The investor identification regime for the securities market in Hong Kong (“HKIDR“) will be launched on 20 March 2023. The purpose of the HKIDR is to enhance market surveillance and monitoring in order to achieve better investor protection.
Relevant licensed corporations and registered institutions (collectively referred to as “Relevant Regulated Intermediaries”) will have the following main obligations under the HKIDR upon its implementation:
- ensure that a unique identification code, namely the “Broker-to-Client Assigned Number” (“BCAN”), be assigned to “Relevant Clients” (as defined in the Consultation Conclusions) who have placed or propose to place (i) an on-exchange order or (ii) an off-exchange trade reportable to the Stock Exchange of Hong Kong (“SEHK”) under its rules, in securities listed or traded on SEHK’s trading system (except for odd lots traded on SEHK’s odd lot/special lot market);
- ensure that up-to-date client identification data (“CID”) has been collected from each Relevant Client and is submitted along with the client’s BCAN (by way of putting the BCAN and CID into a “BCAN-CID Mapping File”) to a data repository to be maintained by SEHK by a prescribed time;
- ensure that the Relevant Client’s BCAN has been included in the order information for each on-exchange order as well as each off-exchange order and included in all reporting of off-exchange trades to SEHK, and report any BCAN error of a matched and executed trade as soon as possible to SEHK by submitting a prescribed error notification form; and
- adopt relevant data privacy and security measures to safeguard the data collected, transmitted and stored, including obtaining express consent from clients for the collection and handling of their personal data in compliance with data privacy laws.
Before the HKIDR commences on 20 March 2023, Relevant Regulated Intermediaries are reminded to complete the following as part of their preparation for the implementation:
- Seeking appropriate client consent. Relevant Regulated Intermediaries will need to obtain necessary consent from Relevant Clients who are individuals (i.e. natural persons) to the collection, storage, processing and use of personal data under the HKIDR. In general, consent may be obtained by written and signed acknowledgment on paper, or by electronic means including by email or instant messaging applications.
- Updating individual and corporate clients’ CID. Relevant Regulated Intermediaries should collect from the Relevant Clients or update as appropriate the following information: the full name of the client as shown in the client’s identity document, the issuing country or jurisdiction of the identity document, the identity document type and the identity document number.
- Submitting the BCAN-CID Mapping File. Relevant Regulated Intermediaries can submit BCAN-CID Mapping File to SEHK via its Electronic Communication Platform and are strongly encouraged to submit the BCAN-CID Mapping File as early as possible to ensure that their clients’ BCANs are registered in preparation for any trading by such clients upon the launch of the HKIDR.
For further information, SFC’s guidelines and circulars can be found here.