Recently, there was a news report about the SFC's proposal to implement an investor identification system for securities trading in Hong Kong. The system is expected to enable the SFC to more effectively identify investors who place orders through intermediaries (brokerage firms or banks), enhance its market monitoring function, and thus strengthen investor protection.
Investor cooperation required The system requires intermediaries to submit their clients' identification document information, together with a brokerage client code assigned to the client, in one go to a confidential database maintained by the Stock Exchange.

Intermediaries need to comply with the Personal Data (Privacy) Ordinance and obtain the client's consent before transferring the client's identity document information to the confidential database. Everyone should note that we need to submit a consent letter to the intermediary before we can continue to purchase securities. Otherwise, we can only sell the securities we hold.

       If the client has submitted his/her identification documents to the intermediary when opening an account, then basically he/she only needs to follow the intermediary’s instructions and provide his/her consent.
If the client holds a Hong Kong identity card but uses other identity documents such as a passport to open an account, the intermediary will follow up and update your Hong Kong identity card information.

Intermediaries only need to hand over the name, number, place of issue and type of the client's identity document. There is no need to hand over a copy of their identity document, nor will they hand over their other information (such as date of birth, address or telephone number) to the confidential database. In addition, the information transferred by the intermediary to the database is one-time in nature, and updates are only required if the client's identity document information changes in the future. The client information provided by the intermediary to the confidential database will be protected by encryption technology. Only authorized personnel of the SFC and the Stock Exchange can access the data in the database. Any data access actions and login failures will be recorded in detail, and unauthorized logins will be investigated. Data security and access monitoring measures will be updated regularly to keep up with the latest technological developments.

The SFC is currently consulting on an investor identification system, which is expected to be implemented in 2022.