On September 22, the Securities and Futures Commission of Hong Kong launched a consultation on the proposed implementation of an Investor Identification regime in the derivatives market of Hong Kong Exchange, aimed at further strengthening the integrity and sustainable development of Hong Kong's capital markets. The consultation period will run for three months.

The Investor Identification regime applicable to the securities market has been successfully operating since March 2023. Building on this foundation, the proposed Investor Identification regime for Hong Kong Exchange-traded derivatives will cover automated order matching trading instructions for futures contracts, options contracts, and stock options traded through the Hong Kong Futures Exchange Limited trading system.

The Investor Identification regime for Hong Kong's derivatives market will adopt a model similar to that used in the securities market. Under this model, licensed corporations and registered institutions providing brokerage services or engaging in proprietary trading will be required to submit client names and identity information to a central database.

Mr. Leung Chung-yin, Executive Director of Market Surveillance at the Hong Kong SFC, stated that to support Hong Kong's rapidly developing derivatives market and align with international practices, the proposed extension of the Investor Identification regime aims to enhance the ability to detect misconduct and strengthen investor protection. He noted that the SFC has also considered minimizing additional operational burdens on the industry, and the implementation of this regime will mark an important advancement.

He further emphasized that Hong Kong's enhancement of cross-market surveillance capabilities will help promote market integrity and boost investor confidence, both of which are crucial factors for consolidating Hong Kong's sustainable development as an international financial center.