The Securities and Futures Commission of Hong Kong has reprimanded and fined Standard Chartered Securities (Hong Kong) Limited HK$2.6 million (US$332,500) for internal control failures relating to the short-selling of orders and breaches of the Securities and Futures (Financial Resources) Rules.

The SFC found that, between January 2014 to August 2015, Standard Chartered failed to evolve adequate systems, controls and procedures and, as a result, broke the rules at least 61 times in ways that involved short sales executed by 11 traders from different trading desks.

The SFC also found that Standard Chartered mis-interpreted and broke the rules by incorrectly including the amounts receivable from its clearing agent, Standard Chartered Bank (Hong Kong) Ltd, as liquid assets in its financial returns for January to September 2015. As at 31 August 2015, Standard Chartered Securities had a required liquid capital deficit of HK$2 billion when the receivables from Standard Chartered Bank were excluded from its liquid assets.

The SFC argues that Standard Chartered Securities was in breach of its code of conduct and its Management, Supervision and Internal Controls Guidelines.

Standard Chartered Securities is licensed under the Securities and Futures Ordinance to carry on business of Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), Type 5 (advising on futures contracts) and Type 6 (advising on corporate finance) regulated activities.