Securities & Futures Commission of Hong Kong

General

Q1:

Many broker firms do not open on Saturday but "business day" as defined in the SFO specifically includes Saturday. Given that many rules require compliance within one business day and non-compliance will amount to an offence and be subject to substantial fine and terms of imprisonment, this creates severe compliance problems for these firms. 

A:

We accept that many broker firms do not open for business on Saturday and it is not our intention to require them to change that.

On the other hand, we do not want to exclude Saturday from the definition of "business day" as some of the rules also apply to registered institutions and corporations licensed for other types of regulated activities and they may open for business on Saturday.  

Hence, we will take that into account whether the firm in question is open for business on Saturday when considering its compliance with the rules.

Q2:

Many rules require clients to give directions or authority in writing.  Will a faxed instruction be acceptable for these purposes?

A:

Yes.  A faxed instruction will be acceptable provided that this has been signed by the client in writing.

The above notwithstanding, we will expect the firms to have controls in place to mitigate any risks that may arise from communication other than by way of original written form, such as to verify the client’s signature and to use a dedicated fax machine that is earmarked for use by settlement staff. If the firm is put on notice of any irregularity, it would be well advised to obtain an original written instruction and put this on file.

Q3:

Many rules require clients to give directions or authority in writing.  Will the SFC accept clients’ instructions that are received on-line where security is typically ensured by the combination of a password and a personal identification number?

A:

Given that this practice is already well established in the marketplace, on the basis that the authenticity of the instruction is not compromised by the different way of communication, we shall take instructions authenticated by the combination of a password and a personal identification number as an equivalent to instructions in writing. 

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