SFC slows down activities at year-end, HS Tech Index scores

The Securities and Futures Commission (SFC) authorised 18 unlisted equity-linked investments and structured deposits for public offering from October to December, a decrease from 72 quarter-on-quarter (QoQ), which led to a stable number of 145 as at the end of 2020 year-on-year (YoY).

There were additionally 145 CNY-denominated unlisted structured products and the number of investment-linked assurance schemes (ILAS) remained unchanged at 300 as at the year-end compared with a quarter ago, according to the SFC’s Q3 FY20/21 report ended in 2020.  

The independent statutory body, headed by CEO Ashley Alder (pictured), also gave the green light to 51 unit trusts and mutual funds including 23 Hong Kong SAR-domiciled funds from October to December, a climb from 40 QoQ and 50 YoY.

In January, the regulator entered into an mutual recognition of funds (MRF) arrangement with the Securities and Exchange Commission of Thailand, which ‘allows eligible Hong Kong SAR and Thai public funds to be distributed in the other market through a streamlined process’. 

As at the year-end, there was no ‘other specialised’ non-Hong Kong SAR-domiciled authorised fund, which included futures and options funds, structured funds and funds that invest in financial derivative instruments. The type of fund was last seen on SFC’s quarterly report ended in 2019 when one delivered a net asset value of US$145m.

In the meantime, the number of licensees and registrants was stable at 47,217 as at the end of 2020 YoY, of which 3,122 were licensed corporations.

During the quarter, the regulator disciplined three corporates including Goldman Sachs (Asia), which was fined HK$2.7 billion for its lapses in 1Malaysia Development Berhad’s bond offerings, as well as Fulbright Securities and Credit Suisse Securities (Hong Kong SAR), which were fined HK$3.6m and HK$2.1m for internal control failures and regulatory breaches in its electronic trading systems, respectively.

As at 31 January 2021, the net notional amount outstanding of unlisted equity-linked investments and structured deposits for public offering reached HK$20.28 billion and HK$1.59 billion, respectively, the SFC latest data shows. 

Derivatives

In November 2020, the Hang Seng Tech Index futures were introduced to the market after the SFC gave its approval. They were launched by Hong Kong Stock Exchange to meet ‘meet the market’s need for an exposure management tool covering the technology sector’. The options subsequently went live in January.

Since then, 225 structured products have been marketed linked to the Hang Seng Tech Index in the form of single index, SRP data shows. The majority were distributed by a total of 11 banks in Hong Kong SAR as well as nine from China, nine from South Korea (excluding seven equity-linked securities that were withdrawn during subscription) and six from Singapore. 

The SFC also approved the launch of futures and options contracts for four stocks - Semiconductor Manufacturing International Corporation, Alibaba Health Information Technology Ltd, Kingdee International Software Group Co and Ping An Healthcare and Technology Co.

During the quarter, the SFC posted a profit of HK$269m, up 30.6% QoQ and a recovery from negative HK$39m year-on-year (YoY). That led to a profit of HK$580m for the period from April to December, a bounce from a loss of HK$203m YoY.

Click the link to view the SFC’s Q3 FY20/21 report.