Financial information services company Markit has been selected by members of the Asia Securities Industry and Financial Markets Association (ASIFMA) to provide an online solution to facilitate compliance with Hong Kong’s Securities and Futures Commission’s (SFC) new electronic trading rules.
The new rules take effect on 1 January 2014 and require Hong Kong-licensed brokers to attest that their electronic trading systems are properly supervised, tested and risk managed.
The rules also require customers to acknowledge that they understand the algorithms and other technologies used by their brokers.
Markit will use its Counterparty Manager technology to provide a solution that will help financial institutions exchange the information required under the new rules. The solution will offer an electronic format of the questionnaire designed by a number of industry associations to assist the buyside and brokers in exchanging the required information.
Using the Markit Counterparty Manager regulatory module, broker dealers will upload their answers as required in the questionnaire and disseminate them to their buyside counterparties. Buyside firms will be able to review the answers from each broker dealer and electronically acknowledge that they have done so. This acknowledgement will be transmitted directly to their counterparties, allowing sellside institutions to see which customers have fulfilled their compliance requirements.
Mark Austen, chief executive of ASIFMA, says: “The industry standard questionnaire facilitates and greatly simplifies the due diligence process required to comply with the new Hong Kong Securities and Futures Commission rules. However, without a technology solution, exchanging information would remain a manual, bilateral process. Markit’s technology will replace the need for a mass of bilateral conversations and the management of a large volume of pages of documentation that would be required in the absence of an automated solution.”
George H Molina, senior vice president and director of Asian trading at Franklin Templeton Investments says: “For several months now the Asia TraderForum buyside industry group has been seeking an efficient solution to facilitate compliance with the SFC’s new electronic trading rules. We are pleased the industry has selected a single platform to assist us in managing the process.”