ENG-2015 — Page 107

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Financial and Monetary Affairs

Statistics on Licensing for SFC-regulated Activities (year end)

2013

2014

2015

Licensed entities

Of which:

38,985

39,621

41,347

Licensed corporations

1,956

2,034

2,172

Licensed individual

37,029

37,587

39,175

Registered institutions

121

118

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In March, the SFC launched a consultation on proposed Principles of Responsible Ownership, which provide guidance on how investors should fulfil their ownership responsibilities in relation to their investment in a Hong Kong-listed company. In May, the SFC published consultation conclusions on proposals to enhance and unify the regulatory regime for alternative liquidity pools1o. The new regime came into effect on 1 December. In June, the commission published consultation conclusions on proposed amendments to the SFO that involved helping overseas regulators in certain situations. These amendments came into effect on 13 November.

To improve monitoring and enhance market transparency, the SFC began a consultation in November on expanding the scope of short position reporting to cover all securities that can be short sold under SEHK rules. The commission also ended a Further Consultation on the Client Agreement Requirements, which would require a new clause11 to be incorporated into client agreements under the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.

On the enforcement front, the SFC disciplined licensees, including 20 individuals and 12 corporations, with fines totalling $70.9 million. Separately, 13 individuals and four corporations were successfully prosecuted for criminal offences that included unlicensed activities and market manipulation.

During the year, the SFC obtained a number of compensation orders in favour of investors: it resolved proceedings against a collapsed hedge fund to recover $191 million in assets for about 340 overseas investors; and received interim orders against an unlicensed investment firm, including freezing its $23.5 million of assets. The court also ordered a listed company to be wound up, marking the first time the commission obtained an order to wind up a listed company to protect investors. In addition, market Misconduct Tribunal proceedings were commenced against a listed company and its chairman and chief executive officer in the first case related to disclosure obligations.

To reduce the industry's compliance burden and protect the environment, the SFC ceased issuing printed licences to individual licensees from November.

10

Also known as alternative trading systems or dark pools.

11

This enables an investor to claim for damages under the client agreement where the regulated intermediary solicits the sale of or recommends a financial product which is not reasonably suitable.

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