Background: SFC (regulator in Hong Kong) requires Online platforms to conduct a Suitability test on their Clients to ensure that the products being offered to them are in line with their risk profile and appetite. Clients are only to be allowed to trade products that are suitable for them.
The main aim of this regulation is to ensure that Complex products are only offered to Clients with the right risk appetite and sophistication. This regulation is applicable to all SCM HK Clients except Institutional Professional Investors.
1. When trying to trade complex product on platform for the first-time/before taking the test. Below disclaimer will pop up:
2. Where to find the Suitability test: Account-Other-Suitability Test
3. When you click on Open the only products that can be seen set as appropriate are the ones classified as Non-Complex because of which all Clients can trade them. The appropriateness for the rest of the products will change based on result of the test.
4. For Clients categorized as Conservative or Balanced attempting to trade a complex product, the below disclaimer will pop up preventing them from doing the trade:
5. For Clients categorized as aggressive or speculative attempting to place trade in Complex product, the below disclaimer will pop up and will need to be acknowledged before they can proceed with the trade:
- Do all Clients of SCM HK need to take the Suitability test?
No, only Clients who trade Complex products are subject to the Suitability test which is why the first time any Client will be prompted to take the test will be when they try to place a trade on a Complex product or if they have newly onboarded and are logging into the platform for the first time.
- Client has done the test and is still unable to place trade in complex product. Why is that?
Clients are reminded to log off and back on for changes to take effect. If Client is unable to do a trade even after that then it is likely that they are not suitable for the product and should be seeing the disclaimer shown in screenshot 5 above.