Hong Kong’s Securities and Futures Commission has imposed a HK$2.5 million fine on XHK Limited, the Hong Kong entity linked to multi-asset brokerage EXANTE, for serious regulatory violations involving capital adequacy, financial reporting, and client money handling. The breaches occurred between January 2020 and June 2021, when accounting errors in financial returns led to liquid capital deficits ranging from HK$3.6 million to HK$32.3 million over four months.
The SFC found XHK transferred up to HK$206 million in client funds to overseas brokers without proper authorization in March and April 2021, and failed to remove approximately HK$38 million in non-client money from segregated accounts within required timeframes between February 2019 and October 2021. The regulator attributed these failures to inadequate oversight of external service providers and insufficient staff knowledge of financial resource rules. XHK self-reported the issues, cooperated with investigators, and confirmed no client losses occurred.
FXnCO Insight
Broker-dealers using XHK or EXANTE for execution should review counterparty risk procedures and confirm current compliance status before continuing relationships.
Source: Finance Magnates