The Hong Kong Securities and Futures Commission (SFC) is introducing new Market Sounding Guidelines, coming into effect on 02 May 2025. The guidelines aim to bring greater structure, oversight, and accountability to market sounding activities.
As firms prepare to meet the requirements of the new Guidelines, understanding the changes and implementing the right internal processes and compliance policies is critical.
See an overview below of what your firm should consider in the lead-up to the Market Sounding Guidelines’ effective date, see our in-depth article, or join our live webinar to hear the insights first-hand. Webinar registrants will also gain priority access to the recording.
A Short Note About Market Soundings
Market Soundings involve the communications firms have with potential investors, lenders, or trading personnel prior to the public announcement of an actual or imminent transaction. Market Soundings aim to gauge the interest of a potential transaction which may involve the disclosure of confidential information and/or Material Non-Public Information (MNPI). However, improper handling of sensitive information and wall-crossing events during these soundings can lead to market abuse risks, regulatory breaches, and reputational damage.
What’s Changing in Hong Kong?
The SFC’s Guidelines establish a more structured framework for managing market-sounding activities. Financial firms under the HK SFC’s jurisdiction—or larger international firms with Hong Kong operations—will need to follow clearer protocols when conducting soundings. The new requirements include:
- Defined obligations for disclosing and receiving parties, ensuring both sides understand their responsibilities.
- Stronger information barriers and safeguards to mitigate insider trading risks.
- Comprehensive documentation and recordkeeping to demonstrate compliance.
The Guidelines also demonstrate a greater alignment with global regulatory standards, such as the EU’s Market Abuse Regulation (MAR) and the UK FCA’s market-sounding framework.
What Firms Should Do to Prepare
Financial firms should begin by assessing their existing market sounding processes. They should ensure that compliance policies and internal processes are in line with the SFC’s expectations
Firms must evaluate whether their existing compliance framework for handling sensitive information and wall-crossing will meet the SFC’s standards. Clear documentation should also be kept throughout the market sounding process to prove compliance.
Firms should also not overlook the vital role of technology in upholding market sounding regulations. Manual tracking of market sounding activities can be incredibly costly, inefficient, and pose serious risk through accidental omission of data due to manual handling.
Many firms have already implemented RegTech solutions that offer automated recordkeeping, eCommunications surveillance and archiving, MNPI management, personal trading monitoring, and much more to streamline their compliance efforts.
The SFC and the Monetary Authority of Singapore (MAS) are leading financial regulators in Asia. The introduction of stricter market sounding regulations in Hong Kong may set a precedent for other jurisdictions to follow in the future. Even firms outside Hong Kong should ensure their global policies are adaptable to emerging regulatory trends.
Join the Webinar for Expert Insights
To help financial firms understand the upcoming regulatory changes and implement the right policies and processes, MyComplianceOffice is hosting an in-depth live webinar:
Market Sounding Compliance: Hitting the Right Regulatory Notes
Our exclusive webinar, featuring industry experts from MyComplianceOffice (MCO) and Kroll, will explore what firms must consider before the Guidelines take effect.
We will provide a clear overview of what must be reviewed— from managing sensitive information to wall-crossing processes, trading oversights, and employee training.
📅 APAC Session: Wed 26 March | 10:00 AM HKT/SGT | 1PM AEDT (AU)
🌎 US/UK Session: Wed 26 March | 10:00 AM EDT (US) | 2PM GMT (UK)
🔗 Register now: https://hubs.ly/Q039jGVq0
With the compliance landscape evolving, firms must ensure they are well-prepared to meet regulators’ expectations and safeguard themselves from unnecessary risk.
