In view of the implementation1 of arrangements for maintaining normal operations of the Hong Kong securities and derivatives markets during severe weather conditions2 (severe weather trading or SWT) starting on 23 September 2024, this circular sets out the standards of conduct and internal controls the Securities and Futures Commission (SFC) expects of intermediaries who provide dealing, clearing and settlement services covering the Hong Kong securities and derivatives markets on an SWT Day3.
Intermediaries should refer to the standards expected of them for implementing SWT as set out in the Annex, and make appropriate arrangements to ensure normal operations during SWT. In particular, intermediaries are expected to: (a) make adequate preparations and implement appropriate measures for conducting business activities on an SWT Day, including adopting remote operations and electronic fund transfers; (b) communicate with clients clearly and in advance about their SWT policies and arrangements as well as any changes to client agreements as a result of SWT, and encourage clients to transfer funds electronically; (c) develop robust arrangements allowing timely and reliable access to funding on an SWT Day, exercise prudent risk management to ensure financial resilience, and maintain effective controls to protect client assets; and (d) promptly notify the SFC of incidents which may materially affect clients’ interests or their ability to maintain business operations on an SWT Day.
The SFC acknowledges that intermediaries of varying business size and complexity may face operational challenges during the initial implementation of SWT. To ensure compliance with the aforementioned expected standards, intermediaries should establish their own procedures that are commensurate with their business size and complexity. Senior management of intermediaries should put in place proper governance and oversight mechanisms to ensure these procedures are properly designed and implemented.
Should you have any enquiries regarding the content of this circular, please contact Ms Kiki Wong of the SFC at 2231 1569 or your case officers.
Intermediaries Supervision DepartmentIntermediaries DivisionSecurities and Futures Commission
Enclosure
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SFO/IS/021/2024
1 According to the Consultation Conclusions on Severe Weather Trading of Hong Kong Securities and Derivatives Markets published by Hong Kong Exchanges and Clearing Limited (HKEX), the severe weather trading arrangements will be implemented on 23 September 2024.2 For the purposes of this circular, severe weather refers to the scenario where a typhoon signal No. 8 or above or a black rainstorm warning is issued by the Hong Kong Observatory, or an “extreme conditions” announcement is made by the HKSAR Government.3 An SWT Day refers to any day from Monday to Friday except a Hong Kong public holiday on which severe weather falls. In addition, it would be considered an SWT Day for the derivatives market if severe weather falls on a Hong Kong public holiday which is a holiday trading day for selected derivatives products.
Supplementary documentAnnex
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