Investor Compensation Boosted

The Financial Services & the Treasury Bureau announced that amendments to the Securities & Futures Rules, made to enhance the investor compensation regime in Hong Kong, were gazetted today.

The regime provides a degree of compensation to investors who have sustained a loss in relation to exchange-traded securities or futures contracts as a result of a default by their intermediary in Hong Kong.

Under the enhancements, the compensation limit will be raised from $150,000 to $500,000 per investor per default.

The trigger levels for suspending and reinstating the Investor Compensation Fund levy will also be increased from $1.4 billion to $3 billion and from $1 billion to $2 billion.

The regime will also be expanded to cover trading on the northbound links of the Stock Connect, as such transactions must be routed through Hong Kong intermediaries.

The proposed enhancements to the regime received strong support in the consultation exercise conducted by the Securities & Futures Commission from April to June.

The legal amendment for enhanced investor compensation will be tabled before the Legislative Council for negative vetting on October 16 before coming into effect on January 1.