HK Court convicts trader of three charges of manipulating price of HSI futures contracts

The Eastern Magistrates’ Court today convicted Mr Tsoi Wan of three charges of manipulating the calculated opening price (COP) of the Hang Seng Index (HSI) futures contracts in the futures market. The conviction follows a prosecution by the Hong Kong Securities and Futures Commission (SFC).

Tsoi Wan was a licensed person to carry on Type 2 (dealing in futures contracts) regulated activity under the Securities and Futures Ordinance and was accredited to Enlighten Futures Limited between 14 May 2004 and 3 January 2018. At present, he does not have any active licence registered with the SFC.

The COP is calculated during the Pre-Market Opening Period and serves as the market opening price for the corresponding product. The morning Pre-Market Opening Period is a 30-minute period before normal trading in the morning session begins. It is the period between 8:45:00 and 9:15:00, which is allocated for traders to place orders and for those orders to be matched in accordance with certain rules laid down by the Hong Kong Futures Exchange Limited.

Tsoi, who pleaded guilty to three charges of market manipulation, was fined $60,000.

The SFC probe has demonstrated that Tsoi, who manipulated the COP of the HSI futures contracts by placing various orders during the morning Pre-Market Opening Period on 10 June 2013, 21 August 2013 and 4 September 2013, made a profit of $70,800 from these manipulative trades.

The SFC’s action against the trader highlights its efforts to clamp down on market manipulation. In March 2019, nine Hong Kong brokerages got restriction notices over suspected market manipulation of China Ding Yi Feng shares.

The nine brokers are: Futu Securities International (Hong Kong) Limited, GF Securities (Hong Kong) Brokerage Limited, Guotai Junan Securities (Hong Kong) Limited, Haitong International Securities Company Limited, Orient Securities (Hong Kong) Limited, SBI China Capital Financial Services Limited, Shenwan Hongyuan Securities (H.K.) Limited, Sun Hung Kai Investment Services Limited, and Yunfeng Securities Limited.

The SFC is not investigating these nine brokers, which have cooperated with the regulator in its ongoing investigation. The restriction notices do not affect their operations or their other clients.

The restriction notices prohibit them, without the SFC’s prior written consent, from disposing of or dealing with, assisting, counselling or procuring another person to dispose of or deal with any assets in any way in the client accounts.