Apply for Hong Kong stock short-selling permission

1. Why is a separate application required for Hong Kong stock short-selling permission?

In Hong Kong, the Securities and Futures Ordinance mandates that investors cannot sell a stock they do not own unless they either possess it or have a reasonable belief that they can successfully borrow it for selling. Investors must borrow the stock before short-selling it. To enable this process, both the borrower and lender need to sign the Stock Borrowing and Lending Agreement. Investors must register this agreement with the Hong Kong Inland Revenue Department (IRD) and pay a registration fee of HK$270. As a result, investors are required to apply for short-selling permission separately to complete these steps.

2. How can I apply for Hong Kong stock short-selling permission?

To apply through the Futubull app:

1. Go to the Accounts tab > Margin Universal Account - Securities > More > Short Selling
2. Select Real-Time Activation or Activation After Approval, depending on your preference

Note: Prior to applying, please ensure that you have a Margin Universal Account - Securities.

2.1 Real-Time Activation

Complete the three following steps:

1) Sign Agreement

You must read and sign the Stock Borrowing and Lending Agreement and the Stamp Duty Supplemental Terms with Futu, which will only take effect once all procedures are completed, and then apply to activate short-selling permission in real-time.

2) Pay Registration Fee

For your convenience, Futu will register the Stock Borrowing and Lending Agreement and pay the registration fee on your behalf. You will need to authorize Futu to deduct the registration fee from your account, based on the Max BP (Buying Power) in your account.

Note: When deducting the registration fee, Futu will check the Max BP amount in your account, not the Withdrawable Cash amount. By agreeing to pay the registration fee, you confirm that you will use margin if your account lacks sufficient cash, and you will cover any resulting charges and interest.

Once the registration fee is paid, your short-selling permission will be activated, and you can then start selling short Hong Kong stocks. When you sell short, Futu will deduct a securities borrowing and return stamp duty from your account, which will be refunded once the IRD approves your application. For more information about the stamp duty, please click here.

3) Register with the IRD

Futu will register the Stock Borrowing and Lending Agreement on the GovHK website on your behalf and keep you updated on the application results. Once the IRD approves your application, we will notify you via in-app message.

Note: If the IRD rejects your application, you can no longer sell short Hong Kong stocks, and Futu, as the lender, will not refund the registration fee or stamp duty to you, as the borrower.

2.2 Activation After Approval

Complete the three following steps:

1) Sign Agreement

You must read and sign the Stock Borrowing and Lending Agreement with Futu, which will only take effect once all procedures are completed.

2) Pay Registration Fee

For your convenience, Futu will register the agreement and pay the registration fee on your behalf. You will need to authorize Futu to deduct the registration fee from your account, based on the Max BP in your account.

3) Register with the IRD

While waiting for the application result, you can also choose Real-Time Activation at any time.

Note: If the IRD rejects your application, you will not be able to sell short Hong Kong stocks, and Futu, as the lender, will not refund the registration fee to you, as the borrower.

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