Circular to Licensed Corporations which are Participants of The Stock Exchange of Hong Kong Limited or Hong Kong Futures Exchange Limited - Licence Holders Insurance Scheme for Exchange Participants

On April 09, 2026, this circular outlines the licence holders insurance scheme arrangements for the scheme year commencing 1 April 2026 and concluding 31 March 2027. The scheme applies to Category 1 licensed corporations, comprising participants of The Stock Exchange of Hong Kong Limited licensed for Type 1 regulated activity, and Category 2 licensed corporations, comprising participants of Hong Kong Futures Exchange Limited licensed for Type 2 regulated activity.

Regulatory Compliance Obligations

Pursuant to the Securities and Futures Ordinance, licensed corporations conducting specific regulated activities must secure insurance in accordance with the Securities and Futures (Insurance) Rules. These Rules mandate that policies cover specified risks with coverage amounts not less than the prescribed minimums.

Scheme Arrangement and Master Policy Details

The Industry Working Group ("IWG"), supported by the Securities and Futures Commission ("SFC"), appointed Marsh (Hong Kong) Limited as the scheme administrator for 2026/2027. Marsh has secured two master policies for Categories 1 and 2, co-underwritten by Lloyd’s Syndicate 1274 [Antares], Lloyd’s Syndicate 3000 [Markel], Lloyd’s Syndicate 1609 [Mosaic], Lloyd’s Syndicate 0435 [Faraday], Allied World Assurance Company Limited, and Berkley Insurance Company. Coverage indemnifies participants against fidelity risks related to dealing in securities, futures contracts, or both, subject to a $15 million indemnity limit per regulated activity annually and a $3 million deductible per claim. SFC will provide Marsh with participant details and correspondence information to facilitate premium allocation based on IWG methodology.

Premium Allocation Methodology

The IWG utilizes a methodology adopted from the previous scheme year, comprising a minimum basic premium and a variable premium. The basic premium, representing 20% of the gross premium for each Category, covers administration costs and is shared equally among participants. The variable premium, constituting the remaining 80%, is allocated based on individual participants’ annual turnover from the preceding calendar year relative to the total Category turnover, adjusted for applicable premium loading or discount factors.

Premium Loading and Discount Provisions

A fixed premium loading of $15,000 applies per claim notification lodged during the preceding scheme year (1 April 2025 to 31 March 2026). Additionally, paid claims exceeding the deductible incur loading factors based on the claim amount and time elapsed: claims over $5 million incur loadings of 60%, 48%, 36%, 24%, and 12% over the subsequent five years, while claims of $5 million or below incur loadings of 30%, 24%, 18%, 12%, and 6%. For Category 2 participants, premium discounts ranging from 12% to 60% apply based on annual turnover bands relative to the market total (e.g., 10%-20% turnover attracts 12% discount). Discounted amounts are returned to the pool and reallocated proportionally, ensuring the total industry premium remains unchanged.

Scheme Administration and Contact Information

Marsh (Hong Kong) Limited, acting as scheme administrator, will implement the premium allocation methodology and issue debit notes and insurance documents. Participants must ensure compliance with the Rules. Queries should be directed to the case officer or Marsh. Marsh contact details include Suite 3402-3406, 33/F & 34/F, One Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong (Phone: 2301 7000; Email: This email address is being protected from spambots. You need JavaScript enabled to view it.). Key contacts are Ms Celine WONG, Mr Sky CHU, and Ms Mabel CHIU. The IWG is chaired by Mr Lee Vincent Marshall Kwan Ho, with members from various industry associations and brokerage houses. Turnover data is sourced from licensed corporations’ monthly financial returns submitted to the SFC, specifically Cell 7006 for Category 1 and Cell 7015 for Category 2.