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Hong Kong & Singapore Regulators Warn Investors of Increased Trading Risks Triggered by Social Media & Online Forums

4th February 2021 | Hong Kong

Hong Kong and Singapore regulators have issued statements, warning investors of increased trading risks triggered by social media and online discussion forums.

” Hong Kong & Singapore Regulators Warn of Increased Trading Risks “

The Hong Kong Securities and Futures Commission (SFC) in the statement warned investors that brokers may revise margin requirement in short notice and have the right to suspend trading.

Monetary Authority of Singapore (MAS), and Singapore Exchange Regulation (SGX RegCo) noted investors interest in GameStop, AMC Entertainment Holdings, and BlackBerry and on discussion forums, may suggest speculative activities.  Some actions may amount to misconduct under the Securities and Futures Act (SFA).  View all warnings below.

 


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SFC, MAS, SGX RegCo Issues Warning

Singapore | Leading financial centre in Asia

The Hong Kong Securities and Futures Commission (SFC), Monetary Authority of Singapore (MAS), and Singapore Exchange Regulation (SGX RegCo) have issued official statements over the last 2 days to warn investors, and in recent times, have increased issuing warnings & alerts to investors.

 

Hong Kong Regulator: SFC

  • SFC has taken note of the recent extreme price volatility in some stocks and related options in overseas markets and cautions investors on the risks of trading highly volatile securities, including overseas-listed stocks as investment discussion forums in social media gain prominence and become increasingly influential.
  • Investors should be aware that brokers may have rights under the terms and conditions of customer agreements to suspend trading services in some circumstances, including in the case of service suspension by overseas execution brokers.  In this situation investors may not be able to open new positions or close out existing positions, which may result in unexpected losses within a short period.
  • Investors should carefully manage market risks arising in any very volatile market.  In particular, brokers may need to revise the margin level for specific products within a very short period in order to properly manage their risk exposures and to meet settlement obligations to clearing houses or other execution brokers.  Investors may be asked to meet immediate margin calls to cover their open positions and provide additional margin deposits or collateral.

”  Brokers have the right to suspend trading services “

The SFC is in close dialogue with local and overseas regulatory counterparts about investor risks in volatile stocks, and will work to ensure fairness and orderliness in our markets.  The SFC will not hesitate to take regulatory action if there is evidence that intermediaries are not acting in the best interests of their clients and the integrity of the market.

 

 

Singapore Central Bank & Regulator: MAS & SGX RegCo

  • Advise the investing public to be on heightened alert to the risks related to trading in securities incited by online discussion forums and social media chat groups.
  • Noted investor interest in Singapore in recent activities in US markets relating to stocks such as GameStop, AMC Entertainment Holdings, and BlackBerry.  Discussions in online websites and platforms suggest the possibilities for similar speculative activities in the Singapore stock market.
  • Public should be aware that certain individuals may exploit this interest for their own benefit through “pump and dump” activities that can amount to market misconduct under the Securities and Futures Act (SFA)
  • These perpetrators may do so by setting up positions in certain securities. They then use social media chat groups to incite investors to buy these securities in a manner similar to how individual investors collectively pushed up certain share prices in the US.
  • As soon as the prices of these securities have risen to specific levels, such perpetrators may then sell the securities which they had accumulated earlier without alerting other investors.

” can amount to market misconduct under the Securities and Futures Act (SFA) “

Any conduct that intentionally, knowingly, or recklessly creates a false or misleading appearance regarding the active trading, market or price of securities is prohibited under the SFA. Other prohibited acts include but are not limited to the making or dissemination of false or misleading statements, fraudulent inducement to deal in securities, and the employment of manipulative and deceptive devices. Investors should make sure they refrain from conduct that could infringe the SFA.  Firm action will be taken against those who breach the SFA or other laws and regulations.

MAS and SGX RegCo are closely monitoring market activities for signs of false trading or other forms of misconduct. Restrictions may be placed on the trading accounts of those suspected of such misconduct and the relevant securities may be placed under designation or suspension. MAS and SGX RegCo are working closely with SGX member firms to ensure our market remains orderly.

 

$11.7 million in Penalties, 9 Convicted for Market Misconduct

In the 2020 Monetary Authority of Singapore (MAS) Enforcement Report covering the period January 2019 to June 2020  (1.5 years), the central bank of Singapore imposed $11.7 million in civil penalties and secured criminal conviction on 9 individuals for market misconduct and related offences.

 

Ashley Alder, SFC’s Chief Executive Officer:

“Cracking down on organised investment fraud on online platforms is a high priority.  To avoid falling victim to these scams, the public must be vigilant when offered unsolicited investment advice or tips on social media.”

 

 

About Securities and Futures Commission (HK)

The Securities and Futures Commission (SFC) is an independent statutory body set up in 1989 to regulate Hong Kong’s securities and futures markets.

We derive our investigative, remedial and disciplinary powers from the Securities and Futures Ordinance (SFO) and subsidiary legislation. Operationally independent of the Government of the Hong Kong Special Administrative Region, we are funded mainly by transaction levies and licensing fees.

Visit: Hong Kong Securities and Futures Commission

 

Singapore Exchange Regulation (SGX RegCo) Board

Founded in 2017, SGX RegCo Board is a subsidiary of Singapore Exchange (SGX) and is a non-profit group to undertake all governance and regulatory function of SGX to ensure integrity and stability of the markets and clearing houses operated by SGX.

SGX RegCo Leadership

  • Professor Tan Cheng Han, Chairman and Profession of Law at National University of Singapore
  • Tan Boon Gin, CEO and Chief Regulatory Officer of SGX

 

Monetary Authority of Singapore

About Monetary Authority of Singapore
(MAS)

The Monetary Authority of Singapore (MAS) is Singapore’s central bank and integrated financial regulator. The Monetary Authority of Singapore (MAS) promotes sustained, non-inflationary economic growth through appropriate monetary policy formulation and close macroeconomic surveillance of emerging trends and potential vulnerabilities.

As an integrated financial supervisor, MAS fosters a sound financial services sector through its prudential oversight of all financial institutions in Singapore – banks, insurers, capital market intermediaries, financial advisors, and stock exchanges. It is also responsible for well-functioning financial markets, sound conduct, and investor education.

MAS also works with the financial industry to promote Singapore as a dynamic international financial centre. It facilitates the development of infrastructure, adoption of technology, and upgrading of skills in the financial industry.

Visit: Monetary Authority of Singapore




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