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Alternative Market Briefing

Hong Kong seeks to add electronic trading regulations

Wednesday, August 29, 2012

Bailey McCann, Opalesque New York: Hong Kong's Securities and Futures Commission (SFC) issued a consultation paper on the regulation of electronic trading and has requested comments by September 24, 2012. According to the regulator, the purpose of the paper and proposed new regulations is to create a more comprehensive framework around electronic trading in Hong Kong. The SFC has been looking at ways to respond to growing activity in the Hong Kong market, some of the issues outlined in this paper including regulations surrounding high frequency trading were discussed by Hong Kong market participants at our recent Opalesque Hong Kong Roundtable.

According to a client alert from Hong Kong-based legal firm Deacons, the new requirements would apply to all banks, fund houses and brokers which use electronic trading systems or provide electronic trading systems to clients. Key new requirements outlined in the paper include making intermediaries responsible for orders and maintaining audit logs of those orders for at least two years. Risk management procedures and intervention procedures must also be in place to stop activities in the event of manipulative activities.

The paper comes on the......................

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