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Hong Kong SFC Report 2023/2024: 2,611 Hong Kong-Listed Companies with $3.8 Trillion Market Value, $30.6 Billion IPO Proceeds Raised in 2023, Asset & Wealth Management AUM at $3.9 Trillion, 926 Hong Kong Domiciled Funds, 2,951 Authorised Collective Scheme, Hong Kong SFC-Authorised AUM at $1.7 Trillion, 44,493 Licensed Individuals, 3,246 Licensed Corporations, 112 Registered Institutions, Securities Industry with 4.7 Million Active Clients & 2.5 Million Margin Clients with Total $13.7 Trillion Value of Transactions, Total Fine of $6.3 Million, 3,206 Complaints Against Intermediaries & Market Activities, 45 Safeguard Client Money Breaches, 41 Safe Client Securities Breaches, 122 Fund Manager Breaches, 269 Anti-Money-Laundering Breaches, 24 Charged in Criminal Proceedings & 166 in Ongoing Civil Proceedings
5th July | Hong Kong
The Hong Kong Securities & Futures Commission (SFC) has released the Hong Kong SFC Report 2023/2024, providing key insights into Hong Kong financial industry, key initiatives & enforcements in 2023 / 2024. In the Hong Kong SFC Report, there are 2,611 Hong Kong-listed companies with $3.8 trillion (31/3/24: HKD 30 trillion) total Hong Kong stock market capitalisation. Market Capitalisation of Hang Seng Index Constituents by Sector – Information technology 34%, Financials 23%, Consumer-related 14%, Telecommunications 8%, Energy 6%, Properties & construction 6%, Others 9%. IPO funds raised in 2023 – $30.6 billion (HKD 239 billion). New listing / IPO applications – 157. New listing / IPO – 67. Takeovers-related applications reviewed – 317. Asset & Wealth Management AUM – $3.9 trillion (HKD 30.5 trillion). Asset Management & Fund Advisory AUM – $2.86 trillion (HKD 22.3 trillion). Private Banking & Wealth Management AUM – $1.14 trillion (HKD 8.9 trillion). Assets under Trusts AUM – $640 billion (HKD $5 trillion). Total Staff in Asset & Wealth Management – 54,322. New authorised funds – 170. No. of HK domiciled funds – 926. Authorised collective investment scheme – 2,951. Hong Kong SFC-authorised funds AUM – $1.7 trillion. Hong Kong domiciled authorised funds AUM – $178 billion. Non-Hong Kong domiciled authorised funds AUM – $1.57 trillion. Hong Kong domiciled authorised funds AUM by type – Bond $25 billion (14.5%), Equity $44 billion (25.2%) Mixed $25 billion (14.1%), Money market $28 billion (15.7%), Feeder funds $15 million (0%), Index $54 billion (30.3%), Guaranteed $30 million (0%), Other specialised $163 million (0.1%). Non-Hong Kong domiciled authorised funds AUM by type – Bond $453 billion (28.7%), Equity $823 billion (52.2%), Mixed $166 billion (10.6%), Money market $11 billion (0.7%), Index $121 billion (7.7%), Hedge $116 million (0%). Licensed corporations – 3,246. Licensed individuals – 44,493. Registered institutions – 112. Total licensed & registered – 47,851. Type 9 license (Asset Management) – 2,140. No. of securities dealers & securities margin financiers – 1,406. Active clients – 4.7 million. Active margin clients – 2.5 million. Total value of transactions (securities) – $13.7 trillion (HKD 107 trillion). Total net profit (securities) – $3.6 billion (HKD 28.5 billion). Hong Kong SFC Enforcements – Total Fine is $6.3 million (HKD 49.9 million). Investor compensation – $64,000 (HKD 500,000) per investor per default. Complaints against intermediaries and market activities – 3,206. Breaches noted during on-site inspections – 1,492. Failure to safekeep client money – 45. Failure to safekeep client securities – 41. Breach of Code of Conduct for Persons Licensed by or Registered with the Securities & Futures Commission – 332. Breach of Fund Manager Code of Conduct – 122. Non-compliance with anti-money laundering guidelines – 269. Internal control weaknesses – 465. Individuals/corporations charged in criminal proceedings – 24. Criminal charges laid – 50. Cases with search warrants executed – 26. Individuals/corporations involved in ongoing civil proceedings – 166. Notices of Proposed Disciplinary Action issued – 26. Investigations – Corporate disclosure 40, Corporate mis-governance 74, Insider dealing 26, Intermediary misconduct 168, Market manipulation 96, Unlicensed activities 41. Persons / corporations subject to enforcement action – Prosecutions 57, Civil proceedings 213, Disciplinary proceedings 45, Market Misconduct Tribunal proceedings 36. See below for key findings & summary | View report here
“ Hong Kong SFC Report 2023/2024: 2,611 Hong Kong-Listed Companies with $3.8 Trillion Market Value, $30.6 Billion IPO Proceeds Raised in 2023, Asset & Wealth Management AUM at $3.9 Trillion, 926 Hong Kong Domiciled Funds, 2,951 Authorised Collective Scheme, Hong Kong SFC-Authorised AUM at $1.7 Trillion, 44,493 Licensed Individuals, 3,246 Licensed Corporations, 112 Registered Institutions, Securities Industry with 4.7 Million Active Clients & 2.5 Million Margin Clients with Total $13.7 Trillion Value of Transactions, Total Fine of $6.3 Million, 3,206 Complaints Against Intermediaries & Market Activities, 45 Safeguard Client Money Breaches, 41 Safe Client Securities Breaches, 122 Fund Manager Breaches, 269 Anti-Money-Laundering Breaches, 24 Charged in Criminal Proceedings & 166 in Ongoing Civil Proceedings “
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Hong Kong SFC Report 2023/2024: 2,611 Hong Kong-Listed Companies with $3.8 Trillion Market Value, $30.6 Billion IPO Proceeds Raised in 2023, Asset & Wealth Management AUM at $3.9 Trillion, 926 Hong Kong Domiciled Funds, 2,951 Authorised Collective Scheme, Hong Kong SFC-Authorised AUM at $1.7 Trillion, 44,493 Licensed Individuals, 3,246 Licensed Corporations, 112 Registered Institutions, Securities Industry with 4.7 Million Active Clients & 2.5 Million Margin Clients with Total $13.7 Trillion Value of Transactions, Total Fine of $6.3 Million, 3,206 Complaints Against Intermediaries & Market Activities, 45 Safeguard Client Money Breaches, 41 Safe Client Securities Breaches, 122 Fund Manager Breaches, 269 Anti-Money-Laundering Breaches, 24 Charged in Criminal Proceedings & 166 in Ongoing Civil Proceedings
The Hong Kong Securities & Futures Commission (SFC) has released the Hong Kong SFC Report 2023/2024, providing key insights into Hong Kong financial industry, key initiatives & enforcements in 2023 / 2024. See below for key findings & summary | View report here
Hong Kong SFC Report 2023/2024
Summary
- Hong Kong-listed companies – 2,611
- Hong Kong stock market capitalisation – $3.8 trillion (31/3/24: HKD 30 trillion)
- Market Capitalisation of Hang Seng Index Constituents by Sector –Information technology 34%, Financials 23%, Consumer-related 14%, Telecommunications 8%, Energy 6%, Properties & construction 6%, Others 9%
- IPO funds raised in 2023 – $30.6 billion (HKD 239 billion)
- New listing / IPO applications – 157
- New listing / IPO – 67
- Takeovers-related applications reviewed – 317
- Asset & Wealth Management AUM – $3.9 trillion (HKD 30.5 trillion)
- Asset Management & Fund Advisory AUM – $2.86 trillion (HKD 22.3 trillion)
- Private Banking & Wealth Management AUM – $1.14 trillion (HKD 8.9 trillion)
- Assets under Trusts AUM – $640 billion (HKD $5 trillion)
- Total Staff in Asset & Wealth Management – 54,322
- New authorised funds – 170
- No. of HK domiciled funds – 926
- Authorised collective investment scheme – 2,951
- Hong Kong SFC-authorised funds AUM – $1.7 trillion
- Hong Kong domiciled authorised funds AUM – $178 billion
- Non-Hong Kong domiciled authorised funds AUM – $1.57 trillion
- Hong Kong domiciled authorised funds AUM by type – Bond $25 billion (14.5%), Equity $44 billion (25.2%) Mixed $25 billion (14.1%), Money market $28 billion (15.7%), Feeder funds $15 million (0%), Index $54 billion (30.3%), Guaranteed $30 million (0%), Other specialised $163 million (0.1%)
- Non-Hong Kong domiciled authorised funds AUM by type – Bond $453 billion (28.7%), Equity $823 billion (52.2%), Mixed $166 billion (10.6%), Money market $11 billion (0.7%), Index $121 billion (7.7%), Hedge $116 million (0%)
- Licensed corporations – 3,246
- Licensed individuals – 44,493
- Registered institutions – 112
- Total licensed & registered – 47,851
- Type 9 license (Asset Management) – 2,140
- No. of securities dealers & securities margin financiers – 1,406
- Active clients – 4.7 million
- Active margin clients – 2.5 million
- Total value of transactions (securities) – $13.7 trillion (HKD 107 trillion)
- Total net profit (securities) – $3.6 billion (HKD 28.5 billion)
Summary – Enforcements
- Total Fine – $6.3 million (HKD 49.9 million)
- Investor compensation – $64,000 (HKD 500,000) per investor per default
- Complaints against intermediaries and market activities – 3,206
- Breaches noted during on-site inspections – 1,492
- Failure to safekeep client money – 45
- Failure to safekeep client securities – 41
- Breach of Code of Conduct for Persons Licensed by or Registered with the Securities & Futures Commission – 332
- Breach of Fund Manager Code of Conduct – 122
- Non-compliance with anti-money laundering guidelines – 269
- Internal control weaknesses – 465
- Individuals/corporations charged in criminal proceedings – 24
- Criminal charges laid – 50
- Cases with search warrants executed – 26
- Individuals/corporations involved in ongoing civil proceedings – 166
- Notices of Proposed Disciplinary Action issued – 26
- Investigations – Corporate disclosure 40, Corporate mis-governance 74, Insider dealing 26, Intermediary misconduct 168, Market manipulation 96, Unlicensed activities 41
- Persons / corporations subject to enforcement action – Prosecutions 57, Civil proceedings 213, Disciplinary proceedings 45, Market Misconduct Tribunal proceedings 36
Hong Kong SFC Report 2023/2024
1) Hong Kong Financial Industry
A) Overview
- Hong Kong-listed companies – 2,611
- Hong Kong stock market capitalisation – $3.8 trillion (31/3/24: HKD 30 trillion)
- IPO funds raised in 2023 – $30.6 billion (HKD 239 billion)
- No. of HK domiciled funds – 926
- Hong Kong SFC-authorised funds AUM – $1.7 trillion
- No. of listed derivative contracts traded in 2023 – 331 million
- Licensed corporations – 3,246
- Licensed individuals – 44,493
- Registered institutions – 112
- Total licensed & registered – 47,851
- Type 9 license (Asset Management) – 2,140
- New Licensed corporations applications – 220
- New Licensed individuals applications – 7,035
- Virtual asset trading platform – 2
- Onsite inspections conducted – 234
- Investor compensation – HKD 500,000 per investor per default
- Total Fines – $6.3 million (HKD 49.9 million)
- Hong Kong SFC Staff count – 958
B) 2023 Asset & Wealth Management Survey:
- Asset & Wealth Management AUM – $3.9 trillion (HKD 30.5 trillion)
- Asset Management & Fund Advisory AUM – $2.86 trillion (HKD 22.3 trillion)
- Private Banking & Wealth Management AUM – $1.14 trillion (HKD 8.9 trillion)
- Assets under Trusts AUM – $640 billion (HKD $5 trillion)
- Hong Kong AUM – Decrease 14% (year-on-year), Worldwide decrease 15% (yoy)
- Total Staff in Asset & Wealth Management – 54,322
C) Market Capitalisation of Hang Seng Index Constituents by Sector:
- Information technology – 34%
- Financials – 23%
- Consumer-related – 14%
- Telecommunications – 8%
- Energy – 6%
- Properties & construction – 6%
- Others – 9%
D) New listing / IPO / Takeover applications
- New listing / IPO applications – 157
- New listing / IPO – 67
- Takeovers-related applications reviewed – 317
E) Takeovers Activities:
- General and partial offers under Code on Takeovers & Mergers – 32
- Privatisations – 17
- Whitewash waiver applications – 21
- Other applications under Code on Takeovers & Mergers – 240
- Off-market and general offer share buy-backs – 7
- Total – 317
F) Hong Kong Securities industry
- No. of securities dealers & securities margin financiers – 1,406
- Active cash clients – 2.1 million
- Active margin clients – 2.5 million
- Active clients – 4.7 million
- Cash – HKD 567 billion
- Receivable from margin clients – HKD 148 billion
- Receivable from clients & other dealers arising from dealing in securities – HKD 183 billion
- Proprietary positions – HKD 69 billion
- Other Assets – HKD 366 billion
- Total Assets – HKD 1.33 trillion
- Total value of transactions – $13.7 trillion (HKD 107 trillion)
- Net securities commission income – HKD 17 billion
- Gross interest income – HKD 39 billion
- Other income (asset management, corporate finance, inter-company management) – HKD 140 billion
- Total operating income – HKD 197 billion
- Total operating profit – HKD 25 billion
- Net profit on proprietary trading – HKD 3.3 billion
- Total net profit – $3.6 billion (HKD 28.5 billion)
G) Funds
- New authorised funds – 170
- New open-ended fund companies registered – 172
- Authorised collective investment scheme – 2,951
- Hong Kong-domiciled funds – 926
Authorised collective investment scheme:
- Unit trusts & mutual funds (Hong Kong-domiciled) – 926
- Unit trusts & mutual funds (non-Hong Kong-domiciled) – 1,425
- Investment-linked assurance schemes (ILAS) – 319
- Pooled retirement funds – 32
- MPF schemes – 26
- MPF pooled investment funds – 197
- Others – 26
- Total – 2,951
Hong Kong domiciled authorised funds net inflow:
- Bond: -$215 million
- Equity: -$5 billion
- Mixed: -$3.1 billion
- Money market: +$10 billion
- Feeder funds: -$4 million
- Index: +$9.8 billion
- Guaranteed: -$5 million
- Other specialised: +$55 million
- Total: +$11.4 billion
Hong Kong domiciled authorised funds AUM:
- Bond – $25 billion (14.5%)
- Equity – $44 billion (25.2%)
- Mixed – $25 billion (14.1%)
- Money market – $28 billion (15.7%)
- Feeder funds – $15 million (0%)
- Index – $54 billion (30.3%)
- Guaranteed – $30 million (0%)
- Other specialised – $163 million (0.1%)
- Total – $178 billion
No. of Hong Kong domiciled authorised funds:
- Bond – 165
- Equity – 203
- Mixed – 111
- Money market – 67
- Feeder funds – 50
- Index – 165
- Guaranteed – 1
- Other specialised – 3
- Total – 765
Umbrella Structures
- Umbrella Structures – 161
- Total Funds including Umbrella Structures – 926
Non-Hong Kong domiciled authorised funds AUM
- Bond – $453 billion (28.7%)
- Equity – $823 billion (52.2%)
- Mixed – $166 billion (10.6%)
- Money market – $11 billion (0.7%)
- Index – $121 billion (7.7%)
- Hedge – $116 million (0%)
- Total – $1.57 trillion
Non-Hong Kong domiciled authorised funds by origin AUM
- Luxembourg – $1.1 trillion (74.3%)
- Ireland – $248 billion (15.7%)
- United Kingdom – $75 billion (4.8%)
- Mainland China – $17 billion (1.1%)
- Bermuda – $116 million (0%)
- Cayman Islands – $1.1 billion (0.1%)
- Others – $63 billion (4%)
- Total – $1.57 trillion
No. of Non-Hong Kong domiciled authorised funds
- Luxembourg – 1,066
- Ireland – 258
- United Kingdom – 26
- Mainland China – 46
- Bermuda – 1
- Cayman Islands – 23
- Others – 5
H) All licensees
Licensed Corporations (LCs):
- Stock exchange – 545
- Futures exchange – 86
- Stock exchange & futures exchange – 74
- Non-stock/ non-futures exchange – 2,541
- Total – 3,246
Licensed Representatives:
- Stock exchange – 11,259
- Futures exchange – 373
- Stock exchange & futures exchange – 5,283
- Non-stock/ non-futures exchange – 18,159
- Total – 35,074
Responsible Officers:
- Stock exchange – 2,003
- Futures exchange – 113
- Stock exchange & futures exchange – 619
- Non-stock/ non-futures exchange – 6,684
- Total – 9,419
All licensees:
- Stock exchange – 13,807
- Futures exchange – 572
- Stock exchange & futures exchange – 5,976
- Non-stock/ non-futures exchange – 27,384
- Total – 47,739
Excludes 112 registered institutions
Licensed Corporations (LCs) include securities and futures brokers, leveraged forex traders, fund managers, investment advisers, sponsors and credit rating agencies.
2) Breaches & Enforcements
- Total Fines – $6.3 million (HKD 49.9 million)
Breaches noted during on-site inspections:
- Failure to comply with SFC (Financial Resources) Rules – 13
- Failure to safekeep client securities – 41
- Failure to maintain proper books and records – 16
- Failure to safekeep client money – 45
- Unlicensed dealing and other registration issues – 19
- Breach of licensing conditions – 1
- Breach of requirements of contract notes/statements of account/receipts – 43
- Breach of margin requirements – 8
- Marketing malpractices – 0
- Illegal short selling of securities – 1
- Breach of Code of Conduct for Persons Licensed by or Registered with the Securities & Futures Commission – 332
- Breach of Corporate Finance Adviser Code of Conduct – 9
- Breach of Fund Manager Code of Conduct – 122
- Breach of regulation of online trading – 17
- Non-compliance with anti-money laundering guidelines – 269
- Breach of other rules & regulations of the Exchanges – 7
- Internal control weaknesses – 465
- Others – 84
- Total – 1,492
Enforcements:
- S179 inquiries commenced – 34
- S181 inquiries commenced / number of letters sent – 188 / 4,627
- S182 directions issued – 182
- Investigations started – 183
- Investigations completed – 175
- Individuals/corporations charged in criminal proceedings – 24
- Criminal charges laid – 50
- Notices of Proposed Disciplinary Action issued – 26
- Notices of Decisions issued – 27
- Individuals/corporations subject to ongoing civil proceedings – 204
- Rule 8 directions issued – 2
- Letter of mindedness issued – 2
- Cases with search warrants executed – 26
- Compliance advice letters issued – 144
Insider dealing Enforcements:
- Individuals/corporations summonsed / summons laid – 1 / 1
- Individuals/corporations involved in ongoing civil proceedings – 10
- Individuals/corporations involved in ongoing MMT proceedings – 3
Market manipulation Enforcements:
- Individuals/corporations summonsed / summons laid – 3 / 5
- Individuals/corporations involved in ongoing civil proceedings – 29
- Individuals/corporations involved in ongoing MMT proceedings – 22
Other Criminal, Civil and Market Misconduct Tribunal (MMT) proceedings Enforcements:
- Individuals/corporations summonsed / summons laid – 3 / 10
- Individuals/corporations involved in ongoing civil proceedings – 166
- Individuals/corporations involved in ongoing MMT proceedings – 9
- Individuals charged for suspected market misconduct and other offences for indictment prosecution – 17
Disciplinary enquiry:
- Notices of Proposed Disciplinary Action issued – 26
- Notices of Decision issued (including S2018 agreement) – 27
Securities & Futures Appeals Tribunal (SFAT) hearings:
- Applications to SFAT – 4
- Applications/hearings completed/withdrawn/abandoned – 2
Investigations:
- Intermediary misconduct – 168
- Market manipulation – 96
- Corporate mis-governance – 74
- Unlicensed activities – 41
- Corporate disclosure – 40
- Insider dealing – 26
Persons/corporations subject to enforcement action:
- Civil proceedings – 213
- Prosecutions – 57
- Disciplinary proceedings – 45
- Market Misconduct Tribunal proceedings – 36
Complaints against intermediaries and market activities – 3,206
Complaints against intermediaries and market activities
- Listing-related matters & disclosure of interests – 27%
- Scams & frauds – 19%
- Conduct of licensees – 18%
- Market misconduct – 11%
- Unlicensed activities – 10%
- Other financial activities not regulated by SFC – 8%
- Boiler rooms and suspicious websites – 6%
- Breach of offers of investments – 1%
- Conduct of registered institutions – <1%
- Product disclosure – <1%
3) 2023 / 2024 Highlights
Market development:
- China Treasury bond futures – We announced the upcoming launch of China Treasury bond futures contracts in Hong Kong. This important risk management tool can facilitate further participation by offshore institutional investors in the Mainland Treasury bond market. We are working closely with Hong Kong Exchanges and Clearing Limited (HKEX) on its launch.
- Swap Connect – Swap Connect, which allows offshore investors from Hong Kong and other jurisdictions to participate in the Mainland interbank interest rate swap market, was launched for northbound trading in May 2023. As of 31 March 2024, there were 50 offshore Swap Connect participants, and the month-on-month average daily gross notional amount of contracts executed under Swap Connect had quadrupled since its launch.
- Stock Connect enhancements – Enhancements to Stock Connect were announced to further raise the trading efficiency of the scheme and promote the mutual development of the Mainland and Hong Kong capital markets. These measures include the expansion of the scope of exchange-traded funds (ETFs), the incorporation of real estate investment trusts (REITs) into the Stock Connect, and the introduction of block trading (manual trades).
- Renminbi (RMB) counters – The RMB counters of 24 stocks were launched for trading in June 2023. The average daily turnover of the 24 RMB counters amounted to RMB98.3 million ($105.1 million) since their launch. The dual counter market making programme brings in market makers to ensure liquidity and minimise gaps between Hong Kong dollar and RMB share prices, and would be further invigorated by the China Securities Regulatory Commission’s (CSRC) support of the inclusion of RMB-denominated stocks into southbound Stock Connect.
- Enhancements to cross-boundary Wealth Management Connect (WMC) – We jointly announced the enhancements to WMC with the People’s Bank of China (PBoC), the National Financial Regulatory Administration (NFRA), the CSRC, the State Administration of Foreign Exchange (SAFE), the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Macao. Enhancement measures include expanding the scope of eligible products and allowing eligible brokers to participate in the scheme. To facilitate licensed corporations’ participation in WMC, we issued a set of guidance and frequently asked questions (FAQs).
- Hong Kong-listed ETFs – We authorised Asia’s first and the world’s largest ETF investing in Saudi Arabian-listed stocks, which was listed in Hong Kong in November.
- We also authorised the first two active ETFs adopting a covered call writing strategy in Hong Kong. They were listed in February 2024.
- Mainland-Hong Kong Mutual Recognition of Funds (MRF) scheme – We reached an agreement with the CSRC on relaxing the MRF scheme. As at 31 March 2024, a total of 44 Mainland funds were authorised by the SFC and 38 Hong Kong funds were approved by the CSRC. The aggregate cumulative net subscriptions were about RMB26.6 billion.
- Hong Kong-domiciled funds – The assets under management (AUM) of Hong Kong-domiciled public funds recorded US$178 billion as of 31 March 2024 and net fund inflows of about US$11.5 billion were recorded during the year.
- Grant scheme for OFCs and REITs – The Government’s grant scheme to subsidise the setting up of open-ended fund companies (OFCs) and listing of REITs in Hong Kong has been extended for another three years from May 2024.
- Overseas listings by Mainland enterprises – After discussing with the SFC, the Stock Exchange of Hong Kong Limited (SEHK) concluded a consultation on Listing Rule amendments to reflect Mainland China’s revised regulation updates on overseas listings by Mainland enterprises. The new rules became effective on 1 August 2023.
- International listings – The main markets of the Saudi Exchange and the Indonesia Stock Exchange were added to the list of recognised stock exchanges, which will enable Saudi- and Indonesia-listed companies to apply for secondary listing in Hong Kong.
- GEM listing reforms – With our approval, SEHK’s GEM listing reforms became effective in January 2024. SEHK introduced facilitative measures for eligible GEM issuers to transfer to the Main Board.
Regulatory enhancements:
- Codes on Takeovers and Mergers and Share Buy-backs
- Amendments were made to enhance regulation of takeovers and share buy-backs, including clarifying a number of important terms and provisions, streamlining processes and introducing green initiatives.
- Uncertificated securities market (USM) regime – Following our March 2023 consultation on subsidiary legislation, we launched a further consultation in October on proposed amendments to the code and guidelines for regulating approved securities registrars under the USM environment. We aim to issue a conclusions paper on both consultations later this year.
- Position limit regime – The enhanced position limit regime took effect in December 2023. The amendments clarified funds- related regulatory requirements, facilitated compliance and provided greater flexibility to the market. We also published an FAQ and updated the related guidance note to help market participants understand the enhancements.
- Over-the-counter (OTC) derivatives regulation – With the legislative process completed for our proposed amendments to the Clearing Rules for the OTC derivative transactions, they will take effect in July 2024. The amendments are in line with the global interest rate benchmark reform.
- Investor identification regime – The investor identification regime for the Hong Kong securities market and the OTC securities transactions reporting regime for shares listed on SEHK were launched in March and September 2023 respectively. Both regimes have strengthened the market surveillance capability, upheld market integrity and bolstered investor confidence in the Hong Kong securities market.
- Type 13 regulated activity (RA 13) regime – Following the completion of the legislative process, the new RA 13 regime for depositaries of public funds will come into effect in October 2024. We provided guidance and began accepting applications in July 2023. As of 31 December, all depositaries of public funds operating in Hong Kong had submitted their RA 13 applications.
- New treasury shares regime – Working together with the SFC, SEHK launched a consultation to introduce a listing regime governing treasury shares. It received strong market support and the rule changes became effective in June 2024.
Virtual assets (VA) and tokenisation:
- New regulatory regime for VATPs – The licensing regime for VATPs under the AMLO came into effect in June 2023. It requires all VATPs operating a virtual asset exchange in Hong Kong or actively marketing their services to Hong Kong investors to be licensed by the SFC. We licensed two VATPs under the SFO. As of 31 March 2024, we received 23 VATP applications, of which four were from existing VATP licence applicants under the SFO, and the remainder were new applications.
- Guidance on VA activities, VA products and tokenisation – We revised the joint circular issued together with the HKMA on intermediaries’ VA-related activities to enable retail investors to access VA dealing services and advisory services provided by SFC-regulated intermediaries partnering with SFC-licensed VATPs. We further revised the joint circular to set out requirements for distributing investment products with exposure to VAs. In another circular, we issued our requirements applicable to SFC-authorised funds with exposure to VAs of more than 10% of their net asset value, including SFC-authorised VA spot ETF. We also provided guidance to the industry on tokenised securities-related activities and tokenisation of SFC-authorised investment products, which emphasised how traditional financial institutions should address and manage the risks arising from tokenisation. The first tokenised SFC-registered private OFC was launched in December 2023; the first tokenised retail gold product was authorised by the SFC in March 2024.
- Enforcement actions under VATP regime – To identify and address potential fraud promptly, we established a dedicated joint working group with the Hong Kong Police Force (Police) with an information sharing protocol to enhance collaboration in monitoring and investigating illegal activities related to VAs and VATPs. At the SFC’s request, the Police expeditiously took steps to block access to websites of entities involved in suspected fraud.
Gatekeeping & supervision:
- Listing applications – We processed 261 listing applications, of which 157 were new listing applications. Amongst others, there were new listing applications from three companies with a weighted voting rights (WVR) structure, 14 pre-profit biotech companies, one special purpose acquisition company (SPAC), two companies seeking a listing by way of de-SPAC transactions5 and two specialist technology companies. One overseas-listed company achieved dual-primary listing on the Main Board.
- Licensing corporations and individuals – We approved 164 new corporate licence applications and around 6,700 individual licence applications. Amongst the newly approved corporate applications, 85% of them applied for Type 9 (asset management) regulated activity (RA) and 63% applied for Type 4 (advising on securities) RA.
- Suitability obligations for dealing with sophisticated professional investors
- We issued a joint circular with the HKMA to guide the implementation of a streamlined approach to comply with the suitability obligations when dealing with sophisticated professional investors.
- Risk management guidelines for futures brokers – We issued risk management guidelines for licensed persons dealing in futures contracts to enhance futures brokers’ risk management.
- Inspections – We conducted 234 on-site inspections of licensed corporations and associated entities to review their compliance with regulatory requirements and noted 1,492 breaches of our rules and regulations.
- Cybersecurity – Our thematic review on emerging cybersecurity risks and threats was commenced, covering the use of end-of-life software, vendor management and remote access.
- Non-exchange traded investment products – We published a report on the joint SFC-HKMA annual survey on the sale of non-exchange traded investment products7 during 2022, which showed that 35% of firms recorded an increase in their transaction amount and the top-selling collective investment schemes were money market funds.
- Review of SEHK’s work – We published a report on our review of the performance of SEHK in its regulation of listing matters during 2021 and identified areas for enhancement.
- Corporate misconduct – As part of our front-loaded approach in preventing corporate misconduct, we issued section 1798 directions to gather additional information in 39 cases.
Enforcement:
- Surveillance – We made 4,627 requests for trading and account records from intermediaries as a result of surveillance of untoward price and turnover movements.
- Investigations and prosecutions – We commenced 183 investigations and laid 50 criminal charges against 24 individuals, of which 17 were charged for suspected market misconduct and other offences for indictment prosecution. We secured convictions against two of them.
- Twenty-four people, including key members and a suspected ringleader of a large-scale, sophisticated ramp and dump syndicate, were charged following a joint operation with the Police.
- Notable disciplinary actions – We reprimanded and fined Changjiang Corporate Finance (HK) Limited $20 million for failure in discharging its duties as the sponsor in six applications to list on SEHK. We revoked the licence of Axial Capital Management Limited for repeated failures to comply with the SFO, the Securities and Futures (Financial Resources) Rules and the Code of Conduct for Persons Licensed by or Registered with the SFC.
- Regulatory collaboration – We conducted the first-ever tripartite operation together with the Independent Commission Against Corruption and the Accounting and Financial Reporting Council (AFRC) in October 2023 against two Hong Kong-listed companies on suspected fictitious corporate transactions totalling $193 million. We issued the first joint statement with the AFRC in July 2023, addressing an observable increase in cases of listed issuers channelling corporate funds to third parties as “loans” in dubious circumstances. We set out conduct standards and practices that listed issuers, their directors, audit committees and auditors should follow in relation to loans and similar arrangements.
Sustainability:
- Cross-Agency Steering Group – We co-led efforts to develop greenhouse gas emissions calculation and estimation tools and the Prototype Hong Kong Green Fintech Map, both of which were launched in early 2024. We also co- lead work on developing a roadmap for Hong Kong’s adoption of the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards as appropriate, which included hosting an industry roundtable with the International Sustainability Standards Board in March 2024.
- International Organization of Securities Commissions’ (IOSCO) Sustainable Finance Task Force (STF) – Through our leading role within IOSCO’s STF and Asia-Pacific Regional Committee (APRC), we promote regulatory alignment, knowledge sharing and capacity building in the region on sustainable finance topics including sustainability disclosures and carbon markets.
- ESG ratings and data products providers – We supported and sponsored the development of a voluntary code of conduct for ESG10 ratings and data products providers via an industry-led working group.
- Inaugural Forum on Sustainability Disclosures – In November 2023, we held our inaugural Forum on Sustainability Disclosures which was attended by more than 200 local and regional participants to gather views on developing a sustainability disclosure ecosystem for Hong Kong.
- Carbon neutrality – We announced our commitment to become a carbon-neutral organisation by 2050, in line with the HKSAR Government’s climate strategy. Our interim target is to reduce 50% of our total carbon emissions by 2030.
4) Hong Kong SFC Enforcement Cases
Insider dealing & market misconduct:
- 3 suspected core members of a large-scale and sophisticated syndicate suspected of ramp and dump market manipulation were charged with the offence of conspiracy to employ a scheme with intent to defraud or deceive in transactions involving securities contrary to section 300 of the SFO and sections 159A and 159C of the Crimes Ordinance. In February 2024, the case against two of the suspected core members were transferred to the District Court. This is the first ramp and dump criminal prosecution in the District Court.
- Following our earlier joint operation with the Police against a large-scale, sophisticated ramp and dump syndicate, 10 more suspects, including key members and a suspected ringleader, were brought to the Eastern Magistrates’ Courts on charges of various criminal offences, including conspiracy to perpetrate fraud or deception in transactions involving securities provided in section 300 of the SFO and related money laundering offences. In total, 24 people were charged in this case. Further hearings were scheduled.
- The Court of First Instance (CFI) granted an interim injunction order under section 213 of the SFO against Tsang Ching Yi and Barry Kwok Sze Lok for suspected insider dealing in the shares of I.T Limited, prohibiting them from removing assets up to HKD 8,246,496 from Hong Kong.
- The Court of Final Appeal unanimously dismissed the appeal by six suspected overseas manipulators concerning service out of the jurisdiction. The appeal arose from legal proceedings under section 213 of the SFO brought by us in a case of alleged false trading in the shares of Ching Lee Holdings Limited through a large-scale and sophisticated scheme. As a result of these proceedings, we obtained from the CFI injunctions to freeze the assets held by 15 local and overseas entities.
- We commenced proceedings in the MMT against a former executive deputy general manager of China CITIC Bank International Limited for alleged insider dealing in the shares of Bloomage BioTechnology Corporation Limited.
- We commenced proceedings in the MMT against the former chairman and non-executive director of Ding Yi Feng Holdings Group International Limited and 20 other individuals for allegedly manipulating the trading of Di Yi Feng shares. We also commenced proceedings in the CFI under section 213 of the SFO against the same 21 individuals to seek various orders to restore affected counterparties to their pre-transaction positions and restrain the defendants from disposing of or dealing with any assets, and to ensure that there will be sufficient assets to meet the restoration orders.
- We brought about the first prosecution for employing a fraudulent scheme with intent to defraud in securities transactions against Yeung Tak Sum Christine (Yeung) in the context of illegal short selling in breach of section 300 of the SFO. In February 2024, the Eastern Magistrates’ Court convicted Yeung for the offence under section 300 after she pleaded guilty. In March 2024, Yeung was sentenced to 18 months of imprisonment.
Tackling corporate fraud & related misbehaviour:
- To seek disqualification orders against seven former directors and a former chief financial controller of China Candy Holdings for permitting, acquiescing or turning a blind eye to falsified bank and accounting records, breach of directors’ duties and other misconduct;
- To seek disqualification orders against eight current or former directors of FingerTango Inc. and a compensation order against six of them for allegedly committing corporate misconduct and breaching their duties towards the company. We also issued restriction notices to three brokers prohibiting them from dealing with or processing certain assets held in the accounts of three of the respondents for preservation of funds to pay compensation to FingerTango if so ordered by the court; and
- To seek disqualification orders against five former directors and a former de facto director of First Credit Finance Group Limited for breach of directors’ duties.
- Lau Chi Yuen Joseph and Chung Man Wai, former directors of Luxey International (Holdings) Limited, to disqualify them from being a director or taking part in the management of any corporation in Hong Kong for eight years and five years, respectively, for their misconduct in a corporate acquisition;
- Liu Yong, a former executive director of National Agricultural Holdings Limited, and Chiu Kam Hing Kathy and Fan Chung Yue William, both former independent non-executive directors of the company, to disqualify them from being a director or taking part in the management of any corporation in Hong Kong for three years, 20 months and 20 months, respectively, after they admitted to having breached their directors’ duties to the company;
- Tse On Kin, the former chairman and executive director of Kong Sun Holdings Limited and China Sandi Holdings Limited, to disqualify him from being a director or taking part in the management of any corporation in Hong Kong for 10 years and to pay compensation of around HKD 2.2 million to Kong Sun, being the profit he made in breach of his fiduciary duty owed to Kong Sun, after he admitted that he had devised a fraudulent scheme to conceal his interests in the companies’ share placements and obtained a secret profit. He was also ordered to pay our costs in the proceedings;
- Nicholas Chiu Sai Chuen, a former independent non-executive director of China Candy, to disqualify him from being a director and being involved in the management of any listed or unlisted companies for three years, after Chiu admitted he acted negligently in discharging his duties as a director. He was also ordered to pay our costs in the proceedings; and
- Chan Wai Shing, former chief financial officer (CFO) and company secretary of Fuguiniao Co., Ltd, to disqualify him from being a director of any corporation or being involved in the management of any listed corporation in Hong Kong for two years, after Chan admitted that he failed to discharge his duties as the CFO of Fuguiniao. He was also ordered to pay our costs in the proceedings.
- In a case where we commenced legal proceedings under section 214 of the SFO against Leung Anita Fung Yee Maria, a former chief executive officer and executive director of SMI Culture & Travel Group, to seek a compensation order for losses suffered by SMI Culture as a result of a suspected fraudulent scheme, we obtained an interim order at the CFI to require Leung to notify us before disposing of her various land properties. The loss suffered by SMI Culture through purchases of overpriced assets was estimated to be HKD 235 million, while the unjust profits gained by the suspected fraudsters ranged from HKD 35 million to HKD 74 million. The interim order was given pending the determination of our injunction application in respect of the assets held by Leung.
- In a case where we commenced legal proceedings to seek disqualification orders against the former chairman and two other former executive directors of Tech Pro Technology Development Limited for breaching their duties owed to the company, we have set the case down for trial at the CFI.
- We directed SEHK to suspend dealings in the shares of LET Group Holdings Limited and Summit Ascent Holdings Limited under the Securities and Futures (Stock Market Listing) Rules with effect from 14 February 2024 due to concerns regarding a very substantial disposal of a major asset of LET and Summit Ascent and the conduct of the two companies and their management.
- We collaborated with SEHK in an enforcement action that led to SEHK’s disciplinary action against Singapore- residing Aris Goh Leong Heng (Goh) and Anita Chia Hee Mei (Chia), two former directors of GEM-listed Global Uin Intelligence Holdings Limited for misappropriating Global Uin Intelligence’s assets through a rerouting arrangement. SEHK publicly censured them and issued the Director Unsuitability Statement against them. Our investigation into the suspected misappropriation by Goh and Chia is still ongoing.
Mishandling client assets:
- We reprimanded China On Securities Limited and fined it HKD 6 million for failing to act within the scope of its client’s authority and adequately safeguard the client’s assets when acting as a placing agent of shares in Hon Corporation Limited.
- We reprimanded Changjiang Asset Management (HK) Limited and fined it HKD 3.4 million for regulatory breaches in relation to the segregation of client money and provision of account statements to clients.
- We reprimanded Ruifeng Securities Limited (RSL) and fined it HKD 5.2 million for failures relating to its fund management activities and account opening procedures. We also suspended the licence of Fang Zhi for failing to discharge his duties as a responsible officer of RSL in charge of its fund management activities.
Internal control deficiencies:
- We revoked the licence of Axial Capital Management Limited for repeated failures to comply with the SFO, the Securities and Futures (Financial Resources) Rules and the Code of Conduct for Persons Licensed by or Registered with the SFC (Code of Conduct). We also suspended the licence of Eugene Chung, a responsible officer of Axial and member of the senior management of Axial, for five years for failing to discharge his duties.
- We reprimanded Chee Tak Securities Limited and fined it HKD 2 million for internal control deficiencies and regulatory breaches. We also suspended the licences of Kevin Chiu Koon Yu, a responsible officer and a member of the senior management of Chee Tak, for 10 months for failing to discharge his duties. Hau Bing Leung, a former account executive, faced a suspension of 15 months for allowing a third party to operate a client’s account without the client’s written authorisation and carrying out personal trades in the client’s account.
- We reprimanded PICC Asset Management (Hong Kong) Company Limited and fined it HKD 2.8 million for failing to discharge its duties as the fund manager of a fund to ensure that its investments were in line with its stated investment strategy, objectives and investment restrictions and to implement adequate and effective internal controls for the fund’s risk management.
- We reprimanded Taiping Securities (HK) Co Limited and fined it HKD 1.3 million for failing to put in place adequate and effective internal controls to monitor employee dealings.
Sponsor failures:
- We reprimanded and fined Changjiang Corporate Finance (HK) Limited (CCF) HKD 20 million for failure in discharging its duties as the sponsor in six applications to list on SEHK. We also partially suspended CCF’s licence to act as a sponsor for listing applications on SEHK for one year or until we are satisfied with its related controls and procedures. Ivan Chan Chuk Cheung, a former responsible officer of CCF, was also banned from re-entering the industry for seven years for failing to discharge his supervisory duties as a sponsor principal in charge of five listing applications.
- We banned Tsang Kwong Fai, a former responsible officer and senior management member of RaffAello Capital Limited, from re-entering the industry for two years for failing to discharge his supervisory duties as a sponsor principal.
AML/CFT-related breaches:
- We reprimanded China Industrial Securities International Brokerage Limited and fined it HKD 3.5 million for internal control failures relating to monitoring suspicious trading activities and recording client order instructions.
- We reprimanded Lion Futures Limited and fined it HKD 2.8 million for failing to comply with anti-money laundering (AML) and counter-terrorist financing (CFT) and other regulatory requirements.
Other regulatory breaches & criminal convictions:
- Conviction of bribery offences – Lam Ching Chiu, Banned from re-entering the industry for five years
- Conviction of bribery offences – Wong Siu Fung, Banned from re-entering the industry for five years
- Failed to comply with the Securities and Futures (Financial Resources) Rules – Central Wealth Securities Investment Limited, Reprimanded and fined HKD 1 million
- Conviction of bribery offences – Amy Chow Bik Sum, Banned from re-entering the industry for life
- Providing false and misleading financial information about licence applications of two firms, failed to sufficiently maintain the firms’ liquid capital and notify the SFC of the firms’ liquid capital deficits – Xie Yangxiong, Banned from re-entering the industry for life
- Took part in a stock manipulation scheme – Law Chi Kin Peter, Banned from re-entering the industry for 10 years and fined HKD 535,500
- Conducted dealings in futures contracts without the required licence – Ninety One Hong Kong Limited, Reprimanded and fined HKD 1.4 million
- Breaching the Code of Conduct and the Corporate Finance Adviser Code of Conduct – The Securities and Futures Appeals Tribunal affirmed our decision to ban Calvin Choi Chi Kin, a former managing director of UBS AG, from re-entering the industry for two years
- We commenced legal proceedings in the CFI (Court of First Instance) to inquire into non-compliance by AMTD Global Markets Limited (Currently known as orientiert XYZ Securities Limited.) and its former executives with our notices issued under section 183 of the SFO concerning initial public offering-related investigations.
- Obtained an order from the CFI (Court of First Instance) to appoint two administrators to administer the property of Vantage New Generation Securities Limited, including assets held by the firm on behalf of its clients or third parties, as well as to manage the affairs of the firm.
- The MMT sanctioned Mayer Holdings Limited (Mayer) and nine of its former senior executives for failing to disclose inside information as soon as reasonably practicable as required under the SFO and ordered them to pay a total fine of $4.65 million. The nine former senior executives were also disqualified for 20 to 30 months and ordered to attend an SFC-approved training programme on compliance with corporate disclosure requirements under the SFO, directors’ duties and corporate governance. The MMT further recommended the AFRC to take disciplinary action against Mayer’s former company secretary and financial controller.
- In June 2022, the Court ordered Maxim Capital Limited and Maxim Trader to pay qualifying investors of the Maxim Fund following legal proceedings brought by the SFC under section 213 of the SFO. In September 2023, the CFI granted our application to extend the cut-off date for investors to make claims relating to investment schemes operated by Maxim Capital Limited and Maxim Trader in Hong Kong by 30 November 2023 (Maxim Fund). The original cut-off date was 23 July 2022.
5) Hong Kong Priorities
Hong Kong SFC Top 4 Priorities in next 3 years (2024 to 2027)
- Maintaining market resilience & mitigating harm
- Enhancing Hong Kong global effectiveness
- Leading market transformations via technology & ESG
- Enhancing SFC’s resilience & efficiency
I) Maintaining market resilience & mitigating harm
- Combatting market misconduct and that related to virtual assets
- Expanding surveillance and investigatory toolkit
- Enhancing enforcement powers and collaboration
- Enhancing supervisory powers and intermediaries’ risk management
- Stepping up HKEX oversight and clearing house risk management
- Enhancing regulatory framework for investment funds
- Implementing uncertificated securities market and regulation of securities registrars
- Preparing for over-the-counter derivative regime
- Type 13 Regulated Activity regime to launch
- Further guidance on cybersecurity to industry
II) Enhancing Hong Kong global effectiveness
- Listing regime improvement
- Enhancing market liquidity
- Leading international standard-setting efforts
- Further enhancing Connect schemes with Mainland and expanding connections to new markets
- Reinforcing Hong Kong’s position as asset and wealth management hub
- New integrated platform for retail fund distribution
- Building an offshore RMB and risk management hub
III) Leading market transformations via technology & ESG
- Tokenisation to increase industry efficiency
- Virtual asset regulatory regime to improve continuously
- Guidance on using generative AI large language models
- Advancing Hong Kong’s leading role in sustainable finance
- Adopting global sustainability disclosure standards
- Supporting voluntary code for ESG rating and data products providers
V) Enhancing SFC’s resilience & efficiency
- Prudent financial control
- Guarding against cyber threats
- Commitment to carbon reduction and neutrality
- Cross-divisional process review to drive efficiency
- New online platform to process product applications
- Deploying AI and other technologies
Hong Kong SFC Strategic Priorities
Deepening Mainland-Hong Kong market connect:
- Prepare for the expansion of ETF Connect and Mutual Recognition of Funds as well as the launch of REIT Connect
- Stock exchanges and clearing houses in Hong Kong and the Mainland are working closely to prepare the implementation details for introducing block trade (manual trade) under Stock Connect.
- Trading ChiNext stocks under Stock Connect, the SFC will explore the relaxation of investor eligibility.
- Cross-boundary Wealth Management Connect (WMC) Scheme in the Greater Bay Area, we are working with the industry to smoothly implement the enhancements announced in early 2024 and will consider further optimisation. Enhancements include allowing participation by eligible brokers, expanding investment product scope and increasing the individual investor quota.
Fostering a more competitive asset management industry:
- Reinforcing Hong Kong’s position as a leading asset and wealth management centre
For the Mainland-Hong Kong Mutual Recognition of Funds scheme, we are working with the CSRC to enhance it by relaxing sales limits and overseas delegation restrictions. - New integrated platform for retail fund distribution (IFP) – To increase participation and diversification in Hong Kong’s
retail fund market and generate new business opportunities,
we are joining forces with HKEX and other parties on the new IFP. The platform will provide a business-to- business service model initially and cover the front-to-back distribution lifecycle and value chain for distributing SFC-authorised funds.
Building an offshore RMB and risk management hub:
- Including RMB counters into Stock Connect – The RMB counters of 24 stocks have been established for trading since June 2023. In April 2024, Mainland authorities indicated support for the inclusion of these counters into southbound Stock Connect, and we are working with them on its launch.
- A-share index options – We are working with the CSRC on the launch of MSCI China A 50 Connect Index options, which will complement the MSCI China A50 Connect Index futures launched in 2021. The index futures and options are effective Mainland-related derivatives in Hong Kong to meet international investors’ hedging needs.
- Preparing to launch 10-year China Treasury bond futures – Offshore investors’ participation in Swap Connect has been increasing steadily after its launch in May 2023. It enables offshore investors to access the Mainland interest rate swap market efficiently to better hedge interest rate risk, mostly for short to medium tenor. To further broaden offshore interest rate risk management tools, we are working closely with HKEX on the upcoming launch of China Treasury bond futures contracts in Hong Kong, which was announced in November 2023. This key risk management tool can help offshore investors hedge the longer-tenor interest rate risk of their China bond holdings and encourage them to participate further in the Mainland bond market.
Promoting Environmental, Social and Governance (ESG):
- Advancing Hong Kong’s leading role in sustainable finance – Key priorities include enhancing climate-related disclosure requirements for Hong Kong-listed companies, bridging Mainland carbon markets with international investors, monitoring the implementation of sustainable finance initiatives in asset management and ESG funds to address greenwashing, and supporting capacity building.
- Adopting global sustainability disclosure standards – As Co-Chair of Hong Kong’s Green and Sustainable Finance Cross-Agency Steering Group, we spearhead work on Hong Kong’s adoption of the IFRS Sustainability Disclosure Standards4 in a pragmatic way. Following the SFC’s approval, SEHK issued its consultation conclusions on enhanced climate-related disclosure requirements for Hong Kong-listed companies in April 2024. The new requirements will be introduced in phases from January 2025. SEHK also published an implementation guidance to assist issuers in preparing disclosures. The SFC will continue to work with SEHK to ensure the smooth implementation of the new requirements, which aim to give listed companies a head-start in building preparedness and capabilities for sustainability reporting.
- Supporting voluntary code for ESG rating and data products providers – To help strengthen the transparency, quality and reliability of sustainability-related data for investors and financial institutions, we sponsor and support the development of a code of conduct for voluntary adoption by ESG ratings and data products providers in Hong Kong. An industry-led working group convened by the International Capital Market Association is leading the development of the code, while the SFC and other local regulators are sitting as observers to the working group.
6) Hong Kong SFC Recap
About Hong Kong SFC
- Hong Kong SFC – The Securities & Futures Commission (SFC) is an independent statutory body set up in 1989 to regulate Hong Kong’s securities and futures markets.
- Hong Kong SFC Mandate – Work is defined and governed by the Securities and Futures Ordinance (SFO), which sets out our powers, roles and responsibilities.
Hong Kong 35 years recap (1989)
- 1989 – SFC is founded on 1 May as an independent statutory body to regulate Hong Kong’s securities and futures market
- 1993 – Amendments to the Listing Rules and a regulatory cooperation agreement with Mainland regulators enable the listing of H shares and red chips
- 1994 – Code of conduct for securities and futures dealers and investment advisers in Hong Kong takes effect
- 2000 – Hong Kong Exchanges & Clearing Limited is founded and the SFC takes over the supervision of intermediaries dealing in securities and futures
- 2002 – For the first time, the court imposes immediate custodial sentences on persons convicted of stock manipulation following the SFC’s prosecution
- 2002 – Following consultation and issuance of the hedge fund guidelines, Hong Kong becomes one of the first markets in the world to offer hedge funds to the retail public
- 2003 – The Securities and Futures Ordinance (SFO) consolidates ordinances governing the securities and futures markets
- 2005 – The first Real Estate Investment Trust in Hong Kong is authorised for listing
- 2007 – China Development Bank issues the first issue of renminbi bonds in Hong Kong
- 2008 – The first criminal conviction for insider dealing under the SFO is obtained
- 2009 – The SFC, the Hong Kong Monetary Authority (HKMA) and 16 distributing banks reach an agreement in relation to the repurchase of Lehman Brothers Minibonds from eligible customers
- 2009 – For the first time, the SFC exercises its statutory power under the SFO to apply to intervene in the privatisation proposal of a listed company, PCCW Ltd, through court proceedings following complaints of vote-rigging in the court meeting to approve the privatisation proposal
- 2010 – The first renminbi denominated fund is authorised for sale to retail investors
- 2012 – The Investor Education Centre, now known as the Investor and Financial Education Council, is established as a subsidiary of the SFC
- 2013 – The new statutory regime mandates timely disclosure of inside information
- 2014 – Shanghai-Hong Kong Stock Connect is launched
- 2014 – A new regulatory regime for over-the-counter derivatives is introduced
- 2014 – The SFC authorises Hong Kong’s first Islamic balanced fund
- 2015 – The SFC obtains its first court order to liquidate a listed company to protect investors
- 2016 – Mainland-Hong Kong Mutual Recognition of Funds is launched
- 2016 – Shenzhen-Hong Kong Stock Connect is introduced
- 2016 – IOSCO appoints the SFC’s then Chief Executive Officer Mr Ashley Alder as Chairman of its Board
- 2017 – The SFC announces a new front- loaded regulatory approach for listing regulation, marking a change in the approach in the use of SMLR9 to direct the suspension of trading in a listed company to pre-empt further harm to investors pending investigation and enforcement outcome
- 2018 – New listing rules for companies from emerging and innovative sectors take effect
- 2018 – The SFC announces Strategic Framework for Green Finance
- 2019 – The revised Code on Unit Trusts and Mutual Funds introduces active exchange-traded funds (ETFs)
- 2020 – The SFC initiates the establishment of the Green and Sustainable Finance Cross-Agency Steering Group with the HKMA to green the financial sector
- 2020 – The SFC reprimands and imposes a record fine against a licensed corporation for serious rule breaches in relation to the 1Malaysia Development Berhad’s bond offerings
- 2021 – The Cross- boundary Wealth Management Connect Pilot Scheme commences
- 2021 – MSCI China A50 Connect Index Futures is launched
- 2022 – Trading of ETFs under Stock Connect, ie, ETF Connect, is launched
- 2022 – Asia’s first virtual asset ETFs are launched in Hong Kong
- 2023 – We launch an investor identification regime for the Hong Kong securities market
- 2023 – Swap Connect is launched with northbound access
- 2023 – The licensing regime for virtual asset trading platforms under the Anti- Money Laundering and Counter-Terrorist Financing Ordinance takes effect
- 2024 – The SFC announces strategic Priorities for 2024-26 to regulate and develop capital markets
- 2024 – Enhancements to Wealth Management Connect and ETF Connect are announced
- 2024 – We authorise Asia’s first spot virtual asset ETFs
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