice Premier Li Keqiang’s visit in August. Meanwhile, discussions continued with various Mainland authorities regarding the status of the Renminbi Qualified Foreign Institutional Investors (RQFII) scheme, and with local fund managers to ensure a smooth launch of products utilising the RQFII quota.

The SFC continued to use innovative approaches to enhance investors’ investing knowledge through interaction. To help investors understand the new measures introduced to enhance investor protection in the sales process, a photo-comic booklet was published. Amid market volatility, various materials were prepared to remind investors of counterparty risks and the need to monitor their portfolios closely.

A copy of the report, in an e-book format, is available under "Speech, Publications & Consultations" - "Publications" of the SFC website.