Hong Kong stock market watchdog to tighten investor identification, over-the-counter trades reporting regimes to close loopholes for misconduct
- From next year, brokerages will be required to submit clients’ names and identity document information to HKEX when placing orders to buy or sell shares
- The new system will allow regulators to pick out investors who use different brokerage accounts to apply for the same initial public offering
The city’s market watchdog, the Securities and Futures Commission (SFC), will introduce a new investor identification system in the second half of next year. It will also require reporting of over-the-counter (OTC) securities transactions, starting from the first half of 2023.
“The new regimes will enable effective and timely surveillance of the Hong Kong securities market,” said Rico Leung, the SFC’s executive director of supervision of markets, in a statement on Tuesday.
The new system, together with the Fast Interface for New Issuance (Fini) digital application and settlement platform to be launched in the second quarter of next year, will allow regulators to pick out investors who use different brokerage accounts to apply for the same initial public offering.
This will effectively pull the rug from under some retail investors – particularly punters from mainland China – who are making use of the city’s disclosure and identification loopholes to gain an unfair advantage in their bids for stock allotments, seen as sure-fire routes to quick profits.
