Hong Kong's securities regulator issued two restriction notices on Friday, 16 December, to Interactive Brokers LLC ("IBLLC") and Interactive Brokers Hong Kong ("IBHK"), after it suspected a particular client account was being used for market manipulation. The Securities and Futures Commision' ("SFC") notices prohibit the firms from dealing with or processing certain assets in that account. The regulator said the account was also suspected of unauthorised internet trades in hacked securities accounts at other firms, between 7 and 15 October 2015.
"The notices prohibit IBLLC and IBHK, without the SFC's prior written consent, from dealing with the suspected proceeds or processing any instructions from the client, or any authorised representative, for those proceeds, including: entering into securities or futures transactions; withdrawing securities, futures or cash; and/or transferring sales proceeds of securities or futures," the securities regulator said.
Although the SFC's investigation is continuing, it is not investigating either brokerage and the "notices do not affect the operations of IBLLC and IBHK or their other clients". Both firms, however, "must notify the SFC if they receive any account instructions" from the client in question, the regulator said. The SFC also said both IBLLC and IBHK cooperated with its investigation, which is also being aided by the Cyber Security and Technology Crime Bureau of the Hong Kong Police Force.
The SFC issued the above notices under s. 204 and s. 205 of the city's Securities and Futures Ordinance ("SFO").
Both brokerages are corporations licensed under the SFO to carry on Type 1 (dealing in securities), Type 2 (dealing in futures contracts) and Type 3 (leveraged foreign exchange trading) regulated activities.
"The SFC considers that the issue of the notices is desirable in the interest of the investing public or in the public interest," the regulator said.