HK flags tighter trade scrutiny, says China cooperation key-regulator

[HONG KONG] Hong Kong's securities regulator on Tuesday said it was considering monitoring trading at client level and stressed the importance of sharing information with Beijing, in comments likely to unnerve investors.

Hong Kong Securities and Futures Commission (SFC) Chief Executive Ashley Alder also told the Thomson Reuters 6th Pan-Asian Regulatory Summit that the watchdog was exploring an overhaul of the way it oversaw the Chinese territory's market.

His comments come as Chinese regulators ramp up surveillance of foreign investors operating in China's stock markets to stem a broad market rout.

Like most international markets, Hong Kong's regulators oversee trading behaviour only at the broker level. But in China, participants at any level are accorded a unique identification code which allows regulators to drill deeper into order books.

Although Alder did not provide more details, a move to allow the exchange and regulators to see which underlying firms are trading would bring Hong Kong in line with mainland Chinese markets and allow the SFC to see which funds are participating in Hong Kong.

Some investors have also raised concerns that schemes to bring mainland stock markets closer to the former British colony, such as a landmark Hong Kong Shanghai stock connect launched last November, increase the likelihood of more interference by China's regulators.

But on Tuesday, Alder rebuffed concerns expressed in the media and among market participants over fears mainland regulators have been interfering in the Hong Kong market, saying closer cooperation was essential for the future of Hong Kong. "Some have raised doubts about whether we should be sharing information with the mainland at all ... but without closer cooperation and information sharing, Hong Kong's markets would be exposed to unacceptable risks," Alder said.

REUTERS