ENG-2019 — Page 105

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Financial and Monetary Affairs

At the end of 2019, there were 47,323 licensed corporations and individuals, including securities brokers, futures dealers, investment and corporate finance advisers and fund managers as well as their representatives, and 114 registered institutions, such as banks, engaging in regulated activities such as dealing in and advising on securities and futures.

There were also 51 SFC-authorised automated trading service providers. Most were overseas exchanges and clearing houses that provided electronic services to process transactions in securities and futures contracts and to clear OTC derivatives.

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

2017

2018

2019

Licensed entities

Of which:

44,050

46,254

47,323

Licensed corporations

2,660

2,905

3,084

Licensed individuals

41,390

43,349

44,239

Registered institutions

119

117

114

Recent Developments

During the year, the SFC implemented new guidelines on risk management standards for brokers engaged in securities margin financing activities.

Enhancements to the investor compensation regime, which include raising the compensation limit from $150,000 to $500,000 per investor per default and covering northbound trading under Stock Connect, will take effect in January 2020.

The SFC announced in November 2019 a new voluntary regulatory framework for virtual asset trading platforms. Platforms which operate in Hong Kong and offer trading of at least one security token' may apply for SFC licensing. The SFC will grant licences to only platform operators that are able to meet robust regulatory standards. These standards are comparable to those which apply to licensed securities brokers and automated trading venues, but also incorporate additional requirements to address risks specific to virtual assets. The SFC also issued a statement warning investors about risks associated with virtual asset futures contracts, which are largely unregulated, highly leveraged and subject to extreme price volatility.

On the enforcement front, the SFC takes disciplinary action to maintain market integrity. Of the SFC licensees disciplined in the year, 20 were individuals and 26 were corporations. Fines totalled $1,657 million.

Listing Regime for Emerging and Innovative Sectors

The SEHK's listing rules, revised in 2018, facilitates the listing of companies from emerging and innovative sectors, subject to safeguards. The expanded listing regime allows the Main Board listing of pre-revenue and pre-profit biotechnology companies, high-growth and innovative

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Security tokens are virtual assets which fall within the definition of 'securities' under the SFO.

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