HKEX publishes Compliance Newsletter "Issue 19", clarifying standard sanctions under HKEX rules, etc.

To continuously promote market transparency and a culture of compliance, Hong Kong Exchanges and Clearing Limited ("HKEX") has prepared a Compliance Newsletter to give the industry a better understanding of its enforcement work and regulatory expectations. The Compliance Newsletter aims to remind all relevant Exchange Participants and Clearing Participants of certain key points regarding the rules, including: (1) standard sanctions under HKEX rules; (2) participants' responsibility to submit data to HKEX on time; (3) client protection measures; and (4) updates to the procedural guidance on minimum margin requirements under Rule 617 of the rules, regulations and procedures of The Hong Kong Futures Exchange Limited ("HKFE") ("HKFE Rules"). Standard Sanctions under HKEX Rules Participants must at all times keep abreast of all relevant HKEX rules and regulations applicable to their companies. HKEX will handle any breaches prudently and does not rule out considering disciplinary action against non-compliant participants, including but not limited to issuing written warnings, imposing fines and initiating disciplinary proceedings. HKEX hereby reminds all participants that certain breaches under the rules of the exchanges and clearing houses may be dealt with under the Summary Fine Offences procedure, which are set out in detail below. Such breaches dealt with under the Summary Fine Offences procedure include failure to comply with: (i) investor eligibility requirements; (ii) certain submission requirements of the Hong Kong Investor Identifier Regime (HKIDR); (iii) settlement obligations to the clearing house; and (iv) position limits determined by capital. Participants' Responsibility to Submit Data to HKEX on Time In connection with the annual compliance assessment and on-site inspection programme, participants are required to complete and return the annual compliance assessment questionnaire ("Questionnaire") in the format specified by HKEX by the specified deadline each year. Participants are required to self-certify through the Questionnaire that they have complied with the applicable rules and requirements during the specified review year. This requirement is one of the obligations of participants under Rule 569(3)(b) of the SEHK Rules, Rule 535 of the HKFE Rules, Rule 214A(a)(iv) of the Futures Clearing House Rules and Procedures, Rule 1703 of the Central Clearing and Settlement System General Rules and Rule 403F(4) of the Options Clearing Rules. HKEX will deal seriously with any late, incomplete or inaccurate submission of data, records or documents requested by HKEX (including submissions relating to the Questionnaire). HKEX may take appropriate corrective action in accordance with the relevant rules and regulations, including disciplinary action where appropriate. HKEX hereby reminds all participants that they must comply with the above obligations and respond to the Exchange's requests in a timely and prudent manner. Client Protection Measures Further to HKEX's circular published in June 2025 (Ref. No.: MSM/007/2025), all Exchange Participants are reminded that they should implement and continuously maintain appropriate measures to prevent and properly handle incidents of unauthorised client transactions. Exchange Participants should also note the HKFE circular issued in December 2025 on monitoring measures to avoid mispriced trades (Ref. No.: MO/DT/265/25) and the SEHK circular issued in March 2026 (Ref. No.: CT/025/26) on the requirements for accurate input of orders and cancellation/correction of trades. All Exchange Participants are hereby reminded that they should have in place and maintain adequate monitoring measures, procedures and contingency arrangements to ensure that, when necessary, mispriced trade reports, trade cancellation requests and trade amendment requests can be submitted and processed in accordance with the applicable requirements. In addition, when submitting trade cancellation/amendment requests in the cash market, or mispriced trade reports in the derivatives market, Exchange Participants must also comply with the relevant eligibility and procedural requirements. For the avoidance of doubt, it is the responsibility of the Exchange Participant (and not its client) to submit trade cancellation/amendment requests (cash market) or mispriced trade reports (derivatives market) to the relevant exchange on time, together with all necessary data and supporting documents. Updates to the Procedural Guidance on Minimum Margin Requirements under Rule 617 of the HKFE Rules In relation to the announced forthcoming phased implementation of changes to client margin requirements, reference is made to the updates issued by the HKFE (Ref. No.: MSM/009/2026) and the Futures Clearing House (Ref. No.: MSM/010/2026) on 21 September 2026 concerning the "Procedural Guidance on Minimum Margin Requirements under Rule 617 of the HKFE Rules" ("the Guidance"). The updated Guidance will supersede the previous version issued on 31 October 2024 (Ref. No.: MSM/010/2024) and is intended to reflect the relevant prevailing requirements, guidance and market practices previously published by the HKFE to the market. The updated Guidance should also be read together with other publications issued by the HKFE from time to time. Participants should review the updated Guidance and take this opportunity to review their existing policy arrangements and implement appropriate internal controls and measures to ensure their continued compliance with the relevant rules and regulations.