SFC issues quarterly report

The Securities and Futures Commission (SFC) today published its latest Quarterly Report which summarises key developments from July to September 2022.

During the quarter, the SFC welcomed the Central Government's support initiatives (Note 1) announced by Mr Fang Xinghai, Vice-Chairman of the China Securities Regulatory Commission (CSRC), to enhance Hong Kong's status as an international financial centre, offshore renminbi centre and risk management centre. The SFC also published its Agenda for Green and Sustainable Finance, setting out its next steps to support Hong Kong's role as a regional sustainable finance centre.

Together with the People's Bank of China and the Hong Kong Monetary Authority (HKMA), the SFC announced in July the development of Swap Connect. It also made a joint announcement with the CSRC on the in-principle approval for enhancements to the Stock Connect trading calendar to enable trading on all days when both the Mainland and Hong Kong markets are open.

The Court of First Instance dismissed a judicial review application brought against the SFC in relation to restriction notices issued during its investigation into a suspected "ramp-and-dump" scheme in order to freeze assets suspected to be connected with the scheme (Note 2). In another case, 13 suspects were charged with criminal offences at the Eastern Magistrates' Courts following the SFC's joint operation with the Hong Kong Police Force against a ramp-and-dump syndicate (Note 3).

Other highlights of the quarter included the publication of the SFC-HKMA annual joint survey on the sale of non-exchange traded investment products and the SFC's findings from a review of licensed corporations' compliance with regulatory requirements when onboarding clients and distributing or advising on investment products via online platforms. In addition, new regulatory requirements came into effect requiring large fund managers to incorporate climate-related risks into their governance, investment and risk management approaches as well as to make related disclosures.

The SFC launched its official WeChat account during the quarter and also began a publicity campaign to help the investing public better understand the investor identification regime, which will enhance its market surveillance function by identifying investors placing orders in Hong Kong's securities market. It also posted a list of licensed virtual asset trading platforms on its website to allow investors to find out whether a particular platform is licensed by the SFC.

Key figures for the quarter include:

• The number of licensees and registrants increased 1% quarter-on-quarter to 48,969, of which 3,274 were licensed corporations.
• The SFC vetted 29 new listing applications, including four from pre-profit biotech companies.
• The SFC authorised 37 unit trusts and mutual funds (including 19 Hong Kong-domiciled funds) and 103 unlisted structured investment products for public offering in Hong Kong. It registered 22 new open-ended fund companies.
• It commenced 53 in-depth inspections of licensed corporations to review their compliance with regulatory requirements.
• The SFC made 1,929 requests for trading and account records triggered by untoward price and turnover movements.
• It issued section 179 directions (Note 4) to gather additional information in 11 cases.
• Four licensed corporations and five individuals were disciplined, resulting in total fines of $20.1 million.

The report is available on the SFC website.