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Introduction of the Hong Kong Investor Identification Regime (HKIDR) and Over-the-counter Securities Transactions Reporting Regime (OTCR)

 

1. What is the Hong Kong Investor Identification Regime (HKIDR) and the Over-the-Counter Securities Transaction Reporting Regime (OTCR)?

To enhance the market surveillance capabilities and maintain market integrity, the Securities and Futures Commission (SFC) has introduced the Investor Identification Regime (HKIDR) at trading level for the securities market in Hong Kong and an Over-The-Counter Securities Transactions Reporting Regime (OTCR) for shares listed on the Stock Exchange of Hong Kong (HKEX).

 

It is recommend to access below links of the videos (i.e. Unlocking Investor ID) (highlight video) for the details of the regimes below :
https://d3nv6maja2jqhl.cloudfront.net/HKIDR_video_19082022.mp4

 

Please be advised that the HKIDR launched on 20 March 2023, and the OTCR will be launched on 25 September 2023.

 

2. What is the scope of securities being affected?

The HKIDR and OTCR affects all securities (including derivatives) listed or traded on the trading system of HKEX. However, it does not cover derivatives traded on the trading system of the Hong Kong Futures Exchange and unlisted structured products (e.g. equity-linked instruments, equity-linked notes) and delivery of SEHK-listed securities pursuant to these products.

 

For OTCR:

(i)transfer of shares made in connection with an OTC securities transaction in respect of which stamp duty is chargeable in Hong Kong

(ii)deposit or withdrawals of physical share certificates

 

3. What is the impact for client?

The HKIDR is a real name measure used for trading securities on the trading system of the HKEX. Solomon is required to assign a Broker-to-Client Assigned Number (BCAN)[1]to each of clients and tag BCAN to the clients’ securities orders, and disclose the relevant information to HKEX when submission of securities orders. This will allow the relevant regulators to quickly obtain the information about investors who place the securities orders and enhance their market surveillance function.

 

Under the OTCR, Solomon has to:

 

report the Client Identification Data (CID) of clients, including the transferee and/or transferor of shares, to the SFC when the broker, whether as principal or agent for clients, makes the relevant transfer of shares made in connection with an OTC securities transaction in respect of which stamp duty is chargeable in Hong Kong; or

 

 report the CID of clients to the SFC when the broker, whether as principal or agent for clients, handles deposit or withdrawal of physical share certificates.

 

4. What is CID?

Client identification data ("CID") of individual clients refer to client identity information, including name in English and/or Chinese as shown on the Identity Document(s)("ID"), ID issuing counry/jurisdiction(s), ID type(s) and ID number(s).

 

CID of institutional or corporate clients includes the name of the legal entity, place of registration, type and number of registration documents.

 

Solomon will disclose and transfer the client data* according to the order of priority as set out below (i.e. where the client does not hold such document first mentioned in the list below, client should provide the next mentioned document and so on) as CID to relevant regulators (including but not limited to SEHK and/or SFC):


(i) In the case of a natural person, his or her (1) HKID card; or (2) national identification document; or (3) passport;


(ii) In the case of a corporation, its (1) legal entity identifier (LEI) registration document; or (2) certificate of incorporation; or (3) certificate of business registration; or (4) other equivalent identity document; and


(iii) In the case of a trust, the trustee information as in (i) or (ii) above, as the case may be. However, if the trust is an investment fund (i.e. collective investment schemes), the CID of the asset management company or the individual fund, as appropriate, which has opened a trading account with our Company should be provided.

 

* Should there be any change in your client data, please notify our Company in writing immediately and provide the latest client data (e.g. if you have LEI and your LEI has lapsed and/or has been renewed, you should submit your updated LEI information to the Solomon immediately).

 

^ LEI refers to the Legal Entity Identifier which is a 20-character alpha-numeric code under the Global LEI System adopted by the Financial Stability Board to uniquely identify distinct legal entities which participate in financial transactions.

 

5. Key features of regime and cooperation required from investors

If you trade securities in the Hong Kong stock market, you should be aware of the new requirements of HKIDR and OTCR.

 

Under the HKIDR, Solomon is required to submit their clients’ identity document information together with the relevant BCAN to a secured data repository of the HKEX and the SFC.

 

Solomon has to comply with the Personal Data (Privacy) Ordinance, so Solomon has to obtain prior consent from its individual clients before submitting the clients’ identity document information to the secured data repository. Without providing this consent to Solomon, you will still be able to sell and withdraw your securities holdings but will not be able to purchase or deposit securities.

 

For individual clients, if you have already provided your identity document information to Solomon at the time your account was opened, which fulfilled the requirement of the order of priority on the type of identity document as specified in Item 4 above, you just need to provide your consent for the collection and transfer of your identity documents information.

 

However, If the information you have submitted does not meet the requirement of the order of priority as specified, e.g. Holding a Hong Kong identity card/national identification but have opened an account using another identity document (e.g. passport), please contact us and update your Hong Kong identity card information.

 

For corporate client, please refer to the requirement of the order of priority on the type of identity document as specified in Item 4 above, please contact us and update your client information if necessary.

 

6. Consequences of failing to provide consent or updated CID

Failure to provide the express consent or failure to updated CID (e.g. CID is not provided/updated in accordance with the waterfall requirements in question 4) may mean that, subsequent to the implementation of HKIDR, Solomon is only allowed to process your instruction to sell, transfer or withdraw your securities but not purchase or deposit of securities.

 

7. How to give my consent for HKIDR on the online trading platform or mobile application?

Please contact our customer services officer for confirmation of CID update as soon as possible or you may visit our Company for the arrangement of the confirmation.

 

For any enquiries, please contact our customer service hotline at +852 2115 9486.

 

8. Will my identity document information be kept confidential?

Under the investor identification regime, brokers will submit client's identity information to a secured data repository of HKEX and the SFC. The information in the data repository is encrypted and is only accessible by authorized personnel of the SFC and HKEX on need to know basis. Data security and access control measures will be updated regularly with the latest technological developments. Detailed audit trials are maintained of all access, and unauthorized access will be investigated.

 

9. Can I withdraw my consent in relation to HKIDR and OTCR after submission?

You may raise a written request with your Account No to cs@solomonwin.com.hk at any time to withdraw your consent previously submitted to Solomon.

 

Please be reminded that if you withdraw your consent previously submitted, Solomon can only process your instruction to sell, transfer or withdraw the existing securities.

 

10. Will I receive acknowledgement to my consent upon submission?

No acknowledge will be sent to client upon submission. You are strongly advised to keep a record of the consent submitted to Solomon.

 

11. I have already submitted the consent with another licensed broker. Do I need to submit consent to Solomon again?

Each licensed broker is required to obtain independent consent from its clients.

 

12. Is my BCAN in Solomon the same as that with other brokers?

Each licensed broker, including Solomon, is required to assign to each of its clients a unique BCAN.

 

13. Can I submit the consent after the deadline?

There is no actual submission deadline for HKIDR. However, once the HKIDR is officially launched by HKEX and the SFC, Solomon can only process your instruction to sell, transfer or withdraw the existing securities if no consent is obtained. Therefore, client can submit consent at any time they wish.

 

14. How long does it take for BCAN registration?

Once client submits the consent, it takes around 1 business day to complete the BCAN registration.

 

15. How can I find more details about HKIDR and OTCR?

For more information on the Hong Kong Investor Identification Number System and the OTC Securities Transaction Reporting System and related information, please visit the below HKIDR and OTCR dedicated websites of the SFC and the Hong Kong Stock Exchange.

 

Securities and Futures Commission (SFC)

https://www.sfc.hk/en/Rules-and-standards/Investor-Identification-and-OTC-Securities-Transactions-Reporting

 

Hong Kong Exchanges and Clearing (HKEX)

https://www.hkex.com.hk/Services/Trading/Securities/Overview/Trading-Mechanism/HKIDR?sc_lang=en

 

 

[1]The Broker-to-Client Assigned Number is an internal code assigned by brokers and banks to each of their clients. When placing a securities order, brokers and banks must input their own central entity number and their client’s Broker-to-Client Assigned Number. Personal information, including names and identity card numbers, will not be inputted by brokers and banks when handling placement of securities order.

 

协议及声明

Introduction of the Hong Kong Investor Identification Regime (HKIDR) and Over-the-counter Securities Transactions Reporting Regime (OTCR)

 

Except for public holidays and the market closure due to bad weather, the Hong Kong stock market generally trades from Monday to Friday. The trading hours are as follows:
 

1. Pre-open Period

Time period

Trading Rules

Enter order 9:00-9:15

Submit, modify, and cancel auction market orders and auction limit orders

Non-cancellable 9:15-9:20

Only at-auction market orders and at-auction limit orders can be submitted, and orders cannot be withdrawn or modified

Random match period 9:20-9:22 (match will start randomly at 9:20-9:22 at the final reference equilibrium price)

Conduct matchmaking during auction period

Pause period, from random match period ends to 9:30

At-auction order: Incomplete order will be cancelled by the system; At-auction limit order: If the input price range of an incomplete order does not deviate from the nominal price by nine times or more, it will be converted to a limit order and automatically transferred to the continuous trading session

 

2. Continuous Trading Hours

Time period

Beijing Time

Morning market

9:30-12:00

Closed at noon

12:00-13:00

Afternoon market

13:00-16:00

Note: Order modification is not allowed during the closed at noon, and cancellation is allowed during 12:30 - 13:00.

 

3. Closing Auction Trading Session

Time period

Trading Rules

Closing auction period 16:00-16:01      

Calculate and publish reference price; orders cannot be submitted

Enter order 16:01-16:06

You can submit, modify, and cancel at-auction market orders and auction limit orders. The price limit of auction limit orders shall not exceed ±5% of the reference price

Non-cancellable 16:06-16:08

At-auction market orders and at-auction limit orders can be submitted, and cannot be cancelled or changed; the input price of at-auction limit orders must be between the lowest selling price and the highest bidding price

Random closing 16:08-16:10

At random closing time, at-auction market orders and at-auction limit orders can still be submitted, and cannot be cancelled or changed; the input price of auction limit orders must be between the lowest selling price and the highest bidding price