Hong Kong’s Securities and Futures Commission (SFC)
has proposed new rules to clamp down on unregulated entities using misleading
names.
The aim is to reduce public confusion and protect
investors from mistaking unlicensed firms for regulated financial institutions.
The consultation launched today proposes to expand the list of restricted names
under the Securities and Futures Ordinance (SFO).
According to the regulator, the updated list would
cover a broader range of terminology commonly used by virtual asset trading
platforms (VATPs), including terms like “exchange,” “trading platform,” and
references to “virtual assets” or “clearing facilities.”
Extending Rules to the Crypto Sector
The move comes as more unregulated crypto platforms
attempt to adopt names that suggest official status. The SFC warns that such
practices can give the impression that these entities operate under the
commission’s oversight when they do not.
To address this, the proposed restrictions will apply
not only under the SFO but also under the Anti-Money Laundering and
Counter-Terrorist Financing Ordinance (AMLO), which houses parts of the VATP regulatory framework.
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The SFC’s proposal aims to cover a wider range of
terms that may create confusion, including variations and synonyms of “exchange” and names that imply an association with established financial
institutions. By tightening the definitions, the regulator seeks to
close loopholes that have allowed some entities to appear more credible than
they are.
Focus on Investor Protection
The SFC emphasized that the new rules would enhance
transparency and investor protection. By making it harder for unlicensed platforms to use
regulated-sounding titles, the regulator hopes to steer retail investors away
from firms operating outside of legal frameworks.
The public consultation is reportedly open, and feedback will
guide the final scope and implementation timeline. Meanwhile, following heightened cases of SMS phishing scams,
SFC issued new guidance aimed at safeguarding investor accounts, by mandating companies
to sign up for the free SMS Sender Registration Scheme to enable clients verify
message authenticity.
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“The SFC fully supports a globally coordinated and
multi-pronged approach to addressing the growing phenomenon of unlawful
finfluencers and their wide followings on social media,” commented Julia Leung,
the SFC’s Chief Executive Officer and Chair of the IOSCO Asia-Pacific Regional
Committee.
“Working in concert with our regulatory counterparts will
enhance the SFC’s own effectiveness in safeguarding market integrity and
protecting the investing public through supervisory oversight, enforcement
actions, and investor education.”
This article was written by Jared Kirui at www.financemagnates.com.
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