Summary of Consultation on HKEX Trading of Derivative Products Market Investor Identification System by Hong Kong Securities and Futures Commission

On June 23, the Securities and Futures Commission of Hong Kong issued a consultation summary on its proposal to expand the Investor Identification Regime to the trading of derivatives products on HKEX. This initiative follows a similar Investor Identification Regime that was successfully implemented in the securities market (HKIDR-S) in March 2023. Respondents to this consultation widely support the proposal, believing that it aligns with international practices, can enhance the surveillance effectiveness of the Securities and Futures Commission of Hong Kong, and contribute to strengthening investor protection. The Securities and Futures Commission of Hong Kong plans to implement the proposal in the second quarter of 2028, subject to completion of system testing and market trials. The Investor Identification Regime for the Hong Kong derivatives market (HKIDR-DM) will apply to automatic matching trading instructions for futures contracts, options contracts, and stock options executed through the trading systems of the Hong Kong Futures Exchange Limited. The regime will operate similarly to the HKIDR-S, requiring licensed firms providing brokerage services or conducting proprietary trading, as well as registered institutions, to submit customer names and identity data to a central data database. Mr. Leung Chung-yin, Director of Market Surveillance at the Securities and Futures Commission of Hong Kong, stated, "The expansion of the Investor Identification Regime demonstrates our firm commitment to enhancing market integrity and safeguarding investors. By strengthening timely and effective surveillance capabilities, the HKIDR-DM will help to enhance the long-term resilience and sustainable development of the Hong Kong derivatives market, and further consolidate its position as a reputable international financial center." To assist the industry in preparing and promote investor education, the Securities and Futures Commission of Hong Kong has established a dedicated HKIDR-DM webpage. In the coming months, the Securities and Futures Commission of Hong Kong will issue further guidance summaries and FAQs to facilitate market participants' adoption of the regime and deepen their understanding.