- The Consumer Council (the Council) is pleased to submit its views with respect to the consultation paper issued by of the Securities and Futures Commission (“SFC”) regarding the proposed amendments to the Securities and Futures Ordinance (“SFO”) and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (“AMLO”) relating to the use of certain titles (the proposed amendments).
The Council’s Overall Stance
- The Council welcomes the proposal to amend section 34 of the SFO by expanding the current list of restricted titles[1] and add similar restrictions under part 5B of the AMLO along the lines of the SFO. The Council considers such measures necessary to prevent consumers from being misled by names that may falsely imply regulatory oversight or association with established financial entities. This is a timely and important step in strengthening investor protection and regulatory clarity, particularly in light of the rapid development of virtual assets and related financial products/services. Following the amendments, the Council deems on-going monitoring of the market and consumer education are of paramount importance.
On-going Monitoring and Review
- The Council proposes that the SFC take into account the translations and usage of certain terms in markets that are closely connected with and might thus impose impact on Hong Kong. For instance, the term “清算” adopted in Mainland China is used to indicate “clearing”, but it is not yet included in the suggested list of restricted titles. While understanding that the list could not be exhaustive, the Council recommends the SFC to keep monitoring market developments and emerging terminology, conduct regular reviews of the relevant regulations and make necessary updates accordingly. This would ensure the regulations remain effective and responsive to evolving industry practices, in turn providing up-to-date protection for consumers.
Consumer Education
- Given that the proposed restricted titles involve combinations of words that might introduce complexity to the regulatory framework, the Council emphasises the importance of public education. The Council urges the SFC to ensure communication with the public regarding the above regulatory updates is clear, accessible and widely disseminated. This will help consumers and investors make well-informed decisions and confidently identify entities that are genuinely regulated or licensed, thereby reinforcing public trust and contributing to the integrity of the financial markets of Hong Kong.
Conclusion
- The Council hopes the above suggestions collectively will strengthen the comprehensiveness and clarity of Hong Kong’s financial markets while upholding high consumer safeguards along the regulatory amendments.
[1] Section 34 of the SFO currently sets out a list of titles that cannot be adopted except with the SFC’s approval (e.g. “stock exchange”). The proposal will extend the restrictions to commonly used terms that are similar in meaning to “exchange” (e.g. “trading platform”) and those that refer to some of the financial products and platforms regulated under the SFO (e.g. “virtual assets”).
