Hong Kong’s Securities and Futures Commission (SFC) has revised its guidelines on market sounding practices, softening certain requirements after receiving feedback from hedge funds and banks, according to a report by Bloomberg.
The report cites a statement released by the SFC on Thursday as confirming that the updated regulations, which are set to take effect on 2 May, 2025, address concerns about the scope of confidential information and types of securities involved.
Initially proposed in October 2023, the SFC’s draft guidelines had drawn criticism from the hedge fund industry and other market participants. Regulators worldwide have been seeking to clarify rules on confidential information sharing that occurs before market-moving deals are announced. Market sounding practices allow banks and issuers to gauge demand and set pricing ahead of public transactions.
The new guidelines come amid an ongoing insider trading investigation involving hedge fund Segantii Capital Management Ltd.
Originally, the SFC’s proposal covered all non-public information, all securities, and applied broadly to licensed brokers and investors. The revised guidelines, however, are more targeted, applying only to confidential information entrusted by a client, issuer, or existing shareholder involved in secondary market transactions.
The updated rules now focus specifically on listed shares and other securities that could significantly impact the price of listed shares, although the SFC also noted that it may expand the guidelines in the future if broader coverage becomes necessary.
