Securities and Futures (Amendment) Ordinance 2014 (Commencement) Notice 2015

The Securities and Futures (Amendment) Ordinance 2014 relating to reporting of OTC derivatives transactions and related record-keeping will come into operation on 10 July 2015. As a result, significant changes will be made to the Securities and Futures Ordinance, including the addition of a new Part IIIA on over-the-counter (OTC) derivative transactions to the extent it relates to reporting and record-keeping obligations, and Part VIII, Division 3A as regards new Hong Kong Monetary Authority powers of investigation for actual or suspected contravention of these requirements.

Additional noteworthy changes introduced by the Ordinance and taking effect on that date include:

  • introduction of a court order mechanism under the Securities and Futures Ordinance for disgorgement for gains made or losses avoided as a result of market misconduct
  • amendment of the Organized and Serious Crimes Ordinance to include six new specified offences within its confiscation regime, including insider dealing, false trading and stock market manipulation
  • repeal of the Securities and Futures (Futures Contracts) Notice 2012, which current provides that structured products are regarded as futures contracts for specified purposes.

Securities and Futures (Stock Markets, Futures Markets and Clearing Houses) Notice

On 6 May the Securities and Futures (Stock Markets, Futures Markets and Clearing Houses) Notice (Prescribed Markets Notice) was signed by the Financial Secretary. The Prescribed Markets Notice contains details of specified international stock and futures markets and certain clearing houses. Products traded on these prescribed markets or cleared through these clearing houses will not come within the definition of “OTC derivative product” and, consequently, the new Hong Kong OTC derivatives regime. The Prescribed Markets Notice will come into operation on the same day as the new section under which it is derived (Section 392A), 10 July 2015.