When an order is routed to SEHK through a chain of RRIs, does every intermediary in that chain need to prepare and assign a BCAN to the same order? Will there be many BCANs tagged to one order when it is routed through the chain of RRIs?
No, only one BCAN shall be tagged to an order and transmitted along the intermediating chain of brokers to SEHK. The last RRI in the chain (starting with the EP and working backwards) shall be the party responsible for assigning the BCAN, collecting CID, preparing and submitting the BCAN-CID Mapping File to SEHK. Other RRIs along the intermediating chain should ensure that the order it receives and passes along has the BCAN (which is assigned by the last RRI in the chain) tagged to it. Please see below as an example.
If an EP receives securities orders from multiple RRIs, each of which maintains only one securities trading account with the EP but has a number of underlying clients who will place securities orders via each RRI’s single securities trading account, are the orders placed through the same RRI securities trading account tagged with the same BCAN?
No. The last RRI in the chain (starting with the EP and working backwards) assigns BCAN to its Relevant Client, who is the first non-RRI client in the chain. Orders placed through different client securities trading accounts with this RRI should be tagged with a different BCAN. When the RRI routes these orders from multiple clients to an EP or through a chain of intermediating RRIs to SEHK, the BCAN of the client orders should not be changed. Please see below an example.
When an RRI (RRI B) receives a securities order from another RRI (RRI A) but RRI A does not include a BCAN in the order, should RRI B tag a BCAN to the order before passing the order to SEHK for execution?
No. When RRI B receives an order from RRI A, RRI B is not the last RRI in an intermediating chain of brokers and is therefore not responsible for assigning a BCAN to the order as per the new paragraph 5.6(d) of the Code of Conduct. Its obligation is to ensure that the order it receives and passes along has a BCAN (which is assigned by the last RRI in the chain) tagged to it.
When an RRI (RRI B) receives a securities order from a non-RRI intermediary (e.g. an overseas broker) but the order is not tagged with a BCAN, should RRI B tag a BCAN to the order?
RRI B should tag a BCAN to the order coming through the securities account of the overseas broker if the order received by RRI B does not carry a BCAN, as illustrated in the order of the orange arrows below.
In some cases (as illustrated in the order of the blue arrows below), RRI B may receive an order from a non-RRI Relevant Client (e.g. an overseas broker) and the order has already been tagged with a BCAN. In that case, RRI B’s obligation is to ensure that the order it receives and passes along has the BCAN (which is assigned by the last RRI in the chain, i.e. RRI A) tagged to it. RRI A (as shown in the diagram below) should ensure that the order information includes its CE number as well as a BCAN assigned to Client C. In addition, in line with new paragraph 5.6(g) of the Code of Conduct, RRI A should take reasonable steps to ensure that the BCAN assigned and tagged to the order would be transmitted by the receiving person (i.e. the overseas broker in this example) to the next RRI (i.e. RRI B) in the intermediating chain. RRI B in question is not expected to look into whether the clients of its direct client (in this case the overseas broker’s clients) are RRIs or not.
Last update: 17 Jun 2022