Recent Developments in Hong Kong’s Brokerage Firms
In recent developments, a number of Hong Kong-based brokerage firms, including Victory Securities and ED Securities, have successfully upgraded to License 1, signaling a new phase in the region’s financial landscape. Guotai Junan International, one of the notable Chinese-funded brokerages, is among several entities seeking this crucial license, with more competitors expected to enter the fray shortly.
Business Strategies of Brokerage Firms
These brokerage firms focus primarily on the distribution of trading services rather than operating their own trading exchanges. Their business strategy typically involves setting up an Omnibus Account within a licensed exchange, which allows them to connect to the trading systems and offer clients access to compliant cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). Notably, these services intentionally avoid high-risk investments such as meme coins and scams, often referred to as rug pulls.
Compliance Standards and Regulations
Although different firms may have varying approaches, the compliance standards across these local brokerages, particularly around Know Your Customer (KYC) protocols, suitability assessments, and investor education measures, align closely with those established by Guotai Junan International. Furthermore, a common regulation among these firms prohibits residents from mainland China from participating in their trading activities, ensuring a layer of compliance with local and international regulations.
Conclusion
As more firms follow suit, the Hong Kong brokerage scene is shaping itself into a more regulated and stable environment for cryptocurrency trading.
