HKEX unveils ID model for investors in northbound trading

It plans to identify orders at the client level for market monitoring purposes.

The Hong Kong Exchange and Clearing Limited (HKEX) has unveiled a proposal for an investor ID model for northbound trading through stock market access programmes with exchanges in Shanghai and Shenzen Stock Connect, according to a news release from Hong Kong Stock Exchange (SEHK).

The ID system serves surveillance and market monitoring purposes and will enable real-time monitoring from regulators in participating markets.

The proposed model requires China Connect Exchange Participants (CCEPs) to assign a unique broker-to-client assigned number (BCAN) to their trading clients.

The Client Identification Data (CID) will then be turned over HKEX which will forward the information to Mainland Exchanges.

If the BCAN mapping has not been received before the cut-off time, the client shall not be allowed to place northbound orders on that trading day.

“We think the current proposed model is a good approach for our market. From making data privacy protection a top priority and allowing investors a choice to opt in to decentralising the assignment of investor ID numbers, we have struck a balance in meeting the regulatory requirements and addressing market participants’ concerns,” said HKEX Joint COO Roger Lee.

The ID system is expected to take effect in the third quarter of 2018.