Hong Kong’s securities watchdog has frozen $91 million in assets across
four brokerages, including US-based Interactive Brokers’ local unit, following
suspected market manipulation and unauthorized trades through compromised
accounts.
SFC Freezes $91 Million in
Trading Accounts, Including Interactive Brokers
The
Securities and Futures Commission (SFC) issued restriction notices to
Interactive Brokers Hong Kong Limited and three local firms – SBI China Capital
Financial Services, Monmonkey Group Securities, and Soochow Securities
International Brokerage – blocking them from handling specific client assets
without prior regulatory approval.
βThe
restriction notices prohibit the four brokers, without the SFCβs prior written
consent, from disposing of or dealing with, assisting, counselling or procuring
another person to dispose of or deal with certain assets in any way in the
accounts up to a total of $91 million,β the official announcement explained.
They are also required to notify the SFC if they receive any instructions
regarding the aforesaid prohibitions.β
The
unauthorized activities occurred between October 24 and November 6, raising
concerns about cybersecurity protocols at major trading platforms. The
regulator is working closely with Hong Kong Police’s Cyber Security and
Technology Crime Bureau and Commercial Crime Bureau to investigate the
suspected account hacking incidents.
The
official statement released by the SFC does not provide any details about the
case. Finance Magnates reached out to the regulator for comment but had
not received a response at the time of publication.
Interactive
Brokers, which holds licenses for three types of regulated activities in Hong
Kong, faces increased scrutiny as the only international broker implicated in
the case. The other affected firms primarily serve the local market.
The company
previously faced action from the SFC in 2018 when the regulator imposed a $4.5
million fine for internal control failures between 2015 and 2016. At the time,
the commission also reprimanded the company for inadequate internal controls
that failed to prevent market disruptions caused by its execution of market
orders. Additionally, it cited the lack of proper documentation for its
electronic trading systems.
Record-Keeping Error in
Stock Lending Program
Last month,
Interactive Brokers was fined $475,000 by the Financial Industry Regulatory
Authority (FINRA) for deficiencies in its share lending program. The brokerage
has since settled the matter with the regulator.
According
to the official “Acceptance, Waiver, and Consent (AWC)” letter, FINRA
detailed that Interactive Brokers miscalculated the number of excess shares
listed on European exchanges that were available for return to customers under
the stock lending program.
Hong Kong’s securities watchdog has frozen $91 million in assets across
four brokerages, including US-based Interactive Brokers’ local unit, following
suspected market manipulation and unauthorized trades through compromised
accounts.
SFC Freezes $91 Million in
Trading Accounts, Including Interactive Brokers
The
Securities and Futures Commission (SFC) issued restriction notices to
Interactive Brokers Hong Kong Limited and three local firms – SBI China Capital
Financial Services, Monmonkey Group Securities, and Soochow Securities
International Brokerage – blocking them from handling specific client assets
without prior regulatory approval.
βThe
restriction notices prohibit the four brokers, without the SFCβs prior written
consent, from disposing of or dealing with, assisting, counselling or procuring
another person to dispose of or deal with certain assets in any way in the
accounts up to a total of $91 million,β the official announcement explained.
They are also required to notify the SFC if they receive any instructions
regarding the aforesaid prohibitions.β
The
unauthorized activities occurred between October 24 and November 6, raising
concerns about cybersecurity protocols at major trading platforms. The
regulator is working closely with Hong Kong Police’s Cyber Security and
Technology Crime Bureau and Commercial Crime Bureau to investigate the
suspected account hacking incidents.
The
official statement released by the SFC does not provide any details about the
case. Finance Magnates reached out to the regulator for comment but had
not received a response at the time of publication.
Interactive
Brokers, which holds licenses for three types of regulated activities in Hong
Kong, faces increased scrutiny as the only international broker implicated in
the case. The other affected firms primarily serve the local market.
The company
previously faced action from the SFC in 2018 when the regulator imposed a $4.5
million fine for internal control failures between 2015 and 2016. At the time,
the commission also reprimanded the company for inadequate internal controls
that failed to prevent market disruptions caused by its execution of market
orders. Additionally, it cited the lack of proper documentation for its
electronic trading systems.
Record-Keeping Error in
Stock Lending Program
Last month,
Interactive Brokers was fined $475,000 by the Financial Industry Regulatory
Authority (FINRA) for deficiencies in its share lending program. The brokerage
has since settled the matter with the regulator.
According
to the official “Acceptance, Waiver, and Consent (AWC)” letter, FINRA
detailed that Interactive Brokers miscalculated the number of excess shares
listed on European exchanges that were available for return to customers under
the stock lending program.
This post is originally published on FINANCEMAGNATES.
