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ONC LawyersONC Lawyers
Hong Kong

Keeping proper audit trail of client orders is a basic and fundamental requirement expected of persons licensed under the Securities and Futures Ordinance (Cap. 571) as it assists the management of licensed corporations to detect and prevent irregularities and fraudulent activities. It also provides reliable evidence if any dispute arises between a broker and its clients about trade orders.

In this regard, the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (the “Code of Conduct”) and Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the Securities and Futures Commission (the “Internal Control Guidelines”) published by the Securities and Futures Commission (“SFC”) set out, among others, the requirements and procedures in relation to order recording and operation of discretionary accounts. However, very often licensed persons misuse discretionary accounts and contravene the order recording requirements under the Code of Conduct.

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December 2014