Hong Kong – SFC Issues Consultation Conclusions on Proposed Guidelines for Securities Margin Financing Activities

On 4 April 2019, the Securities and Futures Commission (“SFC”) issued its conclusions to its consultation (“Consultation Conclusions”) from August 2018 which proposed new Guidelines for Securities Margin Financing Activities (the “Guidelines”). The Guidelines aim to clarify, codify and standardise the risk management practices expected of brokers conducting securities margin financing (“SMF”) activities. This applies to both (i) persons licensed for Type 1 (dealing in securities) activity who provide financial accommodation to their clients in order to facilitate acquisitions or holdings of listed securities by the persons for their clients; and (ii) persons licensed for Type 8 (securities margin financing) activity (together, “SMF brokers”). 

The SFC has decided to proceed with the implementation of the Guidelines, which will take effect on 4 October 2019. The Guidelines generally follow the draft provided in the initial Consultation, with some revisions and further guidance provided to the industry following feedback.

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