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SFC action highlights importance of complying with electronic trading rules

Hong Kong’s electronic trading rules became effective on 1 January 2014. A recent enforcement action by the SFC highlights the importance for licensed corporations to comply with these rules.

On 14 May, the SFC publicly reprimanded Citigroup Global Markets Asia Limited for failures in its algorithmic trading system in 2009 and 2010 that resulted in material increases or decreases in the prices of relevant listed stocks within a very short period of time. In addition to the public reprimand, Citigroup was required to engage an independent reviewer to conduct a forward-looking review of its algorithmic trading system to ensure compliance with the electronic trading rules.

The SFC also stated that, if the failures had occurred after the electronic trading rules came into effect on 1 January 2014, it would have imposed a heavy fine.

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Scott Carnachan

Consultant | Financial Services

Email or call +852 2825 9265

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