SFC proposes enhancements to the Investor Compensation Regime

  The Securities and Futures Commission (SFC) today launched a two-month consultation on proposed enhancements to the Investor Compensation Regime (Note 1).

Key proposals include increasing the compensation limit from $150,000 to $500,000 per investor per default and covering northbound trading under Mainland-Hong Kong Stock Connect (Note 2).

In addition, the SFC proposes to raise the trigger levels for suspending and reinstating the Investor Compensation Fund levies from $1.4 billion to $3 billion and from $1 billion to $2 billion respectively (Note 3). This will not affect the levy suspension currently in place (Note 4).

Another proposal would empower the SFC to make interim compensation payments in exceptional circumstances where delays may raise or increase systemic concerns.

"These changes are needed as the Hong Kong markets have undergone substantial change since the last formal review of the Investor Compensation Regime," said Mr Ashley Alder, the SFC's Chief Executive Officer. "The proposed enhancements will benefit investors and the wider market and better equip the SFC to manage potential systemic risks."

Interested parties are invited to submit their comments in writing by 27 June 2018 via the SFC's website (, by email to, by post or by fax to 2521 7917.

  1. The Investor Compensation Regime has been in place since 1 April 2003 when the Securities and Futures Ordinance came into effect.
  2. Mainland-Hong Kong Stock Connect is a mutual market access programme under which investors in each market can trade some securities listed in the other market. Please see the joint announcements by the SFC and the China Securities Regulatory Commission on 10 April 2014 regarding Shanghai-Hong Kong Stock Connect and on 16 August 2016 regarding Shenzhen-Hong Kong Stock Connect.
  3. The Investor Compensation Fund may be funded by transaction levies which are payable by buyers and sellers of securities and futures contracts traded on the Stock Exchange of Hong Kong or the Hong Kong Futures Exchange. The levy suspension and reinstatement mechanism, introduced following a 2005 public consultation, allows the levies to be suspended and subsequently reinstated when the net asset value of the Investor Compensation Fund reaches certain levels. Under this mechanism, the levies have been suspended since 19 December 2005.
  4. Under the proposals, a levy reinstatement would not be triggered at the Investor Compensation Fund's current size, which is around $2.36 billion. However, levies may have to be reinstated if the fund falls below the proposed $2 billion.

(This news is extracted from the SFC Website "News and announcements")