The Securities and Futures Commission (SFC)  published its latest Quarterly Report to provide operational and financial highlights for the quarter from July to September 2023.

On asset management, exchange-traded funds (ETFs) were a bright spot. Strong net inflows of $16.2 billion to Hong Kong-listed ETFs were recorded, while their average daily turnover (ADT) saw healthy growth (12%) from a quarter ago to $14.8 billion. A total of 175 SFC-authorised ETFs had a market capitalisation of $369.5 billion as at end-September.

Turnover of Mainland-Hong Kong ETF Connect also reported robust growth, as southbound trading recorded ADT of $3.6 billion and accounted for a 15% share of the ADT for eligible Hong Kong ETFs in the quarter. This share of eligible ETFs’ ADT doubled on a six-month basis (ie, from end-March).

Apart from strong ETF data, the number of open-ended fund companies (OFCs) saw encouraging growth of 87% year-on-year to 187, as the SFC registered 36 new OFCs in the quarter.

Hong Kong-domiciled funds recorded net inflows ($11.7 billion) for another quarter. The growth of SFC-authorised ESG funds also persisted, with their total number and AUM up 7.2% and 1.8% respectively from the prior quarter.

For the listing market, the SFC processed 39 new listing applications in the quarter, including four from pre-profit biotech companies. To further deepen mutual market access, regulators agreed to enhance Stock Connect by introducing block trading, as well as Wealth Management Connect by expanding the range of products, investors and eligible participants.

To improve Hong Kong market liquidity, the SFC participated in the work of Task Force on Enhancing Stock Market Liquidity during the quarter, which led to the submission of a report to the Financial Secretary in October and implementation of certain measures as announced in the Chief Executive’s Policy Address. The SFC will work with Hong Kong Exchanges and Clearing Limited on the medium to long-term issues identified.

Furthermore, the SFC witnessed growth in the number of licence applications received, up 13% from the quarter before and 6% from a year ago. It also granted 33 corporate licences during the quarter, mainly for asset management (Type 9) and advising on securities (Type 4). To reinforce market resilience, the SFC set out a comprehensive risk management framework for futures brokers after concluding its consultation (Note 1).

On the virtual assets front, the SFC stepped up information dissemination on virtual asset trading platforms (VATPs) by publishing several VATP lists online, including a list of applicants. In response to suspected fraudulent schemes, the SFC also issued a dedicated list of suspicious VATPs, which currently includes nine names (Note 2).

The quarterly report is available on the SFC website.

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Notes:

1. The guidelines will become effective on 25 February 2024.
2. The SFC maintains a dedicated list of suspicious VATPs on its website to enhance investors’ awareness and help them identify suspicious VATPs doing business in Hong Kong.