Hong Kong’s SFC imposes HK$3.5m fine on FIL Investment Management for regulatory breaches

Maria Nikolova

The violations include unlicensed dealing in futures contracts, delay in reporting the breach to the regulator as well as submitting incorrect information during an application.

Hong Kong’s Securities and Futures Commission (SFC) today announces that it has imposed a HK$3.5 million fine on FIL Investment Management (Hong Kong) Limited (FIMHK) for regulatory breaches including unlicensed dealing in futures contracts, delay in reporting the breach to the SFC as well as submitting incorrect information during an application.

According to the SFC’s findings, between August 2007 and July 2018, FIMHK executed 6,738 trades in futures contracts for its overseas affiliates with an aggregate transaction value of about US$39.7 billion without the required licence. FIMHK identified the suspected breach in a review conducted between May and June 2018 but only reported the incident to the SFC in August 2018, after it had obtained external legal advice.

The regulator also found that FIMHK, when applying to the SFC for a new fund authorization in March 2017, submitted an incorrect information checklist based on an outdated template. Due to this, certain required information was not completed or provided in the checklist submitted to the SFC.

The internal investigation conducted by FIMHK and the reviews performed by an independent reviewer engaged by FIMHK revealed certain deficiencies and weaknesses in FIMHK’s internal controls and systems, which suggest that FIMHK did not implement satisfactory and effective systems and controls to ensure the accuracy of information submitted to the SFC at the relevant time.

In determining the disciplinary sanctions, the SFC considered a variety of factors, including that:

  • there is no evidence to suggest that FIMHK’s failures were intentional or deliberate;
  • there is no evidence of clients having suffered any financial loss;
  • FIMHK engaged an independent reviewer to review its internal controls in relation to the fund application process and took steps to rectify the deficiencies identified;
  • FIMHK took remedial actions to strengthen its internal systems and controls;
  • FIMHK co-operated with the SFC in resolving the SFC’s concerns; and
  • FIMHK has an otherwise clean disciplinary record with the SFC.

Read this next

Executive Moves

Finalto recruits Antony Parsons as head of liquidity

Finalto, the financial trading division of Gopher Investments, is making a broader push into the liquidity provision space, culminating in a new appointment focused on expanding the business into new markets.

Digital Assets

Huobi introduces Tether’s stablecoins pegged to euro, gold

Huobi, the world’s sixth-largest crypto exchange by trading volume, is set to introduce for its clients two stablecoins representing ownership of physical gold and Euro-pegged tokens.

Retail FX

Saxo Bank reports lackluster volumes for November; FX up 40% YoY

FX trading volumes through Saxo Bank’s platforms improved slightly in November, extending its volatile curve as investors continued to weigh central banks’ policy against concerns over a global economic slowdown.

Executive Moves

CMC Markets taps Finalto’s Julia Free to head UK compliance

CMC Markets PLC (LSE:CMCX) has onboarded Julia Free as its newest head of UK compliance as part of a broader organizational reshuffling at the UK’s biggest spread better.

Digital Assets

Ankr successfully patches hack, will reimburse victims and take actions to prevent further attacks

DeFi protocol Ankr plans to reimburse its affected users after a hacker managed to exploit a bug in its code that allowed for unlimited minting of its liquid staking token.

Industry News

ASIC cancels/suspends AFS license of AFSL Group and Quantum Funds Management

ASIC canceled the AFS license of AFSL Group because it failed to lodge statements and audit reports and it did not maintain AFCA membership. The Australian regulator suspended Quantum because it does not have the required professional indemnity insurance coverage.

Executive Moves

BidX Markets hires Shaun French as Research Analyst – Multi Asset

“We believe with his background in the Financial Markets and being based in Dubai, he will be able to provide our clients with access to outstanding research, while also being in a great location to help support our international clients base which is growing at a rapid pace’’.

Institutional FX

Nasdaq migrates US options exchange to AWS with +10% performance in round-trip latency

Nasdaq has announced the successful migration of the core trading system of Nasdaq MRX – one of its six U.S. options exchanges – to Amazon Web Services (AWS).

Institutional FX

TraditionData launches oil swaps pricing data at a critical time in OTC oil traded markets

TraditionDATA has announced the release of a new proprietary Oil Swap Model (OSM) which brings further visibility into illiquid and opaque oil markets.