Best HKSFC Regulated Brokers
Those of you living in Hong Kong who want to start Forex trading would be advised to look for HKSFC regulated brokers. This is because such a broker will be obliged to follow the rules and regulations laid down by this regulatory body, and have your interests at the heart of operations.
What is the HKSFC?
HKSFC stands for Hong Kong Securities and Futures Commission and is the independent statutory body which regulates securities and futures markets in Hong Kong. It was established in 1987 and has several functions. These include:
- Establishing market regulations and ensuring they are enforced, which includes the investigation of any breaking of the rules and cases of misconduct
- Issuing licenses and providing supervision of activities which fall under the Commission’s responsibility
- Enhancing the infrastructure of markets and supervising market operators
- Authorizing investment products and providing documents prior to them being offered to retail traders
- Overseeing the regulations with regard takeovers and mergers of public companies and the regulation of listing matters in respect of the Stock Exchange of Hong Kong Ltd
- Working with and helping overseas regulatory bodies
- Providing help and assistance to consumers about market operations, the risks involved, as well as their rights and responsibilities
There are four financial regulators including the HKSFC and they work together to ensure proper conduct in the markets and to help prevent financial crime and misconduct.
Best and Most Trusted Forex Brokers in 2018
The HKSFC requirements for issuing a license
A Forex broker operating in Hong Kong or offering services for Hong Kong residents has to be licensed or registered with the SFC unless it is exempt. Carrying out a regulated activity, such as leveraged foreign exchange trading without such authorization is a serious offense. There is a set of basic approval criteria which includes:
- Being able to satisfy the SFC that the applicant is fit and proper
- Being assessed for financial status and solvency, educational and other qualifications as well as industry experience
- Being able to carry out the regulated activity competently
- A corporation wanting to be HKSFC regulated brokers will have to have a proper business structure, qualified personnel, and good internal systems
- Satisfy capital requirements
The history of HKSFC
The Hong Kong Securities and Futures Commissions came about in 1989, following the stock market crash in October 1987. Known as Black Money it was the day when stock markets all over the world crashed and shed truckloads of value in a very short space of time. The origin of the crash was Hong Kong, from where it spread to Europe and hit the USA after other markets had already lost a significant margin. In Australia and New Zealand, it is also known as Black Tuesday because of the time zone difference. Towards the end of October stock markets across the world had fallen. For example, in the UK it fell by 26.45%, Australia by 41.8% and in Hong Kong it fell by 45.5%. In 1997 came the Asian financial crisis which led to further improvements in the regulatory framework. The crisis began with the financial collapse of the Thai baht. This collapse happened because the Thai government was forced to float the baht because there was a lack of foreign currency to support its peg to the US dollar. The situation wasn’t helped by the burden of foreign debt which was making the country virtually bankrupt. Hong Kong was affected by speculative pressure because of its significantly high inflation rate. More than $1 billion was used by monetary authorities to defend the Hong Kong dollar. Luckily Hong Kong had more than $80 billion in foreign reserves and the Hong Kong Monetary Authority was able to maintain the HK dollar’s peg to the US dollar. 2008 saw a further global financial crisis and from then on regulators around the world have been working to introduce measures to overhaul the financial system. The Hong Kong Securities and Futures Commission is a member of the International Organization of Securities Commissions and plays a leading role in looking at the impact of reforms, not just in the Asia-Pacific region but globally as well. The HKSFC also works in close collaboration with mainland China to improve the financial service industry for all involved.
What are your rights if you have a complaint concerning an HKSFC Forex broker?
A wholly owned subsidiary of the SFC is the Investor Compensation Company Ltd. It was established to administer claims against the Investor Compensation Fund. Its job is to receive, assess and determine whether any claims against the Fund are valid, make payments and try to recover any losses. The functions of this company have been set out in an official Order – the Securities and Futures (Transfer of Functions – Investor Compensation Company) Order. They include:
- Managing and administering the Fund
- Publishing Notices Inviting Claims
- Deciding whether a claim has been lodged within the required time limit
- Accepting the lodging of a claim
- Determining whether there is a valid claim for compensation
- Asking for the production of relevant records
- Issuing a Notice of Determination
- Paying compensation and deciding the order of the payments
You will be eligible to make a claim if you suffer pecuniary losses due to the default of an HKSFC regulated broker or authorized financial institution. It is also possible to lodge a complaint with the HKSFC itself. It is possible to file complaints on a number of different aspects. For example, if you suspect market misconduct, or are dissatisfied with the level of service from the SFC. If you want to make a complaint regarding an HKSFC regulated broker the commission is able to investigate the complaint and penalize any wrongdoers either with a prosecution or by taking disciplinary action. The commission, however, is unable to act as a legal advisor, unable to get involved in private civil disputes or get your money back.