ENG-2011 — Page 128

92 | Financial and Monetary Affairs

At the end of 2011, there were 39 296 licensed persons, including securities. brokerage firms, futures dealers and securities margin financiers, as well as their representatives, and 110 registered institutions, such as banks, engaging in regulated activities such as dealing and advising on securities and futures.

Statistics on licensing for SFC-regulated activities (year-end)

2009

2010

2011

Licensed persons

35 953

38 022

39 296

Of which: Licensed corporations

1 608

1 731

1 804

Licensed individuals

34 345

36 291

37 492

Registered institutions

107

109

110

Market Misconduct

In 2011, the SFC continued to prosecute market misconduct offences in criminal courts. Four individuals were prosecuted for market manipulation in derivative warrants under the SFO and one of the manipulators was sentenced to five months' imprisonment. The SFC also obtained orders in the High Court to disqualify five directors, of whom three were directors of a listed company who were involved in misusing about 25 per cent of the company's total assets. An alternate non- executive director found guilty of misconduct was also disqualified in the first case of its kind tried in the High Court. The SFC also continued seeking court orders to freeze proceeds obtained through suspected market misconduct.

The Market Misconduct Tribunal (MMT), established in 2003, conducts civil proceedings and hears cases referred to it by the Financial Secretary following investigation by the SFC. So far, the MMT has concluded six cases, and 18 persons or companies were found to have engaged in market misconduct. They were ordered by the MMT to disgorge profits arising from the misconduct and to pay the costs of investigation and proceedings, and were disqualified from being company directors, where appropriate.

Recent Developments

The SFC authorised the first RMB-denominated REIT in April 2011. The REIT was also the first RMB-denominated equity product traded outside the Mainland, marking a significant milestone in Hong Kong's development as an offshore RMB centre.

The investor protection measures introduced in June 2010 to enhance disclosure and the selling practices of investment products were implemented during the year. Since June 2011, all SFC-authorised funds and investment-linked assurance schemes marketed to the public were required to provide product key fact statements (KFS) as part of their offering documents. The KFS, in the form of a summary of key features and risks of an investment product, are spelled out in plain language, to enable investors to better understanding the product.

Effective in September 2011, licensed and registered persons under the Code of Conduct for Persons Licensed by or Registered with the SFC are required to ascertain