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3. Market infrastructure & trading
   • Definitions of certain terms under the Securities and Futures Ordinance (SFO)
   • Position limits and notices of reportable positions
   • Section 34 of the SFO
4. Section 34 of the SFO

Q1 : What is section 34 of the SFO?

A:

Section 34 of the SFO prohibits the use or taking of certain titles (or anything which closely resembles such titles) without the SFC’s authority or reasonable excuse. Any breach is an offence under the SFO. The specific titles prohibited under section 34 (restricted titles) are as follows:

Restricted titles in English	Restricted titles in Chinese
“stock exchange” “stock market” “commodity exchange” “futures exchange” “futures market” “unified exchange” “united exchange”	“證券交易所” “股票交易所” “證券市場” “股票市場” “商品交易所” “期貨交易所” “期貨市場” “聯合交易所”

Q2 : What factors does the SFC take into account when considering whether the taking or use of a particular name requires approval under section 34 of the SFO?

A:

In general:

1. if the name includes any of the restricted titles, approval under section 34 of the SFO is required.
2. if the name does not include any of the restricted titles, the SFC will consider whether the name closely resembles any of the restricted titles. In assessing this, the SFC will take into account:
   1. the nature of the businesses and activities that are or may be conducted under the name, and whether these are akin to the businesses or activities of an exchange; and
   2. the implications that may arise from using or taking the name, eg, whether it may give the impression that the businesses and activities conducted under the name are akin to those of an exchange.

The purpose of section 34 is to protect investors from being misled or confused into thinking that the businesses or activities carried on under the name are regulated by the SFC as an exchange type operation. For any related questions, please contact the SFC at enquiry@sfc.hk.

Q3 : Under what circumstances will the SFC grant approval under section 34 of the SFO?

A:

In general, the SFC will grant approval under section 34 only if:

1. the SFC considers that the name includes any of the restricted titles or closely resembles any of those titles (see Q2 above);
2. the businesses or activities to be conducted under the name include businesses or activities that are similar to an exchange; and
3. the requisite licence, approval or authorisation (howsoever described) under the SFO for conducting such businesses or activities has been, or is to be, obtained from the SFC.

Q4 : Does section 34 of the SFO only restrict the use or taking of certain titles in company names?

A: The prohibition under section 34 of the SFO applies in respect of any use or taking of the restricted titles. It therefore also prohibits, for example, the use or taking of such titles in respect of an operation, a trade name, etc.

Q5 : If a company has been communicating with the SFC concerning an application, notification or other regulatory matters, does the company need to seek section 34 approval separately?

A: Please discuss with the case officer at the SFC in charge of the company’s licensing application, notification or other regulatory matters to discuss the need for a section 34 approval.

Q6 : If a company has obtained approval under section 34 of the SFO to use certain restricted titles, but plans to change the scope of the businesses or activities conducted using those titles, does the company need to seek section 34 approval again?

A: We would encourage the company to contact the company’s case officer at the SFC for any relevant ongoing application, notification or other regulatory matters on varying the scope of the businesses or activities conducted using titles that have been approved under section 34 of the SFO.

Q7 : How can a company submit an application for approval under section 34 of the SFO?

A:

Persons planning to seek approval under section 34 should first contact the SFC at enquiry@sfc.hk or your contact person at the SFC for any relevant ongoing application, notification or regulatory matter before making any submission.

Q8 : What information will be needed in the application for approval under section 34 for the SFO?

A:

In general, the application will need to include the following:

1. the proposed title(s) in both English and Chinese;
2. the reasons of using the title(s);
3. details of how the title(s) will be used;
4. details of the person, or of the owner and management of the corporation intending to take or use the title(s); and
5. details of the businesses and activities to be carried out under the title(s), and whether any licence, authorisation or approval in respect of such businesses and activities has been obtained.

Q9 : Is there any application fee for seeking approval under section 34 of the SFO?

A: There is no application fee for seeking the approval.

Last update: 30 Dec 2024