Hong Kong Banks Dealing In Securities Face Same Regulation As Brokers
The Hong
Kong Monetary Authority (HKMA) will introduce guidelines soon which
will impose the same kind of strict regulations on banks which deal
in securities trading as those that are already in place for stockbrokers.
The guidelines centre upon tightening up rules on employees, so
that banks will need to do more reporting and put more resources
into the training of securities staff. The HKMA action comes
after Hong Kong stockbrokers complained it was unfair for banks
to be exempted from regulation by the Securities and Futures Commission
(SFC). Staff will have to complete a securities course before
banks are able to assign them to securities business, and two
senior executives must be appointed to be in charge of a firm's
securities business. In addition, banks will also need to bring
in security controls to ensure clients' assets are not stolen
or misused by bank staff. The SFC rules require
stockbrokers to execute trades immediately after they receive
orders from clients. Banks at present do not need to follow the
SFC rule, so they may wait hours before executing trades for clients.
The new rules would oblige banks to execute orders faster than
they do at present. The HKMA guidelines
form part of the Securities and Futures Bill which consolidates
the 10 existing securities ordinances and regulates Internet trading.
An unnamed source is quoted in the South China Morning Post as
saying: 'The HKMA guidelines will make sure the banks will not
receive less regulation than the stockbrokers do. This will meet
stockbrokers' calls to bring in a fair competition environment
among brokers and banks.' The overall plan
is for the HKMA to be the frontline regulator while the SFC will
investigate serious misconduct or malpractice. .
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