A collection of Hong Kong-licensed brokers have enlisted Markit to help them comply with new electronic trading rules on the island.
From 1 January, the Securities and Futures Commission (SFC) will require Hong Kong-licensed brokers to attest that their electronic trading systems are properly supervised, tested and risk managed. Customers will also need to acknowledge that they understand the algorithms and other technologies used by their brokers.
Asia Securities Industry and Financial Markets Association (Asifma) will use Markit's Counterparty Manager regulatory module to upload their answers as required in the questionnaire and disseminate them to their buy-side counterparties.
Buy-side firms will be able to review the answers from each broker dealer and electronically acknowledge that they have done so. This acknowledgement will be transmitted directly to their counterparties, allowing sell-side institutions to see which customers have fulfilled their compliance requirements.
Mark Austen, CEO, Asifma, says: "The industry standard questionnaire facilitates and greatly simplifies the due diligence process required to comply with the new Hong Kong Securities and Futures Commission rules. However, without a technology solution, exchanging information would remain a manual, bilateral process.
"Markit's technology will replace the need for a mass of bilateral conversations and the management of a large volume of pages of documentation that would be required in the absence of an automated solution."