HKEx Participants and Trading Rights - Application Guide

Yes，Absolutely proactive。Any broker-dealer who wishes to use the trading facilities of the Stock Exchange and/or the Futures Exchange to conduct brokerage business of relevant products，Before submitting your application to HKEx，Must be licensed by the Securities and Futures Commission of Hong Kong (SFC)，Become a licensed corporation to carry out Type 1 (dealing in securities) or Type 2 (dealing in futures contracts) regulated activities。Before obtaining SFC license，HKEx will not accept applications from participants。

The two are deeply bound。To comply with the statutory requirements to become a relevant exchange participant，All exchange participants must hold trading rights on at least one relevant exchange。That is, a Stock Exchange participant must hold a Stock Exchange trading right，Futures exchange participants must hold a futures exchange trading right。Trading rights are the legal qualifications of a participant to trade within an exchange or through its system，You cannot just hold the name of a participant without trading rights。

Can't。Strict requirements for legal framework，The applicant must be a joint stock limited company incorporated in Hong Kong。If overseas entities want to directly access the Hong Kong Exchange，A locally registered joint stock company must be established in Hong Kong as a licensed corporate entity.，The local company then submits the application。

Applicants must comply with the capital requirements of the Securities and Futures (Financial Resources) Rules (FRR) at all times。Generally speaking，The minimum paid-up share capital for engaging in Type 1 regulated activity (no margin financing is provided) is HK$5 million，Liquid capital must be maintained at the same level；If securities margin financing is provided，The minimum paid-up share capital will be increased to HK$10 million.。For institutions applying to become HKSCC General Clearing Participant (GCP)，Entry barriers are extremely high，Must have a paid-up share capital of not less than HK$300 million，and liquid capital of not less than HK$100 million or the FRR stipulated level (whichever is higher)。

Executive allocation must undergo double review by the exchange and the China Securities Regulatory Commission。All executive directors who have been approved by the SFC as Responsible Persons (ROs) for relevant regulated activities，All must be registered as responsible personnel at the exchange and be included in the registration list。at any time，Exchange participants must have at least one executive director registered with the exchange as a responsible officer。also，During the review, the Hong Kong Stock Exchange will focus on assessing the market experience and suitability of the management.。

uncertain，However, it is mandatory to establish a compliant clearing link。Participants who purchase or sell securities must obtain settlement facilities from one of the following：(a) Become a clearing participant of the Central Settlement System (CCASS) yourself (such as a direct clearing participant DCP or a general clearing participant GCP)；or (b) Enter into legally binding agreements with at least one CCASS General Clearing Participant (GCP)、Binding and valid settlement agreement，Settled on his behalf。either way，All must ensure clear responsibilities for securities settlement and fund clearing。

Applicants must set up their own trading system infrastructure，Including choosing the network method to connect to the China Unicom Hong Kong Exchange Pilot Star Trading Platform (OTP-C)、Order corresponding trading hardware，and apply to the exchange to connect to the central transaction gateway session (OCG)。It is mandatory to complete the end-to-end system testing and market simulation exercises arranged by the Hong Kong Stock Exchange，Ensure that the broker’s own system will not affect the normal operation of HKEX’s core system，And only authorized personnel can operate the gateway session，Comprehensive protection of transaction security。

In addition to completing the statutory application form (Form 1, etc.)，Must also submit：(1) Certified copy of the latest financial statements or Form 1E (Statement of Financial Position) submitted to the SFC and the latest management accounts for the month preceding the date of application；(2) Operation and risk control plan (direct settlement/comprehensive settlement participants only)；(3) Group structure chart、Approved SFC license certificate and applicable clearing/participant agreement；(4) Identity and fit and proper statements of all responsible officers。

The fees that applicants must pay mainly include：Trading rights fee (HK$500,000 for each newly issued trading right)、Compensation Fund Contribution (HK$50,000 per trading right)，and a non-refundable application fee.。If you are a clearing participant，Clearing house participation fees (e.g. HK$50,000 per trading right) and reserve fund contributions must also be paid。All payments must normally be made by crossed cheque，Make the letterhead "Hong Kong Exchanges and Clearing Limited"。There will also be ongoing monthly fees for system dedicated lines and terminals.。

Exchange participants may only conduct securities trading business at their registered business addresses，Do not use a virtual address as your primary location of operations。Its trade name must be exactly the same as the name registered under the Business Registration Ordinance，Without the prior written consent of the Exchange’s Board of Directors，The name of a firm registered on the exchange cannot be changed.。therefore，Applicants must ensure that the actual office premises comply with the Exchange’s inspection requirements。

Private transactions are absolutely prohibited。Subject to exceptions expressly provided for in the rules (e.g. transfer on death)、Transfer to a company wholly owned by an individual、Except for very few exemptions such as liquidation or bankruptcy receivership)，Holders of trading rights on the Stock Exchange are not allowed to sell their trading rights、transfer、charge、pledge or constitute any trust。Transfer of trading rights not granted under the SEHK scheme is strictly prohibited，Any private transfer will be void and may result in disciplinary action。

On the premise that the data is fully prepared and the system development is smooth，Regular audits by the Hong Kong Stock Exchange generally take 4 to 8 weeks。But the overall time depends largely on the applicant's system development progress、Infrastructure construction and scheduling of participating in the Hong Kong Stock Exchange system testing (Testing Slot)。If it involves settlement participant application，Due to stricter capital verification and risk control plan review，The overall time taken may extend to 3 months or more。

Participants must continue to comply with the Exchange Rules，Regularly report financial status through the system (such as liquid capital declaration)，In case of change of major shareholders、Changes in directors and key personnel，Must report to the Hong Kong Stock Exchange and the Securities and Futures Commission in advance or within the prescribed time。also，Must fulfill strict anti-money laundering and market conduct obligations，May face annual compliance inspections by exchanges，Any major breach may result in disciplinary action or even revocation of trading privileges。

Common reasons for failure include：(1) The SFC license has not been approved or the conditions have not been met；(2) Demonstrated insufficient financial resources，Unable to meet corresponding capital requirements；(3) The senior management team’s lack of market experience or suitability has been questioned；(4) There are major flaws in the internal control and risk management systems，In particular, the AML and conflict of interest prevention mechanisms are not perfect.；(5) Failure to pass system testing or technical infrastructure failing to meet HKEx’s stability standards；(6) Providing false or inaccurate documents，Integrity record compromised。