Consultation Conclusions on Proposed Amendments to Enforcement-Related Provisions of Hong Kong's SFO
On 8 August 2023, the Securities and Futures Commission of Hong Kong ("SFC") published consultation conclusions on proposed amendments to enforcement-related provisions of the Securities and Futures Ordinance ("SFO").
The SFC will proceed with the proposal to amend the insider dealing provisions of the SFO, and there will be opportunity for the industry to review the draft amendments during the legislative process. The effect of this proposal is to broaden the scope of the insider dealing provisions of the SFO to cover: (i) insider dealing perpetrated in Hong Kong with respect to overseas-listed securities or their derivatives; and (ii) insider dealing perpetrated outside of Hong Kong with respect to Hong Kong-listed securities or their derivatives. This proposal will align the territorial scope of Hong Kong's insider dealing laws with those of other major common law jurisdictions, including Australia, Singapore and the United Kingdom, and other market misconduct provisions of the SFO, such as false trading, price rigging and stock manipulation.
The SFC also consulted the industry on two other proposed amendments, namely: (i) amendments to section 213 of the SFO to expand the basis on which the SFC may apply for remedial and other orders against a regulated person; and (ii) amendments to the professional investor exemption in section 103(3)(k) of the SFO to restore such exemption to the original point in time when the advertising materials are issued, by exempting from the SFC's authorization requirement those advertisements of investment products which are issued to professional investors only. Recognizing the complex implementation issues raised by the respondents to the consultation, the SFC concluded that the preferred course is to put on hold these two proposed amendments.
The SFC will continue to monitor market developments and consider a full range of options to provide adequate protection to investors, which may include strengthening the SFC's disciplinary powers and other parts of the legal and regulatory framework.
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