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Investor identification and OTC securities reporting

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  4. D. FAQs on obtaining express individual client consent

D. FAQs on obtaining express individual client consent

Q1 :

Are RRIs required to obtain express consent from clients who are not individuals, e.g. corporate clients and institutional clients for the transfer of their CID to SEHK and/or the SFC under the HKIDR and OTCR? If a securities trading account is held jointly by two or more individuals, is it sufficient to obtain express consent from any one of the individuals?  

A:

If a CID does not relate to an individual client (i.e. a natural person), an RRI will not be required under paragraphs 5.6(p) and 5.7(h) of the Code of Conduct to obtain a client consent for the transfer of the CID to SEHK and/or the SFC under the HKIDR and OTCR.

If a securities trading account is held by two or more individuals (e.g. a joint account), a client consent as required under paragraphs 5.6(p) and 5.7(h) of the Code of Conduct will need to be obtained from each of these individuals. 

 

Q2 : If a client has submitted for execution a buy order and then withdraws his or her consent for the transfer of its CID to SEHK and/or the SFC, what is the effect of the withdrawal on the order and what should an RRI do after the withdrawal? 

A: An order placed and/or executed before the withdrawal of the consent will not be affected by the withdrawal. After a client’s subsequent withdrawal of consent, the RRI should not submit any BCAN or CID of that client to SEHK and should only effect sell orders or trades in respect of existing holdings of a listed security or transfers of shares out of or withdrawals of physical certificates from the account (but not buy orders or trades or transfers of shares or deposits of physical certificates into the account) for that client.

Notwithstanding the subsequent withdrawal of consent by a client for the transfer of his or her personal data to SEHK and the SFC, the BCAN and CID that have already been disclosed will continue to be stored, processed, used, disclosed or transferred for the purposes as notified after the withdrawal of the consent. If the SFC notices that there are frequent giving and withdrawal of consent in respect of particular clients, the SFC may make enquiries with the RRIs to understand the reasons and circumstances surrounding such actions. 

Q3 :

Is there any template wording for an RRI to obtain client consent? Is a Chinese version also available?

A: Please refer to the  and the for the template in English and Chinese respectively. 

Q4 :

Are negative confirmation and opt-out option (i.e. implied consent) acceptable for obtaining client consent for the purpose of the HKIDR and the OTCR?

A: No.  As set out in , a client consent should be obtained in an explicit form. 

Q5 :

If an individual client does not provide express consent under the HKIDR, can an RRI execute short selling orders for that client?

A:

No. If express client consent has not been obtained, the RRI should only effect sell orders or trades in respect of existing holdings of a listed security for that individual client but the sell orders or trades should exclude short sales. Hence, RRIs should have proper internal control procedures to ensure that individual clients who do not give express consent under the HKIDR are not allowed to execute short sale orders after the implementation of the HKIDR.

For outstanding short sale trades or repurchase agreements (repo) (or other trades that involve subsequent buy-back of securities) entered into before the implementation of the HKIDR, RRIs are reminded to pay special attention to these types of trades and should actively follow up on obtaining express consent from the relevant individual clients. If the express consent from the relevant individual clients cannot be obtained, RRIs should make proper arrangement with these clients prior to the implementation of the HKIDR to ensure that the RRIs properly manage their risks in respect of such short sale/repo trades.  

Last update: 17 Jun 2022

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