Circular to Licensed Corporations which are Participants of The Stock Exchange of Hong Kong Limited or Hong Kong Futures Exchange Limited – Licence Holders Insurance Scheme for Exchange Participants

The Securities and Futures Commission of Hong Kong (SFC) has issued a circular providing information on the arrangements of the license holders insurance scheme applicable for the scheme year from April 1, 2023 to March 31, 2024 (both dates inclusive).
The scheme applies to corporations which are licensed under the Securities and Futures Ordinance and which fall into one of the following two categories:
1. Participants of the Stock Exchange of Hong Kong Limited and licensed for Type 1 regulated activity (i.e. dealing in securities) and
2. Participants of the Hong Kong Futures Exchange Limited and licensed for Type 2 regulated activity (i.e. dealing in futures contracts).
The insurance coverage under the scheme is mandatory to above specified market participants to safeguard against risks arising from their activity. The insurance premiums (and coverage specifics) are reevaluated every year and – based on the outcome of the evaluation – established for the upcoming year. The Circular specifically describes
– the maximum insurance coverage per activity ($15 million);
– the deductibles per claim to be met by each insured participants ($3 million); and
– the premium allocation, including a basic fee to cover the administrative costs of the insurance and a variable fee based on a participant’s annual turnover in the previous calendar year.
The SFC has also published corresponding updated frequently asked questions (FAQs) regarding this issue. Please see in this context EventID #20921 for more information.