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Although only a proportion of brokers are currently in scope for the SFC’s new data standards, the Hong Kong regulator is encouraging all firms to consider adopting them.
The SFCs new Data Standards for Order Life Cycles regime, known as DS-OL, which specifies data standards for orders and trades, came into effect from 30th April. Although the regime does not include a regular reporting requirement, the SFC now has the right to request data from any in-scope broker on orders and trades executed in 2018/19, with the broker obliged to respond with a reasonable timeframe (defined as ‘a few working days’).
Central to the requirement is a stipulation that brokers respond in a standardised format, which the SFC expects firms to have proactively adopted, to ensure they are able to provide data on a timely basis.
The number of firms in scope at the outset is likely to be small – comprising only those brokers responsible for over 2% of transactions in SEHK-listed equities. However, it will likely make sense for more firms to adopt this data standard over time, particularly if growth plans or current trading volumes make it likely that you will exceed the 2% threshold in the current calendar year.
In its circular, the SFC also encourages all licensed securities brokers to follow DS-OL on the basis that it “should facilitate in-house monitoring and surveillance”.
The standards themselves are prescriptive, with detailed guidance provided on how certain transaction workflows should be recorded, how data should be maintained, and how to handle specific scenarios (for example cancellations, parent-child orders and so on).
How Bovill can help
We are experts in helping firms comply with order recordkeeping and trade reporting rules globally. We can work with you to:
- Interpret the data standards in the context of your broking business
- Assess readiness to comply with SFC requests for information
- Prepare responses to data requests, to ensure they will meet the SFC requirements.
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