Hong Kong SFC Warns Investors About Trading Volatile Stocks


The SFC has warned investors of the risks of trading some highly volatile stocks as investment discussion forums in social media gain prominence and become increasingly influential.

February 4, 2021 | AtoZ Markets – The Hong Kong’s Securities and Futures Commission (SFC) warned investors on Wednesday about the risks of trading highly volatile securities as investment discussion forums on social media become more influential.

SFC’s Warning To Investors Trading Volatile Stocks

Mass buying by amateur traders over the past two weeks, fueled by posts on the popular Reddit forum WallStreetBets, has driven wild price gyrations in companies that big US fund managers had bet against, including videogame retailer GameStop and cinema operator AMC Entertainment.

This has raised global regulators’ concerns. US Treasury Secretary Janet Yellen is calling a meeting of top US financial regulators this week to discuss the market volatility.

Investors should be aware that brokers may have rights under the terms and conditions of customer agreements to suspend trading services in some circumstances, including in the case of service suspension by overseas execution brokers.  In this situation investors may not be able to open new positions or close out existing positions, which may result in unexpected losses within a short period,” the SFC said.

Read also: Hong Kong SFC Warns of Social Media Investment Scams

The Monetary Authority of Singapore (MAS), on Tuesday, also warned investors of risks related to trading in securities incited by online forums and social media chat groups.

The Hong Kong’s markets watchdog said in a statement it was in close dialogue with local and overseas regulatory counterparts about investor risks in volatile stocks.

The statement said investors should be aware that brokers might have rights under the terms and conditions of customer agreements to suspend trading services in some circumstances.

The SFC further added that it would take regulatory action if there was evidence that intermediaries were not acting in the best interests of their clients and integrity of the market.

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