Interactive Brokers Hong Kong Limited Fined $4.2 Million by SFC for Regulatory Breaches

The Securities and Futures Commission of Hong Kong (SFC) has reprimanded and fined Interactive Brokers Hong Kong Limited $4.2 million for regulatory breaches related to the handling of client assets. 

An SFC investigation found that between December 3, 2017, and October 23, 2020, Interactive Brokers Hong Kong Limited relied on expired standing authority of 7,911 clients and loaned their securities listed on the Stock Exchange of Hong Kong Limited pursuant to a securities borrowing and lending agreement. The incident arose from the company’s failure to send these clients renewal notices of the standing authority during the material time due to a programming error.

In determining the penalty, the SFC considered all relevant circumstances, including the company’s self-reporting of the breach and remedial actions, the unintentional nature of the misconduct with no evidence of client losses, and their cooperation in addressing regulatory concerns and accepting the SFC’s findings and disciplinary action.

Interactive Brokers Hong Kong Limited is licensed under the Securities and Futures Ordinance to conduct business in Type 1 (dealing in securities), Type 2 (dealing in futures contracts), and Type 3 (leveraged foreign exchange trading) regulated activities.