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Markit selected by the industry to deploy compliance solution for equity trading in Hong Kong

Markit, a leading, global financial information services company, today announced that it has been selected by members of the Asia Securities Industry and Financial Markets Association (ASIFMA) to provide the online solution to facilitate compliance with Hong Kong’s Securities and Futures Commission’s (SFC) new electronic trading rules.

The new rules take effect on January 1st 2014 and require Hong Kong-licensed brokers to attest that their electronic trading systems are properly supervised, tested and risk managed. The rules also require customers to acknowledge that they understand the algorithms and other technologies used by their brokers.

Markit will use its Counterparty Manager technology to provide a solution that will help financial institutions exchange the information required under the new rules (SFC Paragraph 18 and Schedule 7) easily and efficiently. The solution will offer an electronic format of the questionnaire designed by a number of industry associations (AIMA[1], ASIFMA, ATF[2], FPL[3], HKIFA[4]) to assist the buyside and brokers in exchanging the required information.

Using the Markit Counterparty Manager regulatory module, broker dealers will upload their answers as required in the questionnaire and disseminate them to their buyside counterparties. Buyside firms will be able to review the answers from each broker dealer and electronically acknowledge that they have done so. This acknowledgement will be transmitted directly to their counterparties, allowing sellside institutions to see which customers have fulfilled their compliance requirements.

Mark Austen, CEO of ASIFMA, said: “The industry standard questionnaire facilitates and greatly simplifies the due diligence process required to comply with the new Hong Kong Securities and Futures Commission rules. However, without a technology solution, exchanging information would remain a manual, bilateral process. Markit’s technology will replace the need for a mass of bilateral conversations and the management of a large volume of pages of documentation that would be required in the absence of an automated solution.”

George H. Molina, senior vice president and director of Asian trading at Franklin Templeton Investments, said: “For several months now the Asia TraderForum buyside industry group has been seeking an efficient solution to facilitate compliance with the SFC’s new electronic trading rules. We are pleased the industry has selected a single platform to assist us in managing the process.” Franklin Templeton Investments is a leading global fund management company at the forefront of industry technology solutions.

Kevin Gould, president of Markit and head of Markit Asia Pacific, said: “Our solution leverages our existing Counterparty Manager technology to help market participants in Asia Pacific adapt to the new regulatory environment. This technology allows market participants to use a single platform and API for multiple regulatory requirements across regions, lowering costs and operational headaches. Last year, we used Counterparty Manager to deliver the ISDA Amend platform, which facilitates compliance with Dodd-Frank, and recently extended the service to help businesses comply with Emir.”

Markit Counterparty Manager is used by market makers, asset managers and corporations for trading account onboarding and maintenance, reference data management, regulatory compliance and other reporting.

[1] Alternative Investment Management Association

[2] Asia TraderForum

[3] FIX Protocol Organisation

[4] Hong Kong Investment Funds Association