SFC hints on dark pools consultation outcome

The Securities and Futures Commission is still not revealing final conclusions on the next steps for dark pools in Hong Kong, but has supplied more clarity on the likely outcome.

The Securities and Futures Commission (SFC) is still not revealing final conclusions on the next steps for dark pools in Hong Kong, but has supplied more clarity on the likely outcome.

The Hong Kong regulator has just published its quarterly report that summarises its news from the second quarter of 2014.

It refers to its two-month consultation, completed in April, on dark pools, which it refers to as ‘alternative liquidity pools’. It said that it received 59 replies.

The consultation paper suggested enhancements and standardisations to the regulatory obligations imposed on Hong Kong-licensed corporations that operate dark pools, by including new comprehensive governance requirements in the SFC’s Code of Conduct

At that point, the SFC, says in its quarterly report that it intends to desist from its current practice of imposing conditions on the licences of dark pool operators on a case-by-case basis. The recommendations will also draw on developments in other major markets.

Among its other highlights for the quarter, the SFC also pointed to its establishment in April of a framework for the regulation of the OTC derivatives market.

The SFC said that it is continuing to work with the Hong Kong Monetary Authority on subsidiary legislation and plans to conduct joint public consultation in several phases. The first phase will cover reporting obligations and related record-keeping requirements.

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