Response to the Consultation on proposals to (1) implement an investor identification regime at trading level for the securities market in Hong Kong and (2) introduce an over-the-counter securities transactions reporting regime for shares listed on the Stock Exchange of Hong Kong
Release Date: 2021-03-04
Securities and Futures Commission
18 Westlands Road, Quarry Bay, Hong Kong
54/F, One Island East
Online Submission
https://www.sfc.hk/edistributionWeb/gateway/TC/consultation/
February 25, 2021
To: Securities and Futures Commission
Dear Sir/Madam,
Question 1: Do you have any comments on the coverage of the proposed regime? Apart from the odd lot and special lot market, are there any other types of trades that should be excluded? Please explain your view.
Our association agrees with the related opinions. However, regarding monthly stock investment plans, the consultation paper does not specify if they will be regulated. Will the paper reference paragraph 23 or the suggestions in paragraph 38?
Question 2: Do you have any comments or suggestions on the proposed operational arrangements for the assignment and submission of the BCAN? Do you have any comments on whether the same or a different BCAN should be assigned to the same client under the NB Investor ID Regime and the proposed HK Investor ID Regime? Please explain your view.
Our association agrees with the related suggestions. However, for foreign brokers opening client trading accounts with Hong Kong brokers, will these foreign brokers and their clients need to implement the investor identification regime? If not, we believe (1) it would be unfair to Hong Kong brokers, and (2) it could lead clients participating in stock trading on the SEHK to open Hong Kong stock trading accounts with foreign brokers to avoid regulation. We request further clarification from your organization.
Question 3: Do you have any comments on the proposed data collection and submission of CID and the proposed requirement to keep the central data repository updated? Please explain your view.
Our association agrees with the related suggestions and believes they will enhance fairness in new stock subscriptions.
Question 4: Do you have any comments or suggestions on the proposed measures for Regulated Intermediaries’ compliance with relevant data privacy laws and in relation to data security, including the proposed arrangements concerning clients’ consent for the handling of their personal data? Please explain your view.
Our association agrees with the related suggestions. However, when the SFC obtains client data through the investor identification regime, intermediaries should be notified.
Question 5: Do you have any comments on the proposed amendments to the SFC Code of Conduct for the purpose of implementing the HK Investor ID Regime? Please explain your view.
Our association agrees with the related suggestions.
Question 6: Do you have any comments on the proposed implementation timeline for the HK Investor ID Regime? Please explain your view.
Our association agrees with the related suggestions.
Question 7: Do you have any comments on the proposed OTC Securities Transactions Reporting Regime? Please explain your view.
Regarding share placements, licensed brokers may (1) directly deposit shares into the client's account with the broker, or (2) issue shares in physical form to clients. However, the consultation paper does not address whether this will be handled as described in paragraph 84.
Question 8: Do you have any comments on the proposed OTC Securities Transactions Reporting Regime submission system? Please explain your view.
Our association agrees with the related suggestions.
Question 9: Do you have any comments on the proposed arrangements concerning clients’ consent under OTC Securities Transactions Reporting Regime? Please explain your view.
Our association agrees with the related suggestions.
Question 10: Do you have any comments on the proposed amendments to SFC Code of Conduct? Please explain your view.
Our association agrees with the related suggestions.
Question 11: Do you have any comments on the proposed implementation timeline for the OTC Securities Transactions Reporting Regime? Please explain your view.
Our association agrees with the related suggestions.
For any inquiries regarding this letter, please feel free to contact Mr. Mofiz Chan, the Director of Industrial Relations Department.
Yours sincerely,
The Council of Hong Kong Securities and Futures Professionals Association
18 Westlands Road, Quarry Bay, Hong Kong
54/F, One Island East
Online Submission
https://www.sfc.hk/edistributionWeb/gateway/TC/consultation/
February 25, 2021
To: Securities and Futures Commission
Dear Sir/Madam,
Question 1: Do you have any comments on the coverage of the proposed regime? Apart from the odd lot and special lot market, are there any other types of trades that should be excluded? Please explain your view.
Our association agrees with the related opinions. However, regarding monthly stock investment plans, the consultation paper does not specify if they will be regulated. Will the paper reference paragraph 23 or the suggestions in paragraph 38?
Question 2: Do you have any comments or suggestions on the proposed operational arrangements for the assignment and submission of the BCAN? Do you have any comments on whether the same or a different BCAN should be assigned to the same client under the NB Investor ID Regime and the proposed HK Investor ID Regime? Please explain your view.
Our association agrees with the related suggestions. However, for foreign brokers opening client trading accounts with Hong Kong brokers, will these foreign brokers and their clients need to implement the investor identification regime? If not, we believe (1) it would be unfair to Hong Kong brokers, and (2) it could lead clients participating in stock trading on the SEHK to open Hong Kong stock trading accounts with foreign brokers to avoid regulation. We request further clarification from your organization.
Question 3: Do you have any comments on the proposed data collection and submission of CID and the proposed requirement to keep the central data repository updated? Please explain your view.
Our association agrees with the related suggestions and believes they will enhance fairness in new stock subscriptions.
Question 4: Do you have any comments or suggestions on the proposed measures for Regulated Intermediaries’ compliance with relevant data privacy laws and in relation to data security, including the proposed arrangements concerning clients’ consent for the handling of their personal data? Please explain your view.
Our association agrees with the related suggestions. However, when the SFC obtains client data through the investor identification regime, intermediaries should be notified.
Question 5: Do you have any comments on the proposed amendments to the SFC Code of Conduct for the purpose of implementing the HK Investor ID Regime? Please explain your view.
Our association agrees with the related suggestions.
Question 6: Do you have any comments on the proposed implementation timeline for the HK Investor ID Regime? Please explain your view.
Our association agrees with the related suggestions.
Question 7: Do you have any comments on the proposed OTC Securities Transactions Reporting Regime? Please explain your view.
Regarding share placements, licensed brokers may (1) directly deposit shares into the client's account with the broker, or (2) issue shares in physical form to clients. However, the consultation paper does not address whether this will be handled as described in paragraph 84.
Question 8: Do you have any comments on the proposed OTC Securities Transactions Reporting Regime submission system? Please explain your view.
Our association agrees with the related suggestions.
Question 9: Do you have any comments on the proposed arrangements concerning clients’ consent under OTC Securities Transactions Reporting Regime? Please explain your view.
Our association agrees with the related suggestions.
Question 10: Do you have any comments on the proposed amendments to SFC Code of Conduct? Please explain your view.
Our association agrees with the related suggestions.
Question 11: Do you have any comments on the proposed implementation timeline for the OTC Securities Transactions Reporting Regime? Please explain your view.
Our association agrees with the related suggestions.
For any inquiries regarding this letter, please feel free to contact Mr. Mofiz Chan, the Director of Industrial Relations Department.
Yours sincerely,
The Council of Hong Kong Securities and Futures Professionals Association