The emergence of virtual asset trading platforms is among the factors cited by the Hong Kong Securities and Futures Commission for launching a consultation on tightening up rules around the names businesses can use, in order to give greater investor protection.
The SFC said the consultation aimed at restricting unregulated entities from improperly adopting names that may give the public a false impression that they are regulated entities.
It is proposing to expand the existing list of restricted titles under the Securities and Futures Ordinance (SFO). Per Section 34 of the SFO, there is a list of names that cannot be adopted except with the SFC's approval (eg, "stock exchange" and "commodity exchange"). The main aim is to ensure that businesses and operations do not adopt names that may mislead the public into believing they are regulated by the SFC when in fact they are not.
Additionally, the SFC is proposing to include similar restrictions under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). VATPs that carry on business in Hong Kong, or actively market their services to Hong Kong investors, are required to be licensed and regulated by the SFC. The SFO regulates VATPs providing services for virtual assets that also constitute securities or futures contracts, while the AMLO regulates VATPs offering services for virtual assets that do not constitute securities or futures contracts.
The consultation is suggesting the restrictions be extended to commonly used terms that are similar in meaning to “exchange” (eg, “trading platform”) and those that refer to some of the financial products and platforms regulated under the SFO (eg, “virtual assets” and “clearing facilities”). The proposal will also cover titles that may imply an association with established exchanges, VATPs and other similar entities.
The deadline for written comments is 11 August, and can be made by the website (www.sfc.hk), by email to [email protected], by post or by fax.
