1. Company Overview

• Zhengda International was established in 2019 and is a licensed corporation regulated by the Securities and Futures Commission (SFC) of Hong Kong, with Central Registration Number BOP620.

• The company holds Type 2 (Dealing in Futures Contracts) and Type 5 (Advising on Futures Contracts) regulated activity licenses. Its main business includes commodity futures, financial futures, equity index futures, options, and OTC derivatives trading and advisory services.

• The company is headquartered at International Trade Tower, 33 Wang Chiu Road, Kowloon Bay, Hong Kong.

• It positions itself as a global futures and derivatives trading platform, serving professional and high-net-worth clients and covering multiple international markets.

2. Risk Analysis

2.1 Regulatory and Compliance Risk

• Although the company is licensed by the SFC, as a relatively young financial institution, its compliance and internal control systems may still be in a development or enhancement stage.

• The business involves highly regulated derivatives and leveraged products. Failure to comply with anti-money laundering rules, reporting requirements, or market conduct regulations could lead to penalties or license restrictions.

• Publicly available information provides limited detail on the company’s internal risk management framework, suggesting that transparency could be improved.

2.2 Business Model and Market Risk

• The company’s revenue relies heavily on the trading volume of futures and derivatives, which are highly sensitive to market volatility and investor sentiment.

• High-leverage products amplify both gains and losses. In periods of market turbulence, clients may face rapid margin depletion, increasing default and liquidation risks.

• If global market volatility declines, trading activity and commission收入 may decrease.

• The company claims to operate across multiple exchanges, but specific geographic and product exposure is not fully disclosed, implying concentration and expansion-related uncertainties.

2.3 Credit and Liquidity Risk

• The company must maintain sufficient liquidity to process client withdrawals. Concentrated or large-scale withdrawal requests could create short-term liquidity pressure.

• In leveraged trading, if clients’ losses exceed available margin, the company may face margin shortfall and collection risks.

• External settlement arrangements with exchanges or clearing houses may impose additional funding and credit stability requirements.

2.4 Operational and Information Technology Risk

• Brokerage business depends on trading platforms, data feeds, and network systems. Outages, latency, system failures, or cyberattacks could disrupt trading and harm client interests.

• Fund transfer and account operations also carry operational risks such as transaction errors or identity verification failures.

2.5 Market Competition Risk

• The Hong Kong derivatives brokerage industry is highly competitive, with strong local and global financial institutions.

• If Zhengda International cannot maintain advantages in pricing, technology, or service quality, it risks losing clients and market share.

• Business reliance on specific markets or products may expose the company to policy or liquidity shocks.

2.6 Legal and Reputation Risk

• Leveraged trading frequently leads to client disputes. Poor handling of complaints or liquidation-related losses may result in litigation or regulatory investigation.

• Any issues involving delayed withdrawals, trading execution errors, or system instability could negatively impact the company’s brand credibility.

2.7 Macroeconomic and Policy Risk

• The derivatives market is influenced by interest rate cycles, geopolitical events, and global macroeconomic trends. Fluctuations in market sentiment can quickly affect trading volume.

• Regulatory tightening across different jurisdictions may increase compliance costs for cross-border operations.

3. Risk Mitigation Recommendations

1. Strengthen the internal compliance and AML framework and improve disclosure transparency.

2. Enhance the risk management system, including margin monitoring, liquidity stress testing, and client credit checks.

3. Upgrade system stability and cybersecurity protection, with backup and recovery mechanisms.

4. Diversify business across products and regions to reduce concentration risk.

5. Improve service quality and operational transparency to build long-term client trust.

6. Monitor global macroeconomic conditions and regulatory changes and adjust business strategies accordingly.

4. Conclusion

Zhengda International has development potential as a licensed Hong Kong derivatives brokerage service provider. However, the company simultaneously faces regulatory, liquidity, operational, technological, market, and reputation risks due to the high-risk nature of leveraged derivatives trading. Its ability to sustain growth will depend on the robustness of its compliance framework, risk management systems, operational transparency, and market competitiveness.