A regular round-up of compliance news, such as fines, permissions, new technology solutions to make tracking risks easier, and other developments.

Singapore
Three prominent financial groups in Singapore have launched a checklist to guide listed and unlisted business entities on how to carry out general meetings when heightened safe distancing measures are in place to fight the COVID-19 pandemic.

The checklist has been rolled out by the Monetary Authority of Singapore, the Accounting and Corporate Regulatory Authority and the Singapore Exchange Regulation.

The guidance is aimed at companies, variable capital companies, business trusts, unit trusts and debenture holders.

If issuers need certain essential persons to be in the same physical location to facilitate the conduct of a “virtual” meeting, the Ministry for Trade and Industry would grant an automatic time-limited exemption to permit temporary operations at the same physical location, provided that there are not more than six people present and they are complying with safe distancing measures.

Issuers whose annual general meetings are due to be held between 16 April and 31 July 2020 may alternatively choose to defer the meetings by up to 60 days, as previously announced.
 

Hong Kong’s SFC
The Securities and Futures Commission has found that the vast majority of leveraged foreign exchange trading clients it tracked in 2018 were retail investors, raising questions about whether they should be involved in this area.

The survey found that 98 per cent of active LFET clients were retail investors and more than 99 per cent of turnover in the LFET market was attributable to rolling spot forex contracts. Turnover was relatively low for more complex forex products such as options and forward contracts, which may be difficult for retail investors to understand. 

All LFET products were traded on an over-the-counter basis, the SFC said in a statement last week. 

As part of the SFC’s survey, a sample of brokers were selected to provide more detailed information. These brokers reported that more than 60 per cent of their LFET clients made net trading losses in LFET, and some investors suffered losses of over HK$1 million. 

"Leveraged foreign exchange trading may not be suitable for everyone. It is done on a margin basis and these products may involve complex or non-standard features. Even experienced investors may suffer huge losses in such trading, especially in times of high market volatility," Ashley Alder, the SFC’s chief executive, said. "Brokers should ensure that their clients fully understand the nature and risks of these products and have sufficient financial resources to assume the risks and bear the potential losses."

The survey data covered the 32 firms licensed for Type 3 regulated activity (leveraged foreign exchange trading) which reported on their LFET activities in 2018. The sample contributed 77 per cent of market turnover and their clients accounted for 41 per cent of total active LFET clients.