HK regulator fines EFG Bank over dealing in futures contracts without license

Maria Nikolova

The SFC found that EFG Bank had executed 139 offshore listed index option transactions, involving a premium of US$65 million, during a 13-year period.

The Hong Kong Securities and Futures Commission (SFC) announced today its disciplinary action against has publicly reprimanded and fined EFG Bank AG due to dealing in futures contracts without having the necessary license. The watchdog reprimanded the bank and imposed a fine of HK$2 million.

The penalties relate to findings that from April 1, 2003 to November 22, 2016 EFG Bank executed certain offshore listed index options for clients without a Type 2 (dealing in futures contracts) registration.

In fact, EFG Bank self-reported to the SFC that it had executed offshore listed index option transactions for clients which might constitute a Type 2 (dealing in futures contracts) regulated activity under the Hong Kong securities regulations. EFG Bank had executed 139 offshore listed index option transactions for 11 clients during the 13-year period in question. This activity fell within the definition of “futures contracts” under the securities regulations.

The transactions involved premium of about US$65 million, and EFG Bank earned US$27,629 in commission from these transactions.

The regulator notes that General Principle 7 (Compliance) of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct) provides that a licensed or registered person should comply with all regulatory requirements applicable to the conduct of its business activities so as to promote the best interests of clients and the integrity of the market. In addition, Paragraph 12.1 (Compliance: in general) of the Code of Conduct provides that a licensed or registered person should comply with, and implement and maintain measures appropriate to ensuring compliance with the law, rules, regulations and codes administered or issued by the SFC.

Via the execution of transactions in offshore listed index options for clients without a Type 2 (dealing in futures contracts) registration, EFG Bank has failed to put in place adequate controls to ensure compliance with a registration requirement, thus violating General Principle 7 (Compliance) and paragraph 12.1 (Compliance: in general) of the Code of Conduct.

The SFC has concluded that the fitness and properness of EFG Bank as a regulated person have been called into question. In determining the penalties, the SFC has taken into account that: (a) EFG Bank initiated a review of its offshore listed index options activities and self-reported the unlicensed activities to the SFC; (b) there is no evidence to suggest that the non-compliance was intentional; (c) EFG Bank co-operated with the SFC in resolving the SFC’s concerns; (d) EFG Bank has taken remedial measures to strengthen its internal controls to avoid recurrence of similar issues; and (e) EFG Bank has an otherwise clean disciplinary record with the SFC.

Read this next

Fintech, Uncategorized

BitMEX integrates HALO from Solidus Labs for cross-market surveillance

““The recent approval of the Spot Bitcoin ETF has piqued the market’s interest. As a result of price volatility, the trading volumes for crypto derivatives have gone up substantially. HALO, with its advanced technology and crypto-native detection architecture, will enable BitMEX to smoothly and safely scale trade surveillance across its increased trading volumes and provide the necessary safeguards for new product launches.”

Industry News

Horizon Software rebrands to Horizon Trading Solutions

“Horizon Trading Solutions has seen accelerated global growth over the past year to meet the rising demand for our trading solutions and built-for-purpose technology offering. The choice to rebrand represents a key part of this development, while maintaining our heritage and history in the industry.”

Market News

USDJPY has surged to levels last witnessed in 2022. Should we consider opening a short position?

The recent resurgence of the US dollar has propelled USD/JPY to new heights, touching levels not seen since 2022. This surge comes against the backdrop of stable short-term yields and ongoing economic data that fails to signal a significant slowdown, prompting questions about the extent of current monetary easing measures.

Digital Assets

DED Trends on Twitter After Memecoin Snapshot Announcement

Polkadot-backed community coin #DED, made it to the trending charts on X, demonstrating community’s engagement and interest behind the memecoin. 

Digital Assets

BlockDAG Presale Nears $10 Million Amid Toncoin’s Momentum, Green Bitcoin’s Presale, and the Rise of Other Top Cryptos

This article will examine three top trending topics: Toncoin’s potential, Green Bitcoin’s innovative presale, and BlockDAG’s sustainable mining approach. These cryptocurrencies take centre stage for their uniqueness and innovation.

Digital Assets

Coinbase scores minor victory vs SEC, but lawsuit to proceed

A federal judge in Manhattan, U.S. District Judge Katherine Polk Failla, ruled on Wednesday that the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Coinbase can largely proceed.

Web3

COTI Teams Up with Civic for Enhanced Digital Identity Control

СOTI and Civic are teaming up to enhance digital identity security in Web3, aiming to provide users with more control over their digital selves through innovative technology.

Digital Assets

BlockDAG Takes on Chainlink (LINK) Crypto, and RON With DeFi Card and 5000x Profit Potential

Explore BlockDAG’s innovative DeFi card, which transforms cryptocurrency into spendable cash, alongside Chainlink (LINK) crypto and Ronin’s advancements.

Digital Assets

Court finally decides on Sam Bankman-Fried sentence, experts predict 20 years

Sam Bankman-Fried, the former CEO of the now-defunct cryptocurrency exchange FTX, is set to face sentencing on Thursday in a pivotal moment that could see the entrepreneur beginning a lengthy period in federal prison.

<