Table 1 Number of investment products authorized

 2010/11 2009/10 2008/09
Unit trusts and mutual funds 1,944 1,968 2,093
Investment-linked assurance schemes 248 239 235
Pooled retirement funds 35 34 35
Mandatory Provident Fund (MPF) master trust schemes 40 37 36
MPF pooled investment funds1 305 296 305
Others2 22 25 129
Total 2,594 2,599 2,833
1 121 funds included in this category were offered both as retail unit trusts as well as pooled investment funds for MPF purposes.
2 Other schemes comprised 14 paper gold schemes and eight REITs.
Table 2 Authorized unit trusts and mutual funds – by type

 Number % Total NAV1 (US$ million) %
Bond 327 18.45 360,944 30.38
Equity 1,089 61.46 571,859 48.13
Diversified 78 4.40 43,005 3.62
Money market 44 2.48 86,854 7.31
Fund of funds 80 4.52 7,898 0.66
Index 99 5.59 106,192 8.94
Guaranteed 36 2.03 1,287 0.11
Hedge 11 0.62 920 0.08
Other specialised2 8 0.45 9,106 0.77

1,772 100.00 1,188,065 100.00
Umbrella structures 172


No. of authorized funds 1,944


1 NAV as at 31 December 2010.
2 Includes Futures and Options Funds and Leveraged Funds.
Table 3 Authorized unit trusts and mutual funds – by origin

 Umbrella funds Sub-funds Single funds Total % Total NAV1 (US$ million) %
Hong Kong 35 104 61 200 10.29 36,821 3.10
Luxembourg 57 1,101 3 1,161 59.72 759,667 63.94
Ireland 34 253 2 289 14.87 259,299 21.83
Guernsey 2 1 0 3 0.16 0 0.00
United Kingdom 5 48 5 58 2.98 50,133 4.22
Other Europe 0 0 15 15 0.77 896 0.08
Bermuda 3 16 3 22 1.13 5,244 0.44
British Virgin Islands 2 4 0 6 0.31 22 0.00
Cayman Islands 34 118 31 183 9.41 11,341 0.95
Others 0 0 7 7 0.36 64,642 5.44
No. of authorized funds 172 1,645 127 1,944 100 1,188,065 100
1 NAV as at 31 December 2010 (excluding “umbrella funds”).
Table 4 Unlisted retail structured products: authorization of offer and marketing documents

 2010/11 2009/10 2008/09
Authorizations granted under section 105 of the SFO 84 24 61
Authorizations granted to register prospectuses under the Companies Ordinance 0 0 31
Table 5 Renminbi bonds: authorization of offer and marketing documents

 2010/11 2009/10 2008/09
Authorizations granted under section 105 of the SFO 41 4 42
Authorizations granted to register prospectuses under the Companies Ordinance 23 34 35
1 Include one renminbi bond offering with a retail issue size of RMB4.0 billion.
2 Include one renminbi bond offering with a retail issue size of RMB1.5 billion.
3 Two renminbi bond offerings with an aggregate retail issue size of RMB3.0 billion.
4 Three renminbi bond offerings with an aggregate retail issue size of RMB5.974 billion.
5 Three renminbi bond offerings with an aggregate retail issue size of RMB4.5 billion.
Table 6 Takeovers activities

 2010/11 2009/10 2008/09
Codes on Takeovers and Mergers and Share Repurchases


General and partial offers under the Takeovers Code 29 37 27
Privatisations 6 9 6
Whitewash waiver applications 30 41 34
Other applications under the Takeovers Code 224 254 190
Off-market and general offer repurchases 2 9 7
Other applications under the Share Repurchases Code 13 13 2
Total 304 363 266
Takeovers Bulletins 4 4 4
Executive Statements


Sanctions imposed with parties’ agreement1 2 1 0
Takeovers and Mergers Panel
Meetings for review of the Takeovers and Share Repurchases Codes 1 1 5
Hearings before the Panel (disciplinary and non-disciplinary) 2 3 3
Statements issued by the Panel2 2 1 3
1 Pursuant to section 12.3 of the Introduction to the Codes on Takeovers and Mergers and Share Repurchases.
2 Pursuant to section 16.1 of the Introduction to the Codes on Takeovers and Mergers and Share Repurchases.
Table 7 New listing applications

 2010/11 2009/10 2008/09
Total listing applications received 201 132 87
Transfer from GEM to Main Board 17 6 15
Listed 117 79 46
Cases lapsed / withdrawn / rejected1 11 13 24
1 As at 31 March.
Table 8 Stock market

 2010/11 Change 2009/10 Change 2008/09
Number of listed companies on the Stock Exchange 1,426 +7% 1,332 +5% 1,266
Main Board   1,258 +9% 1,158 +6% 1,092
Growth Enterprise Market   168 -3% 174 0% 174






Market capitalisation ($ billion) 21,396.9 +19% 18,055.6 +78% 10,127.7
Main Board   21,259.1 +19% 17,920.9 +78% 10,080.8
Growth Enterprise Market   137.8 +2% 134.7 +187% 47.0
Average daily market turnover ($ million) 71,862.9 +7% 67,138.1 +14% 58,832.1
Main Board   71,363.8 +7% 66,725.6 +14% 58,689.7
Growth Enterprise Market   499.1 +21% 412.5 +190% 142.4
Table 9 Statistical information and financial position of the Hong Kong securities industry1

 As at 31.12.2010 As at 31.12.2009 As at 31.12.2008
Total number of securities dealers & securities margin financiers 831 769 741
Total number of active cash clients2 1,113,657 957,651 918,750
Total number of active margin clients2 132,101 138,772 113,823
Total number of active clients (+14%) 1,245,758 1,096,423 1,032,573
Balance sheet ($ million) ($ million) ($ million)
Cash in hand and at bank3 292,827 276,962 251,982
Amounts receivable from margin clients4 58,468 40,160 17,217
Amounts receivable from clients and
  other dealers arising from dealing in securities		 138,422 120,754 86,369
Proprietary positions 173,873 143,467 94,003
Other assets 147,754 137,182 141,203
Total assets (+13%) 811,344 718,525 590,774

As at 31.12.2010 As at 31.12.2009 As at 31.12.2008
Amounts payable to clients and


 other dealers arising from dealing in securities 287,645 263,372 211,565
Total borrowings from financial institutions 71,558 48,572 37,015
Short positions held for own account5 107,211 36,891 11,186
Other liabilities5 126,899 177,965 156,661
Total shareholders’ funds 218,031 191,725 174,347
Total liabilities and shareholders’ funds (+13%) 811,344 718,525 590,774
Profit and loss 12 months to 31.12.2010 ($ million) 12 months to 31.12.2009 ($ million) 12 months to 31.12.2008 ($ million)
Total value of transactions6 54,372,754 46,347,239 53,923,632
Net securities commission income 31,079 31,676 40,120
Gross interest income 5,280 3,979 9,586
Other income7 82,365 62,841 59,188
Total operating income (+21%) 118,724 98,496 108,894
Total overheads and interest expense 102,224 90,164 87,707
Total operating profit (+98%) 16,500 8,332 21,187
Net profit on proprietary trading 10,606 12,905 5,860
Net profit for the period (+28%) 27,106 21,237 27,047
Remarks:
1 Data were extracted from the monthly Financial Returns submitted in accordance with the Securities and Futures (Financial Resources) Rules by licensed corporations licensed for dealing in securities or securities margin financing. Figures reported by an overseas incorporated licensed corporation that carries out its principal business activities outside Hong Kong and operates in Hong Kong as a branch office were excluded from these computations.
2 Active clients are clients for whom the licensed corporation is required to prepare and deliver monthly statements of account in respect of the relevant reporting month in accordance with the Securities and Futures (Contract Notes, Statements of Account and Receipts) Rules.
3 Cash in hand and at bank includes trust monies held on behalf of clients totalled $119,475 million (31.12.2009: $114,352 million).
4 Average collateral coverage (the number of times the aggregate market value of securities collateral deposited by clients covers the amounts receivable from margin clients on a given date on an industry-wide basis):
As at 31.12.2010 As at 31.12.2009
4.7 5.2
5 The increase of $70 billion in short positions held for own account from 2009 was mainly due to a reporting reclassification of other liabilities by a securities dealer.
6 The total value of transactions includes trading in equities, bonds and other securities in Hong Kong and overseas.
7 Other income comprises fund management income, corporate finance income, inter-company management fee income and others.
Table 10 Number of licensees as at 31 March 2011 vs last year

 Corporations Representatives Responsible Officers Total Change

2011 2010 2011 2010 2011 2010 2011 2010
Stock Exchange participants 440 422 11,552 10,736 1,486 1,378 13,478 12,536 +8%
Futures Exchange participants 117 116 931 926 123 120 1,171 1,162 +1%
Stock Exchange and
Futures Exchange participants		 63 56 3,447 2,852 360 291 3,870 3,199 +21%
Non-participants 1,132 1,037 16,074 16,016 2,854 2,631 20,060 19,684 +2%
Total 1,752 1,631 32,004 30,530 4,823 4,420 38,579 36,581 +5%
Table 11 Breaches by licensed corporations noted during inspections
Nature of Breaches 2010/11 2009/10 2008/09
Failure to comply with Financial Resources Rules 14 12 25
Failure to safekeep client securities 10 7 16
Failure to maintain proper books and records 6 15 13
Failure to safekeep client money 10 21 19
Unlicensed dealing and other registration issues 2 6 0
Breach of licensing condition 2 1 2
Breach of requirements of contract notes / statements of account / receipts 22 30 30
Failure to make filing / notification 1 1 3
Breach of margin requirements 3 5 2
Marketing malpractices 1 0 0
Illegal short selling of securities 0 2 1
Dealing malpractices 1 2 0
Breach of Code of Conduct for Persons Licensed by or
 Registered with the Securities and Futures Commission		 88 132 154
Breach of Corporate Finance Adviser Code of Conduct 10 16 1
Breach of Fund Manager Code of Conduct 24 12 12
Non-compliance with anti-money laundering guidelines 28 6 23
Breach of other rules and regulations of the Exchanges 20 15 2
Internal control weaknesses 121 107 188
Others 39 51 56
Total 402 441 547
Table 12 Successful prosecution – insider dealing *
Case Defendants Date of conviction Fine ($) / Penalty Investigation costs awarded ($)
1 CHAN Pak Hoe Pablo 5.8.2010 120,000 and 4 months’ imprisonment 44,478
* Cases where fines were below $10,000 are not shown here.
Table 13 Successful prosecutions – market manipulation
Case Defendants Date of conviction Fine ($) / Penalty Investigation costs awarded ($)
1 WONG Chung Shun, Johnson 22.4.2010 27,000 30,273
2 FU Kor Kuen, Patrick 7.5.2010 33 months’ imprisonment 694,498
3 LEE Shu Yuen, Francis 7.5.2010 36 months’ imprisonment 694,498
4 SZETO Kwok Kwan 13.5.2010 25,000 and 4 weeks’ imprisonment suspended for 12 months 31,569
5 NG Kwok Leung 27.5.2010 240 hours’ community services 69,268
6 LEUNG Kin Bon 31.5.2010 30,000 and 4 weeks’ imprisonment suspended for 12 months 29,700
7 TSUI Hon Wai 10.6.2010 120 hours’ community services 60,206
8 CHIU Yat Man 2.12.2010 120 hours’ community services 21,988
9 PAN Ming 1.3.2011 immediate 5 months’ imprisonment 69,268
10 FONG Ka Lai 24.3.2011 40,000 and 1 month’s imprisonment suspended for 12 months 27,444
11 YU Yau Ki, Tony 24.3.2011 4 weeks’ imprisonment to run concurrently suspended for 18 months 20,609
Total: 11 entities
122,000 1,749,321
Table 14 Successful prosecution – unlicensed / unauthorized activities*
Case Defendants Date of conviction Fine ($) Investigation costs awarded ($)
1 Unlicensed investment adviser
KWOK Sau Ping		 6.1.2011 10,000 80,0001
* Cases where fines were below $10,000 are not shown here.
1 $80,000 is the investigation costs awarded for the prosecution of this offence and another unrelated offence. There was no apportionment of costs between them.
Table 15 Successful prosecutions – disclosure of interests*
Case Defendants Date of conviction Fine ($) Investigation costs awarded ($)
1 LEE Jong Dae 22.7.2010 12,000 6,298
2 YEUNG Ka Sing, Carson 22.7.2010 16,000 11,088
3 CHEN Liang 15.9.2010 20,000 10,357
4 LI Chi Keung 11.11.2010 12,000 8,368
5 BEL Trade Investment Holdings Limited 9.12.2010 16,000 13,946
6 Elite Dragon Limited 9.12.2010 16,000 13,946
7 SY Chin Mong, Stephen 9.12.2010 16,000 13,946
8 Ming Yuan Investments Group Limited 17.2.2011 20,000 8,642
9 REN Baogen 24.3.2011 20,000 21,024
10 QI Xiaohong 31.3.2011 18,000 9,581
Total: 10 entities
166,000 117,196
* Cases where fines were below $10,000 are not shown here.
Table 16 Successful prosecutions – unlawful short selling
Case Defendants Date of conviction Fine ($) Investigation costs awarded ($)
1 CHEUNG Wong Kwan 19.4.2010 30,000 42,144
2 MOK Kee Tong 8.7.2010 54,000 25,711
Total: 2 entities
84,000 67,855
Table 17 Successful prosecutions – provision of false or misleading information*
Case Defendants Date of conviction Fine ($) Investigation costs awarded ($)
1 CHAN Ping Keung 5.11.2010 18,000 4,954
2 LAM Ying Kam 9.11.2010 10,000 10,825
Total: 2 entities
28,000 15,779
* Cases where fines were below $10,000 are not shown here.
Table 18 Successful prosecutions – failure to submit audited accounts, etc. within the specified period
Case Defendants Date of conviction Fine ($) Investigation costs awarded ($)
1 Able Alliance International Limited 5.11.2010 11,000 4,954
2 LAM Ying Kam 5.11.2010 11,000 4,954
Total: 2 entities
22,000 9,908
Table 19 Most significant disciplinary actions
Item Company / Name Date of action Conduct Action / SFAT decision
1 CES Capital International Co Ltd ZHANG Rigang 3.3.2011 Failure to safeguard client monies Reprimanded and fined $2 million Reprimanded and fined $250,000
2 Standard Chartered Bank (HK) Ltd 1.3.2011 Distribution of Lehman Brothers
Equity Linked Structured Notes		 Standard Chartered Bank repurchased ELNs from eligible customers involving over 2,300 transactions and a total value of about $1.48 billion
3 ZHANG Xiao Ming 21.2.2011 False trading Banned for 12 months
4 ZHANG Bijia 31.1.2011 Insider dealing Banned for life
5 YAM Chin Yui, Peggy 29.12.2010 Forging colleague’s signature
on banking documents		 Banned for 18 months
6 NG Kwok Leung 23.12.2010 Market manipulation Banned for 3 years
7 Pauline Ellen COUSINS 15.11.2010 Providing false portfolio valuation
summaries to mislead customers		 Banned for life
8 Noble Apex Advisors Ltd 8.11.2010 Inadequate supervision of staff Reprimanded and fined $1 million
9 TAM Sak Man 25.10.2010 Facilitating unlicensed leveraged Reprimanded and fined $816,220



foreign exchange activities
10 CHUN Peng Fai 20.10.2010 Engaging in derivative warrants
trading that falsely inflated
market turnover		 Revocation and banned for 5 years
11 Jugurtha HARCHAOUI 9.9.2010 Mismarking trading book Banned for life
12 CHAN Hon Man 31.8.2010 Market manipulation Banned for 18 months and fined $134,580
13 IP Chun Chun 19.7.2010 Forgery of clients’ signatures Banned for 5 years
14 DBS Bank (Hong Kong) Ltd 14.7.2010 Distribution of Lehman Brothers-
related Constellation Notes		 DBS repurchased Constellation Notes from eligible customers involving over 2,100 accounts and a total value of about $651 million
15 CHU Kwok Shing, Godwin 5.7.2010 Market manipulation Licence suspended for 18 months
16 KWAN Po Kit 5.7.2010 Operating secret account and
conducting conflicts of interest activities		 Banned for 5 years and fined $228,000
17 TAM Man Chuen, Peter 2.7.2010 Misappropriation of clients’ assets Licence suspended for 18 months
18 Julius Baer (Hong Kong) Ltd 28.6.2010 Failure to take adequate steps to identify clients as professional investors before treating them as such Reprimanded and fined $3 million
19 Christfund Securities Ltd 17.6.2010 Internal control deficiencies in
handling Mainland clients’ accounts		 Reprimanded and fined $1.2 million
20 Christfund Futures Ltd 17.6.2010 Internal control deficiencies in
handling Mainland clients’ accounts		 Reprimanded and fined $700,000
21 HU Frank NG Peony CHANG Pui Chun, Jenny 2.6.2010 Negligence in handling a
client’s trade orders		 Reprimanded and fined $800,000 Reprimanded and fined $600,000 Reprimanded and fined $400,000
22 Merrill Lynch (Asia Pacific) Ltd & Merrill Lynch Futures (HK) Ltd 31.5.2010 Systems and controls failings
associated with mis-marking
activities in a trading book		 Fined $3.5 million
23 HU Junbo 18.5.2010 Concealing true identities of owners
of trading accounts from employer
and effecting transactions without
obtaining prior written authorizations		 Banned for 12 months
Table 20 Requests for regulatory co-operation

 2010/11 2009/10 2008/09

In Out In Out In Out
Enforcement-related requests for assistance 93 74 88 89 55 66
Licensing-related requests for assistance 86 1,068 144 847 263 926
‘In’ represents requests received, while ‘out’ reflects requests made by the SFC.
Table 21 Comparison with overseas regulatory agencies

It is difficult to obtain detailed data, in a consistent format, for sensible comparison of key performance measures with other regulators and this is complicated further by the different mandates which each of these regulators have. Nevertheless, we have set out in this table some key data relating to the size of certain other regulators for the interest of readers.

All foreign currency amounts have been translated into Hong Kong dollars with the exchange rate on 31 March of each of the three years.


 2010/11 2009/10 2008/09
SFC (year ended 31 March)1


Number of staff 544 501 478
Total expenditure ($ million) 780 730 684
US Securities and Exchange Commission (SEC) (year ended 30 September)2


Number of staff 3,8485 3,7486 3,656
Total expenditure ($ million) 8,8975 8,5536 7,441
UK Financial Services Authority (FSA) (year ended 31 March)3


Number of staff (at year-end date) 3,3007 3,1508 2,730
Total expenditure ($ million) 6,4247 5,0148 3,999
Australian Securities & Investment Commission (ASIC) (year ended 30 June)4


Number of staff (at year-end date) Data not available 1,932 1,698
Total expenditure ($ million) Data not available 2,756 1,585
1 The SFC is an independent non-governmental statutory body funded mainly by a market levy and is responsible for regulating the securities and futures markets in Hong Kong.
2 The US SEC is an independent, non-partisan, quasi-judicial regulatory government agency with responsibility for administering the federal securities laws.
3 The FSA is an independent non-governmental body funded by the firms it regulates. It has been given statutory powers to regulate the financial services in the UK, including authorization and regulation of deposit taking, insurance, mortgage lending, general insurance advice, mortgage advice and investment business.
4 ASIC is an independent Commonwealth government body that enforces and regulates company and financial services laws to protect consumers, investors and creditors.
5 Budget figures are extracted from FY2012 Congressional Justification.
6 Actual figures are extracted from FY2012 Congressional Justification.
7 Budget figures are extracted from FSA Business Plan 2010/2011.
8 Actual figures are extracted from FSA Annual Report 2009/2010.
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