“The launch of the investor identification regime is in line with international practices. Regulators will have real-time information about investor identity for securities orders. This will no doubt strengthen our market surveillance capability, uphold market integrity and bolster investor confidence.”
The Securities and Futures Commission (SFC) of Hong Kong has reminded the investing public about the incoming HK investor identification regime, which will commence on 20 March 2023.
The SFC asked investors to respond to their intermediaries’ requests for consent to transfer their client identification information to the regulatory authority and to the stock exchange.
Upon the launch of the HKIDR, relevant licensed corporations and registered institutions are required to tag Broker-to-Client Assigned Numbers (BCANs) to securities orders to be executed on SEHK and to off-exchange trades reportable to SEHK, and submit to the SFC and SEHK their clients’ names and identity information.
Those who do not comply will be unable to buy securities
The new investor ID regime and Hong Kong’s data privacy laws, including the Personal Data (Privacy) Ordinance, require intermediaries to obtain individual clients’ express consent to submit their identification information to the SFC and the Stock Exchange of Hong Kong Limited (SEHK).
According to the regulator, the information is encrypted in the data repository and accessible only to authorized personnel of the SFC and SEHK.
The agency further added that individual investors who have not provided this consent will only be able to sell their securities holdings on SEHK but not buy additional securities.
Julia Leung, Chief Executive Officer at the SFC, commented: “The launch of the investor identification regime is in line with international practices. Regulators will have real-time information about investor identity for securities orders. This will no doubt strengthen our market surveillance capability, uphold market integrity and bolster investor confidence.”
Licensed firms will have to assign Broker-Client number to each client
It was in August 2021 that the SFC issued consultation conclusions on proposals to introduce an investor identification regime (HKIDR) at trading level for the securities market in Hong Kong and an over-the-counter securities transaction reporting regime (OTCR) for shares listed on the Stock Exchange of Hong Kong (SEHK).
Under the HKIDR, relevant licensed corporations and registered institutions will have to assign a Broker-Client Assigned Number (BCAN) to each of their clients and tag the BCAN to their clients’ securities orders. They will also have to submit to SEHK’s data repository the identification data (ie, names and identity document information) of clients placing securities orders on SEHK or who conduct off-exchange trades reportable to SEHK.
Separately, information about OTC securities transactions in ordinary shares and real estate investment trusts listed on SEHK as well as deposits and withdrawals of physical share certificates will be reported to the SFC under the OTCR.