SFC reprimands and fines Interactive Brokers Hong Kong Limited $4.2 million for regulatory breaches

The Securities and Futures Commission (SFC) has reprimanded and fined Interactive Brokers Hong Kong Limited (IBHK) $4.2 million for regulatory breaches in relation to the handling of client assets (Note 1).

The SFC’s investigation found that between 3 December 2017 and 23 October 2020, IBHK relied on expired standing authority of 7,911 clients and loaned their securities listed on the Stock Exchange of Hong Kong Limited pursuant to a securities borrowing and lending agreement. The incident arose from IBHK’s failure to send these clients renewal notices of the standing authority during the material time due to a programming error.

IBHK’s failure constitutes breaches of the Securities and Futures (Client Securities) Rules (CSR) and the Code of Conduct (Note 2).

In deciding the disciplinary sanction, the SFC has taken into account all relevant circumstances, including:

• IBHK’s remedial actions and self-report to the SFC regarding its breach of the CSR;

• IBHK’s conduct was not deliberate and there is no evidence of client loss as a result of such conduct; and

• IBHK’s cooperation in resolving the SFC’s concerns and accepting the SFC’s findings and disciplinary action.

End

Notes:

1. IBHK is licensed under the Securities and Futures Ordinance to carry on business in Type 1 (dealing in securities), Type 2 (dealing in futures contracts) and Type 3 (leveraged foreign exchange trading) regulated activities.

2. Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.