SFC issues quarterly report

24 Feb 2022

The Securities and Futures Commission (SFC) today published its latest Quarterly Report which summarises key developments from October to December 2021.

During the quarter, the SFC released consultation conclusions on conduct requirements for capital market transactions in Hong Kong to clarify the roles of intermediaries and set out the standards expected of them in bookbuilding, pricing, allocation and placing activities to enhance their transparency and promote a fair and orderly market (Note 1). It also concluded a consultation on amendments to the Code on Pooled Retirement Funds to strengthen investor protection and ensure the regulations for these funds are up-to-date and fit for purpose (Note 2).

The SFC conducted a simultaneous joint operation in December with the Hong Kong Police Force, the Monetary Authority of Singapore and the Singapore Police Force against an active and sophisticated syndicate suspected of operating cross-border ramp-and-dump manipulation schemes in Hong Kong and Singapore (Note 3). Also in December, the SFC and the China Securities Regulatory Commission held their 12th regular high-level meeting on enforcement cooperation to exchange views and discuss ways to strengthen collaboration.

As part of the SFC’s ongoing efforts to promote sustainability and tackle climate change, the Green and Sustainable Finance Cross-Agency Steering Group, co-chaired by the SFC and the Hong Kong Monetary Authority (HKMA), met during the quarter to discuss carbon market development and climate-related disclosure, data and taxonomies. The SFC’s Chief Executive Officer, Mr Ashley Alder, participated in the 26th UN Climate Change Conference of the Parties in Glasgow, Scotland where he spoke about corporate sustainability disclosure and the significance of the new International Sustainability Standards Board.

In November, more than 1,100 industry professionals took part in the fourth SFC Regulatory Forum, where senior regulators and industry leaders shared insights on Hong Kong’s future development as China’s international financial centre and other regulatory and topical issues. Also during the quarter, the SFC published a report which set out regulatory standards and measures for preventing and responding to disruptions and managing the risks of remote working as well as a report on its first joint annual survey with the HKMA on the sale of non-exchange traded investment products.

Key figures for the quarter include:

• The number of licensees and registrants totalled 48,657, of which 3,210 were licensed corporations.
• The SFC vetted 40 new listing applications, including two from companies with weighted voting rights structures and one from a pre-profit biotech company.
• The SFC authorised 45 unit trusts and mutual funds (including 27 Hong Kong-domiciled funds), four mandatory provident fund pooled investment funds and 48 unlisted structured investment products for public offering in Hong Kong. It registered 21 new open-ended fund companies.
• 61 in-depth inspections of licensed corporations were conducted to review their compliance with regulatory requirements.  
• The SFC made 1,284 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 14 cases and wrote to detail its concerns in one case as part of its review of corporate disclosures.  
• Five licensed corporations and nine individuals were disciplined, resulting in total fines of over $23 million.
  
  

The report is available on the SFC website.

End

Notes:

1. The new requirements will become effective on 5 August 2022.
2. The amendments took effect on 1 December 2021. A 12-month transitional period will generally be provided for existing pooled retirement funds and their underlying investment portfolios and key operators.
3. Ramp-and-dump schemes are a form of market manipulation where fraudsters use different means to “ramp” up the share price of a listed company and then “dump” the shares to other investors at an artificially high price.
4. Section 179 of the Securities and Futures Ordinance gives the SFC the power to compel the production of records and documents from persons related to a listed company.