Frequently Asked Questions 
31/08/2009 
 

Chapter 5

Market Operations and Trading


5.1

Participating in the Hong Kong Market

 

5.1.1

How can investors participate in the Hong Kong securities and derivatives markets? How should they select a securities or derivatives dealer?

Investors need to trade Hong Kong securities and derivative products through Securities and Futures Commission (SFC) licensed persons or registered institutions. Investors may refer to the "Public Register of Licensed Persons and Registered Institutions" at the SFC website (www.sfc.hk) for the list of licensed persons and the regulated activities they are licensed to conduct.

If a licensed person or registered institution is an Exchange Participant, its trading facilities can have direct access to HKEX's trading facilities. A list of Exchange Participants is available at “Participant Information” of “Exchange and Clearing House Participants” under “Market Operations” of the HKEX website.

When selecting a securities or futures company, investor should compare services and fees of different companies.  Companies who provide in-depth research, investment advice or other value-added services may charge higher commissions than those which merely trade on behalf of clients. Some offer cash accounts only; others also manage discretionary accounts or margin accounts. Investors should weight their own investment and financial needs carefully before deciding on a securities or futures company and the type of accounts to be opened.

HKEX operates securities and derivatives markets that are open and free and welcomes the participation of investors from all over the world. However, overseas investors should comply with regulations governing overseas trading in their own countries or places of residence before trading in Hong Kong.

 

5.1.2

What channels are there for Mainland individual investors to participate in the Hong Kong securities market?

At present, Mainland individual investors can invest in the Hong Kong securities market through QDII products.

Qualified Domestic Institutional Investors, commonly known as QDII, are qualified domestic financial institutions entrusted by domestic investors to invest in stipulated overseas financial products according to their agreed investment terms and methods. Investment gains and risks will be borne by investors or shared between investors and banks according to agreed terms.

Under the QDII scheme, individual investors directly pass their money to banks, insurance companies and fund houses for investment in overseas capital markets. The investment channels of domestic individual investors are expanded and global allocation of investors’ assets is made possible. Investors can enjoy the fruits of global capital markets while diversifying their risks.

Please check the latest Mainland announcements for an updated QDII list, product details and subscription methods.

 

5.1.3

What are the procedures for opening a securities or futures account?     

When opening a securities or futures account, investors are required to fill in an application form and sign a client's agreement. Requirements relating to basic information in a client's agreement including specific risk disclosure statements are set out in the Code of Conduct for the Persons Licensed by or Registered with the SFC.

As the client's agreement is legally binding, investors should only sign it when they are sure that all information is correct. When in doubt, they must seek legal advice.

In their own interest, investors should open accounts with securities or futures companies in person, and before dealing in securities or futures, they should make sure that they know the due day for settlement and the basis on which commission, interest and other charges are calculated. To protect market interests, securities or futures companies may require prospective clients to provide reference letters. They may accept only investors with references from existing clients or the companies' acquaintances to ensure prospective clients' capability to meet the obligations of share transactions.