SFC concludes consultation on the position limit regime
The Securities and Futures Commission (SFC) today published conclusions to its further consultation on proposed changes to the position limit regime for the derivatives market (Note 1). These include imposing obligations on asset managers who manage funds or sub-funds of umbrella funds and amending the Securities and Futures (Contracts Limits and Reportable Positions) Rules in response to HKEX’s proposed enhancements to its position limit regime (Note 2).
After considering market feedback, the SFC will implement the proposed changes to give more clarity on regulatory requirements in relation to funds to facilitate compliance and provide more flexibility to the market by increasing position limits for certain products. Subject to the legislative process, the SFC plans for the law changes to come into effect in December 2023.
Notes:
- 1.In the Consultation Conclusions and Further Consultation on proposed changes to the Securities and Futures (Contracts Limits and Reportable Positions) Rules and the Guidance Note on Position Limits and Large Open Position Reporting Requirements published on 22 November 2022, the SFC concluded some of the proposals including: (1) expanding the list of “specified contracts” for granting excess position limits; (2) prescribing position limits and reporting levels for some new contracts; (3) increasing the position limit for renminbi currency contracts; (4) imposing large open position reporting requirements for holiday trading contracts; (5) clarifying the circumstances under which a clearing participant is not regarded as having discretion over its clients’ positions; and (6) introducing an excess position limit regime for clearing participants.
- 2.The obligations relate to the application of position limits and reporting requirements to funds. Other changes include revising the statutory position limits for stock options and stock futures contracts, and removing the additional position limits for mini stock index futures and options contracts.
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