Hong Kong regulator sanctions ex-CICC investment consultant over WeChat app use

Maria Nikolova

The SFC considers Xu Tao breached the Code of Conduct and that this breach has called into question his reliability, reputation, and ability to carry out regulated activities competently.

The use of chat applications in the financial services industry has been subject to bans and heavy regulations in many jurisdictions across the globe. This regulatory approach has been adopted by Hong Kong authorities too. Today, the Hong Kong Securities and Futures Commission (SFC) has once again acted against the illegal use of chat applications.

The SFC announces that it has prohibited Mr Xu Tao, a former investment consultant of China International Capital Corporation Hong Kong Securities Limited (CICC), from re-entering the industry for four months. The ban will last until February 10, 2018.

Xu was licensed under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities), Type 2 (dealing in futures contracts) and Type 4 (advising on securities) regulated activities and accredited to CICC between September 2008 and October 2015. He is currently not licensed by the SFC.

The penalty is imposed over findings that Xu used his mobile phone and WeChat messaging application to accept order instructions from 13 clients between February and August 2015, in violation of the SFC’s Code of Conduct and the internal policies and procedures of CICC.

Under Hong Kong regulations, where order instructions are received from clients through the telephone, a licensed or registered person should use a telephone recording system to record the instructions and maintain telephone recordings as part of its records for at least six months. Paragraph 3.9 of the Code of Conduct also states that the use of mobile phones for receiving client order instructions is strongly discouraged. However, where orders are accepted by mobile phones, staff members should immediately call back to their licensed or registered person’s telephone recording system and record the time of receipt and the order details.

The action against Xu adds to previous sanctions imposed by the Hong Kong regulator with regard to illegal use of chat applications in the financial services industry. In March this year, for instance, SFC banned Philip Leung Ming Yin, a former account executive of HSBC Broking Securities (Asia) Limited (HSBC Securities), for six months over using his personal phone and WeChat to receive and confirm order instructions. The violations lasted between March and July 2015 without maintaining a proper record of the instructions as required by the SFC’s Code of Conduct.

In a similar action in December 2016, SFC prohibited Mr Poon Kin Lung, a former account executive of Phillip Securities (Hong Kong) Limited (Phillip), from re-entering the industry for two years over breaches of the SFC’s Code of Conduct. The SFC found that Poon had received order instructions from two clients via WhatsApp and mobile phone, but he had failed to keep a proper record of their instructions in accordance with Phillip’s internal policies.

Read this next

Inside View

Industry Leaders Share Insights on Framing Crypto Payments into FX Brokerage Business

While the allure of crypto payments is strong, caution is essential. The potential benefits in terms of speed, lower fees, and blockchain efficiency need to be weighed against the risks associated with cryptocurrency volatility. 

Institutional FX

FXSpotStream volumes hit 14-month high in November

FXSpotStream’s trading venue, the aggregator service of LiquidityMatch LLC, reported its operational metrics for November 2023, which moved higher on a monthly basis.

Digital Assets

Circle denies ties with Palestinian groups, TRON founder

Stablecoin issuer Circle has denied allegations that it facilitates funding for terrorist organizations.

Retail FX

CySEC hits operator of Titanedge, TradeEU with €90,000 fine

The Cyprus Securities and Exchange Commission (CySEC) announced that it has imposed a fine of €90,000 on Titanedge Securities Ltd due to shortcomings in their regulatory obligations.

Institutional FX

Cboe FX volumes retreats slightly in November 2023

Cboe’s institutional spot FX platform today announced its trading volume for the month ending November 2023, which took a step back after a strong rebound in October.

Institutional FX

Alpha Group seals Cobase majority acquisition

Foreign exchange service provider Alpha Group International plc (AIM: ALPH) has finalized its acquisition of Financial Transaction Services, operating as Cobase.

Digital Assets

TMNG Tokens Successfully Listed on MEXC Crypto Exchange

TMN Global proudly announces the successful listing of its native TMNG token on the MEXC crypto exchange, effective December 1st, 2023. This strategic partnership marks a significant milestone for TMN Global in the crypto space.

Institutional FX

Marex completes acquisition of TD Cowen’s PB business

London-headquartered commodities broker Marex has completed the acquisition of TD Cowen’s prime brokerage and outsourced trading business, which will be integrated into Marex’s capital market division. This division was established following the acquisition of ED&F Man Capital Markets in 2022.

Digital Assets

Talos introduces decentralized liquidity and onchain settlement with Uniswap and Fireblocks

“At the cornerstone of the DeFi ecosystem, Uniswap has the breadth of assets and depth of liquidity that institutional traders need. And to have this partnership powered by Fireblocks, a digital assets infrastructure provider trusted by some of the most renowned institutions, is very fitting.”