HK SFC launched a consultation on proposed guidelines for market soundings.
Clarify regulatory expectations and assist intermediaries in their compliance with principle to conduct business activities honestly, fairly during market soundings.
Proposed Guidelines
Define market sounding as the communication of non-public information, regardless if it is price-sensitive, with potential investors prior to announce a securities transaction.
Gauge interest in potential transaction or determining specifications of a potential transaction, such as its potential size, pricing, structure by licensed/ registered person.
Not apply to communications regarding speculative transactions or trade ideas, ordinary day-to-day trade transactions and public offerings of securities.
Outline factors to consider of the corresponding potential transaction materializing when determining whether a disclosing person is conducting market soundings.
Core principles include market integrity, governance, policies/procedures, information barrier controls, review/monitoring controls and authorized communication channels.
Specify specific requirements for disclosing persons as well as recipient persons.
Propose to provide a six month transition period for the industry after the gazettal.
Consultation End
Consultation is open for public opinions which shall be submitted by Dec. 11, 2023.
Oct. 2024 Consultation Conclusions
On Oct. 31, 2024, HK SFC published consultation conclusions on Guidelines for market soundings, following a two-month public consultation that ended Dec. 11, 2023.
HK SFC received 27 written submissions from industry stakeholders, consultation focused on protocols for protecting confidential data during market sounding process.
Guidelines will apply to confidential data entrusted by clients, issuers or shareholders.
Scope narrowed to cover market soundings for shares listed on exchanges, securities likely to materially affect price of listed shares; record retention reduced to 2 years.
Requirements for recorded communications apply to disclosing persons, not recipients.
Guidelines to be gazetted on Nov. 1, 2024, with six-month transition period provided.
Effective date set for May 2, 2025, additional guidance given through FAQs.
Regulators
HK SFC
Entity Types
B/D; Bank; IA; Inv Co
Reference
FAQ, Rsp, PR, OG G.N. 6499, 10/31/2024; CP, PR, 10/11/2023
