Consultation on Proposed Regulation to Govern Market Soundings in Hong Kong
The SFC proposes new guidelines for intermediaries conducting market soundings in securities and capital market transactions to enhance transparency and compliance in Hong Kong.
Consultation on Proposed Regulation to Govern Market Soundings in Hong Kong
On 11 October 2023, the Securities and Futures Commission (SFC) issued a consultation paper proposing new Guidelines for Market Soundings aimed at intermediaries involved in securities and capital market transactions such as private placements and block trades.
Key Highlights of the Proposed Guidelines
- Scope: The guidelines apply to intermediaries conducting and receiving market soundings in Hong Kong, covering a broad range of capital market transactions.
- Transparency and Disclosure: Emphasis on clear communication and disclosure to ensure that all parties understand the confidential nature of the information shared during market soundings.
- Compliance Requirements: Intermediaries are expected to establish robust internal controls and procedures to manage market soundings effectively and comply with regulatory expectations.
- Record-Keeping: Detailed records of market soundings must be maintained to facilitate regulatory oversight and investigations if necessary.
Implications for Market Participants
The proposed guidelines aim to enhance market integrity by reducing the risk of insider trading and market manipulation during sensitive capital market transactions. Intermediaries should review their current practices and prepare to implement the new requirements once finalized.
Next Steps
The SFC is inviting public comments on the consultation paper until 10 January 2024. Market participants and stakeholders are encouraged to provide feedback to help shape the final guidelines.