Investor Identification Regime and OTC Securities Transaction Reporting Regime for Securities Market

Investor identification regime
OTC Securities Transaction Reporting Regime
Stocks
Financial intermediaries
ETF

Author: Mr Chin17/06/2022

The investor identification regime (HKIDR) and the OTC Securities Transaction Reporting Regime (OTCR) will be implemented in the securities market in Hong Kong, allowing the Securities and Futures Commission (SFC) to identify investors placing orders and conducting certain OTC securities transactions through intermediaries (e.g. brokers or banks) more effectively and enhance its market surveillance function for better investor protection.

What Investors Need to Do

As an investor who trades in the Hong Kong stock market, we should all be aware of the new requirements.

Under the HKIDR, intermediaries are required to submit their clients’ identity document information together with the relevant Broker-to-Client Assigned Numbers to a secured data repository of the Stock Exchange of Hong Kong (SEHK) and the SFC.

Separately, relevant information including clients’ identity document information will be reported by intermediaries to a secured data repository of the SFC under the OTCR.

Intermediaries have to comply with the Personal Data (Privacy) Ordinance, so they have to obtain prior consent from their individual clients accordingly before submitting the clients’ identity document information to the secured data repository. Without providing their consent to intermediaries, investors would still be able to sell and withdraw their securities holdings but would not be able to make further purchases or shares deposits.

  • If you, like me, have already provided your identity document information to your intermediary at the time your account was opened, you just need to follow the intermediary’s instruction to provide your consent for the collection and transfer of your identity documents information.
  • If you have a Hong Kong identity card but have opened an account using another identity document (e.g. passport), your intermediary will follow up with you to update your Hong Kong identity card information.

Intermediaries are only required to submit the individual client’s name, identity document number, type, and place of issue as stated on a client’s identity document to the secured data repository. Copies of such documents or other personal data (such as date of birth, residential address or phone number) are not required. In addition, intermediaries are required to submit such data once only unless there are changes to client’s identity document information.

Data in the secured data repository would be encrypted and is only be accessible by authorised personnel of the SFC and SEHK. Any access to data and failed logins would be recorded, and unauthorised access would be investigated. Data security and access control measures would also be updated regularly to keep abreast of the latest technological developments.

The HKIDR is expected to be launched by the end of this year at the earliest, and the OTCR is expected to be launched in the later part of Q2 2023 at the earliest. More details are available on the SFC website.

 

More: Leaflet on Investor Identification Regime