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Retail trader sentenced to 18 months' imprisonment for securities fraud via illegal short selling

The Eastern Magistrates’ Court has sentenced Ms Christine Yeung Tak Sum, a retail trader, to 18 months' imprisonment following her conviction in February 2024 for securities fraud involving illegal short selling (see our previous updates in November 2023 and February 2024).

This is the first case where an individual has been convicted for the offence of employing a fraudulent or deceptive scheme with intent to defraud in transactions involving securities (under section 300 of the Securities and Futures Ordinance) in the context of illegal short selling.  The case stemmed from a complex ramp-and-dump investigation.

In sentencing, the Magistrate noted the serious nature of the offence, the premeditation in the commission of the offence and the significant amount of illicit profits involved.  He concluded that taking into account these factors and the importance of upholding Hong Kong’s status as an international financial centre, a strong deterrent message must be sent to the public by imposing an immediate custodial sentence.

The SFC emphasises that it has zero-tolerance for market misconduct, and will redouble its efforts to root out such conduct in order to safeguard market integrity and maintain a level playing field for Hong Kong.  [20 Mar 2024]

HKMA head of enforcement and AML discusses risk-based regulation and initiatives for managing financial crime risk

The HKMA's Executive Director of Enforcement and AML, Ms Carmen Chu, delivered a speech at the ALB Pan Asian Regulatory and Anti-Corruption Compliance Summit 2024, discussing risk-based regulation and initiatives for managing financial crime risk.

The HKMA is committed to strengthening Hong Kong’s position as a global leader in relation to risk-based regulation and supervision.  It has implemented structural reforms in its approach to managing financial crime risk, which involve a stronger focus on effectiveness and outcomes, rather than a tick-box approach to compliance.

Delivering impactful reforms in financial crime risk management is dependent on executing the risk-based approach correctly.  The banking industry has historically found the risk-based approach challenging to execute.  A risk-based approach to anti-money laundering (AML) and counter-financing of terrorism should be premised on an up-to-date understanding of evolving risks, by making the best possible use of data.  The international standards on which the Hong Kong regime is based do not expect 'zero failure' in preventing, detecting or deterring possible abuse of bank accounts for money laundering or other financial crimes.  In addition to issuing guidance, the HKMA has engaged the industry through its on-site examinations, often focusing on effectiveness rather than technical compliance.

To further promote effective execution of the risk-based approach, the HKMA is currently preparing further practical guidance on how to apply such approach on politically exposed persons (PEPs), particularly around local PEPs and former PEPs.  It is working with an external consultant to make sure the new guidance is consistent with international standards and best practices.

In Hong Kong, the public and private sectors have been sharing information on cases through the Fraud and Money Laundering Intelligence Taskforce since 2017.   In January 2024, the HKMA launched a consultation on its proposal to allow authorised institutions to share information on customer accounts for the purposes of preventing and detecting financial crime (see our previous update).

Criminal syndicates are not bound by any rules, boundaries or borders or restricted to any one modus operandi.  They innovate and use technology to attack at scale anywhere and at any time.  While the HKMA has witnessed significant innovation, including regtech adoption under the eco-system approach, it is important to keep innovating in order to combat the evolving nature of financial crime.  Artificial intelligence (AI) can help detect fraud more quickly but at the same time may involve additional risks.  In the coming weeks, the HKMA will be providing AML-focused guidance around the use of AI to make sure the right guardrails are in place, which adds to its thematic guidance on banks’ transaction monitoring systems.

Looking forward, the initiatives to combat financial crime should stay true to the principles on which they were designed: Agile in addressing new threats; Manage risks and customer experience in a balanced manner; and Led by innovation and new capabilities.  [19 Mar 2024]

SFC's head of enforcement discusses enforcement strategies to combat financial crime

The SFC's Executive Director of Enforcement, Mr Christopher Wilson, delivered a speech at the ALB Pan Asian Regulatory and Anti-Corruption Compliance Summit 2024, discussing the SFC's enforcement strategies to combat financial crime and misconduct.

  • Mr Wilson commented that financial crimes have grown in terms of both quantity and complexity. In 2023, the SFC’s complaint team handled more than 400 fraud-related complaints, an increase of 60% from 2022.  Ramp and dump schemes have evolved through multiple iterations into highly organised and sophisticated cross-border operations.
  • As the methods and tools available to fraudsters are continuously upgraded with each new wave of technological disruption, the SFC must adapt its strategies to the new threats. The SFC has adopted a robust data strategy, using data generated from trading activities and investigatory processes and data collected by its proprietary intelligence database.  It is also consolidating risk data across its divisions that cover major players in the Hong Kong securities market.  In addition, it is using artificial intelligence to monitor social media platforms and flag potential risk content, and to automate repetitive tasks so that staff can focus on developing strategies in higher-impact cases.
  • Investor engagement and education are crucial in preventing financial crimes. The SFC's subsidiary, Investor and Financial Education Council, conducts annual retail investor studies to understand investors' mindset and habits.  The SFC has implemented measures and campaigns to reinforce information dissemination and investor education on virtual asset-related activities, as well as a TV drama to illustrate prevalent investment scams and other forms of market misconduct.
  • Collaboration with other regulatory authorities and law enforcement agencies is key to combating financial misconduct. The SFC has executed joint operations and investigations with other local agencies and maintains effective enforcement cooperation with regulators in the Mainland as well as worldwide.

Mr Wilson also highlighted several significant enforcement actions taken by the SFC, including those involving insider dealing, corporate fraud, and sophisticated ramp and dump syndicates.  [19 Mar 2024]

HKMA launches Phase 2 of e-HKD Pilot Programme to delve deeper into selected pilots from Phase 1 and explore new uses cases

The HKMA has announced the launch of Phase 2 of the e-HKD Pilot Programme, with a view to further exploring innovative use cases for an e-HKD in Hong Kong.  The HKMA completed Phase 1 of the e-HKD Pilot Programme in October 2023 (see our previous update) which studied domestic retail use cases in various areas such as programmable payments, settlement of tokenised assets, and offline payments.  Phase 2 will delve deeper into select pilots from Phase 1, namely programmability, tokenisation and atomic settlement, as well as explore new use cases.

Phase 2 will utilise an enhanced e-HKD sandbox to accelerate the prototyping, development and testing of use cases by pilot participants, and facilitate the study of interoperability and interbank settlement between e-HKD and other forms of tokenised money.

The enhanced sandbox will leverage on the wholesale central bank digital currency (CBDC) sandbox to be built under Project Ensemble (see our previous update).

The outcomes and insights gained from both phases of the e-HKD Pilot Programme and the research by the CBDC Expert Group will facilitate the HKMA’s study on the possible implementation of an e-HKD.  The HKMA will also continue to engage local and international stakeholders regarding the latest development of CBDCs.

Organisations interested in participating in Phase 2 of the e-HKD Pilot Programme should submit their applications by 17 May 2024.  Further details about the application process are set out on the HKMA's dedicated webpage on CBDCs.  [14 Mar 2024]

HKMA launches stablecoin issuer sandbox arrangement

When the HKMA and the Financial Services and the Treasury Bureau (FSTB) jointly launched a public consultation in December 2023 on the legislative proposal to regulate issuers of stablecoins (see our previous update), they indicated that the HKMA would launch a stablecoin issuer sandbox arrangement.

The HKMA has now announced the launch of the sandbox arrangement, through which it aims to communicate its supervisory expectations to parties interested in issuing fiat-referenced stablecoins in Hong Kong, and allow participants to provide feedback on the proposed regulatory requirements.  The participants' proposed operations will be conducted in the sandbox within a limited scope in a risk-controlled environment.  To the extent appropriate, the HKMA will develop and promote good practices in key control areas (such as reserves management and stabilisation, governance, user protection, anti-money laundering and counter-financing of terrorism, and data transparency).

Details of the sandbox arrangement, including the objectives, factors for consideration in evaluating applications, application procedure, and other requirements, are set out in the annex to the press release.  An applicant should demonstrate:

  • A genuine interest in and a reasonable plan for issuing fiat-referenced stablecoins in Hong Kong;
  • A concrete plan for participation in the sandbox; and
  • A reasonable prospect of complying with the proposed regulatory requirements.

Participants are expected to comply with the terms and conditions of the sandbox.  In the event of non-compliance, the HKMA may terminate the participation.  The HKMA notes that successful admission as a sandbox participant does not imply that the institution is endorsed by it.  Sandbox participants that intend to apply for a licence are required to submit a separate application to the HKMA under the regulatory regime to be implemented.

A list of the participants of the sandbox arrangement will be published on the HKMA's dedicated webpage for stablecoin issuers.  [12 Mar 2024]

HKMA announces Project Ensemble on wCBDC to support development of Hong Kong tokenisation market

The HKMA has announced the commencement of Project Ensemble, a new wholesale central bank digital currency (wCBDC) project to support the development of the tokenisation market in Hong Kong.

Project Ensemble will seek to explore innovative financial market infrastructure (FMI) that will facilitate seamless interbank settlement of tokenised money through wCBDC.  The project will initially focus on tokenised deposits (a digital representation of commercial bank deposits) issued by commercial banks and made available to the general public.

The HKMA plans to launch a wCBDC Sandbox this year to further research and test tokenisation use cases (including settlement of tokenised real-world assets such as green bonds, carbon credits, aircraft, electric vehicle charging stations, electronic bills of lading and treasury management).  It could potentially forge a new FMI that bridges the existing gap between tokenised real-world assets and money in transactions.

If the wCBDC Sandbox attracts sufficient interest from the industry, the HKMA will conduct a 'live' issuance of the wCBDC at an appropriate time.

To help set industry standards and a future-proof strategy, the HKMA will form a wCBDC Architecture Community consisting of local and multinational banks, key players in the digital asset industry, technology companies and the CBDC Expert Group.

The HKMA will continue to partner with Cyberport and Hong Kong Science and Technology Parks Corporation to foster the development of asset tokenisation and support homegrown fintech innovation.

Project Ensemble is part of the HKMA's portfolio of initiatives for developing the tokenisation market, including e-HKD and collaborations with the BIS Innovation Hub Hong Kong Centre on projects such as mBridge, Dynamo and Genesis.  It will also build on the experimentation of tokenised deposit use cases that the HKMA conducted with HSBC, Hang Seng Bank and Ant Group in 2023.  [7 Mar 2024]

SFC publishes synopsis of speeches and panel discussions at Regional Securities Regulatory Leadership Symposium

The SFC has published a synopsis of the speeches and panel discussions at the SFC Regional Securities Regulatory Leadership Symposium, which took place on 28 February 2024.  The symposium gathered more than 300 government officials, financial regulators and business leaders to exchange views on Asia-Pacific capital market developments.  The following are some of the discussions:

  • Hong Kong's unique position in the global financial market – Mr Paul Chan (Financial Secretary) stated that fundamental strengths of the Hong Kong financial markets remained strong and robust. As a financial super-connector and super value adder for Mainland and international markets, Hong Kong will continue to boost its various Connect schemes with Mainland markets and consolidate its relationship with traditional markets, such as the US and Europe.  It is also building closer collaborations with Asian partners.  Dr Fang Xinghai (Vice Chairman, China Securities Regulatory Commission (CSRC)) stated that Mainland China and Hong Kong's close coordination and mutual support have produced major benefits to both markets, and that while Hong Kong remains unique and highly valuable to China’s modernisation, the CSRC will continue to take practical measures to support the growth of the Hong Kong capital market.
  • Asia capital markets – Panel 1 pointed out that the major forces driving markets include economic policies such as stimulus, company performance, investor confidence and market integrity. One panellist mentioned that Asian markets remain attractive to investments, given the strong growth in many areas including trade, foreign and outbound investments, wealth creation, companies and entrepreneurs.  Major challenges in Asia include sentiment, consistency and confidence.
  • Landscape for investment funds in Asia – Panel 2 mentioned that the region's capital markets are large in scale and growing fast, and alternatives such as private credit and private equity are some of the bright spots. Hong Kong has transformed from a hub of fund distribution to one of 'fund manufacturing', driving the tremendous growth of Hong Kong-domiciled funds.  The Connect schemes have helped encourage asset management firms to create local vehicles in the city.  In addition, the asset management industry is currently watching out for the development of the real estate market under a changing interest rate environment.  Geopolitics will also impact markets, while sustainability will create both opportunities and risks.
  • Role of regulation in advancing sustainable finance – Panel 3 highlighted the importance of using the 'same language' (common standards) across the world to promote sustainability. Key factors for its success include interoperability and scalability, and prompt action is needed to implement international sustainability reporting standards.  In the private sector, the focus is on providing suitable financial products for green transition and engaging with companies to identify the impact and risks. An engaging regulatory environment for product disclosure and labelling standards are fundamental to these areas.
  • Intersection of fintech and artificial intelligence (AI) in wealth management – Panel 4 noted that the use case potential of AI and generative AI is promising in wealth management, which can make trading and investments much more efficient and cost-effective, including in areas such as client servicing (eg, roboadvisors) and compliance (eg, regulatory requirements on know-your-clients and anti-money laundering). The panel also noted that tokenisation can be a game changer, allowing instant settlement and fractionalisation of assets without the need of financial intermediaries.  The panel also acknowledged the need to address the risks of AI, including those relating to data governance, privacy and confidentiality, model instability and hallucination.

Ms Julia Leung (CEO of the SFC) concluded that the importance of Asia-Pacific was a common thread running through the panel discussions and that the region will continue to drive capital market flows and developments.  [6 Mar 2024]

SFC reminds public regarding end of VATP application period under transitional arrangements

Further to the reminder of 5 February 2024 (see our previous update), the SFC has issued another reminder to industry participants and investors that the deadline of 29 February 2024 has passed for virtual asset trading platforms (VATPs) to submit licence applications to the SFC in order to continue operating in Hong Kong on or after 1 June 2024.

As a result, VATPs that are operating in Hong Kong but did not submit licence applications to the SFC by the 29 February 2024 deadline must close down their businesses in Hong Kong by 31 May 2024, pursuant to the transitional arrangements.  Carrying on unlicensed activity or actively marketing virtual asset services to Hong Kong investors while unlicensed constitute criminal offences.

Investors are urged to check the regulatory status of VATPs on the SFC’s lists of VATPs.  If they are dealing with VATPs operating in Hong Kong which are not on the list of licensed VATPs or list of VATP applicants, they should close their accounts with such VATPs or transfer to SFC-licensed VATPs for trading virtual assets.

Investors should however note that the applications submitted by those on the list of VATP applicants are still being processed and may (or may not) be approved.  Trading on these platforms therefore carries a risk.  For this reason, the SFC strongly urges investors to trade virtual assets only on SFC-licensed VATPs.  [1 Mar 2024]

Financial Secretary announces initiatives in 2024-25 Budget speech to strive for high‑quality development in Hong Kong

In his 2024-25 Budget speech, Hong Kong's financial secretary, Mr Paul Chan, set out the initiatives to 'advance with confidence, seize opportunities, and strive for high‑quality development' in Hong Kong.  The key initiatives relating to financial services include (among others):

  • Green finance - The government is extending the Green and Sustainable Finance Grant Scheme (due to expire in mid-2024) to 2027 and expanding the scope of subsidies to include transition bonds and loans.  To facilitate the alignment of sustainability disclosure practices with international standards, the Financial Services and the Treasury Bureau and the SFC will formulate a roadmap and vision statement to guide companies and financial institutions in sustainability reporting and data analysis.
  • Green technology - The Green and Sustainable Fintech Proof-of-Concept Subsidy Scheme, to be launched in the first half of 2024, will provide early-stage funding support for green fintech, facilitating commercialisation and fostering the development of new green fintech initiatives.
  • Digital finance - The HKMA completed Phase 1 of the e-HKD Pilot Programme in October 2023, and studied domestic retail use cases in areas such as programmable payments, offline payments, and tokenised deposits.  Phase 2 will explore new use cases.  Phase 1 of the service developed under Project mBridge, set to launch in 2024, will be one of the first projects globally to settle cross-boundary transactions for corporates using central bank digital currencies.  In addition, the scope of e-CNY pilot testing in Hong Kong will be expanded, allowing the public to set up e-CNY wallets easily and top up funds via the Faster Payment System.
  • 0 – The HKMA will soon roll out a 'sandbox' for entities interested in issuing stablecoins, as part of its initiative to develop a regulatory regime for stablecoin issuers (for which a consultation has been launched).  A consultation has also been launched on the regulation of over-the-counter trading of virtual assets.  These follow the implementation of a licensing regime for virtual asset trading platforms in June 2023.
  • Offshore renminbi business hub - Hong Kong will continue to (i) deepen mutual-market access schemes that facilitate RMB cross-boundary investment and two-way fund flows, (ii) encourage financial institutions to provide more offshore RMB products and risk-management tools, and (iii) develop the Central Moneymarkets Unit into Asia's major international central securities depository platform to better support RMB businesses in terms of cross-border clearing, settlement, and custodian services.
  • Mutual market access - The HKEX will host the 10th Anniversary of the Mutual Access Forum to share experiences and explore ways to inject new impetus into the regime.  Discussions are ongoing with Mainland authorities on introducing block trading, including RMB counters under the Southbound trading of Stock Connect, and expanding the mutual-market access regime to cover real estate investment trusts (REITs).
  • Asset and wealth management centre - The Government will extend the Grant Scheme for Open‑ended Fund Companies and Real Estate Investment Trusts for three years, and set up a task force to discuss with the industry measures for further developing the asset and wealth management industry.  The new Capital Investment Entrant Scheme will soon invite applications.  The Government will further enhance the preferential tax regimes for related funds, single family offices, and carried interest, to attract more funds and family offices to establish a presence in Hong Kong.
  • Securities market – The HKEX has consulted on and is looking to implement a treasury share buy-back regime and the initiative to maintain trading operations under severe weather, both targeted for mid-2024.  The SFC and the HKEX are considering a range of measures to boost market efficiency and liquidity, including measures aimed at enhancing the listing regime, improving the transaction mechanism, boosting investor services, and stepping up market promotion.  In addition, stamp duties payable on the transfer of REIT units and the jobbing business of option market-makers will be waived.
  • Financial co-operation in the Greater Bay Area (GBA) - To help enterprises secure financing in the GBA more easily, the HKMA and Mainland regulatory authorities will continue to build a collaborative framework on cross‑boundary credit referencing.
  • Property mortgage loans - Taking into account the external and local economic situation, the HKMA considers that there is room to make further adjustments to the countercyclical macroprudential measures for property mortgage loans.  See HKMA's announcementcircularand comments by HKMA Chief Executive, Mr Eddie Yue for details.
  • SME Financing Guarantee Scheme - The application period for the 80% and 90% Guarantee Products under this schemewill be extended for two years to the end of March 2026 (see our previous update regarding the previous extension).

The SFC, the Accounting and Financial Reporting Council and the Insurance Authority have announced their support for the measures announced by Mr Chan.  Further information on the Budget can be found here.  [28 Feb 2024]

SFC issues 'Disciplinary Proceedings at a Glance' guide for AMLO VATP regime

The SFC has published a guide, Disciplinary Proceedings at a Glance (for regulated persons under Part 5B of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance), to outline the disciplinary process under the new licensing regime for virtual asset trading platforms (VATP) under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO).

The guide provides the reasons for the SFC’s disciplinary actions, persons subject to them, criteria for determining to take action, potential disciplinary measures and disciplinary process, amongst others.

The disciplinary process under the new AMLO VATP licensing regime is based largely on the disciplinary process applicable to persons licensed by or registered with the SFC (as well as those involved in their management) under the Securities and Futures Ordinance (SFO).  Hence, this new guide is based on the Disciplinary Proceedings at a Glance guide for the SFO regime, with appropriate amendments and updates.  [28 Feb 2024]


MAS: Deputy Prime Minister discusses sustainability and green finance

The Monetary Authority of Singapore (MAS) has published the opening remarks delivered by Mr Heng Swee Keat, Deputy Prime Minister and Coordinating Minister for Economic Policies, and MAS Board Member, at the Sustainable and Green Finance Institute (SGFIN) Sustainability Summit on 21 March 2024. The opening remarks focused on Singapore's plans to reach its net-zero target by 2050, including: policy innovations such as carbon pricing; deepening the talent pool in sustainable finance; the need for robust regulatory standards, good analytical tools, and trusted financial platforms; and the need to catalyse the flow of venture and private equity capital to support deep-tech innovations.  [21 Mar 2024]

MAS Assistant MD and CSO on shaping the future of investments

MAS has published the speech delivered by Ms Gillian Tan, Assistant Managing Director (MD), Development & International, and Chief Sustainability Officer (CSO), at the Alternatives Investment Management Association (AIMA) Singapore Annual Forum 2024. The speech highlighted three forces that are shaping the future of investments: the net zero transition; digitalisation; and generative artificial intelligence (Gen AI).  [20 Mar 2024]

MAS Deputy MD (Financial Supervision) on 'Treating Customers Right'

MAS has published the address delivered by Ms Ho Hern Shin, Deputy MD (Financial Supervision) at the LIA Annual Luncheon, on 15 March 2024.  The speech focused on the concept of 'treating customers right' as MAS prepares updates to its Guidelines on Fair Dealing. The revised guidelines will have an expanded scope and will apply to all financial institutions, and cover all financial products and services offered to all their customers. It will apply in a risk proportionate manner and provide guidance on what it means to treat customers fairly at various stages of the customer journey.  [15 Mar 2024]

MAS: Second reading of Financial Institutions (Miscellaneous Amendments) Bill

The Monetary Authority of Singapore (MAS) has published the second reading speech delivered by Mr Alvin Tan, Minister of State, Ministry of Culture, Community and Youth & Ministry of Trade and Industry, and Board Member of MAS, on behalf of Mr Lawrence Wong, Deputy Prime Minister and Minister for Finance, and Chairman of MAS. The key features of the bill include the enhancement of the MAS’ investigative powers, and the enhancement of its powers in the capital markets, including its supervisory powers.  [7 Mar 2024]

SGX RegCo consults on incorporation of ISSB standards

The Singapore Exchange Regulation (SGX RegCo) has issued a consultation on how the International Sustainability Standards Board (ISSB) standards are to be incorporated into its sustainability reporting rules for climate-related disclosures.

Among others, SGX RegCo proposes that its listing rules be amended, and its Sustainability Reporting Guide encompass, the following:

  • from financial year (FY) 2025, issuers should refer to both ISSB’s IFRS S1 and IFRS S2 in preparing climate-related disclosures, including any (permanent) structural and (temporary) transition reliefs;
  • issuers should disclose Scope 1 and Scope 2 greenhouse gas (GHG) emissions and the measurement approach from FY 2025;
  • Issuers should disclose applicable categories of Scope 3 GHG emissions from FY 2026;
  • issuers should disclose industry-based metrics and cross-industry metric categories relevant for climate-related disclosures; and
  • the sustainability report should be issued according to current timelines in FY 2025; from FY 2026, it should be issued together with the annual report.

Responses are requested by 5 April 2024.  [7 Mar 2024]

SGX RegCo/ACRA: Mandatory climate reporting for listed issuers and large non-listed companies

The Singapore Exchange Regulation (SGX RegCo) and the Accounting and Corporate Regulatory Authority (ACRA) have published details of mandatory climate reporting for listed issuers and large non-listed companies. The reporting requirements will be introduced in a phased approach in line with the recommendations from the Sustainability Reporting Advisory Committee (SRAC).

From FY2025, all listed issuers will be required to report and file annual climate-related disclosures, using requirements aligned with the International Sustainability Standards Board (ISSB) standards. Large non-listed companies (defined as those with annual revenue of at least $1 billion and total assets of at least $500 million) will be required to do the same from FY2027.

ACRA will review the experience of listed issuers and large non-listed before introducing reporting requirements for other companies.  [28 Feb 2024]


NFRA consults on proposed new data security rules for banks and insurers

The National Financial Regulatory Authority (NFRA) has published for consultation new draft rules concerning data security management for banks and insurers.

The draft rules are open for comments until 23 April 2024 and are aimed at standardising the data processing activities of banking and insurance institutions, ensure data security, promote the rational development and utilisation of data, steadily improve the level of digitalisation and intelligence of financial services, and protect the legitimate rights and interests of individuals and institutions.

The draft rules aim to:

  • Clarify the structure of data security governance;
  • Establish data classification and grading standards;
  • Strengthen data security management;
  • Improve the data security technology protection system;
  • Strengthen personal data protection;
  • Improve the data security risk monitoring and handling mechanism; and
  • Clarify the NFRA's responsibilities of supervision and management. [22 Mar 2024]

China unveils 24-point action plan to attract foreign investment via high-level opening up

The General Office of the State Council has published a 24-point action plan to attract foreign investment through high-level opening up.

The action plan outlines various measures to attract foreign investment, grouped under five areas, including:

  • Expanding market access, such as expanding access of foreign financial institutions to banking and insurance sectors, expanding business scope of foreign financial institutions in the domestic bond market, and conducting pilot investment programs for qualified foreign limited partners in China;
  • Enhancing appeal for foreign investment, such as implementing preferential tax policies for foreign investors in China's bond market, encouraging financial institutions to provide quality services and financing support for eligible foreign-invested projects according to market principles, and supporting eligible foreign enterprises in issuing RMB bonds and using them for investment in China;
  • Optimising a fair competition environment, such as cleaning up behaviours and policies violating fair competition, removing unreasonable restrictions hampering enterprises of all types of ownerships from participating in tenders and bidding on an equal basis, supporting foreign enterprises to take part in formulation and revision of standards according to law, and better serving foreign enterprises via various means;
  • Facilitating the flow of innovation factors, such as supporting foreign enterprises' data flow with their global headquarters, facilitating international business personnel exchanges, streamlining application process for foreigners' work permits and work-related residence permits, and supporting innovative cooperation between domestic and foreign institutions; and
  • Aligning domestic rules with high-standard international economic and trade rules, such as strengthening intellectual property rights protection, improving rules for cross-border data flow, and increasing pilot efforts in aligning with high-standard international economic and trade rules. [19 Mar 2024]

China launches new platform via WeChat to allow consumers to file complaints with banks and insurance companies

China has launched a Financial Consumer Protection Service Platform via WeChat for trial operations. Developed by China Banking and Insurance Information Technology Management Co Ltd, the platform enables registered consumers to file complaints and mediation requests with banks and insurance companies, and aims to improve the efficiency of handling consumer complaints in terms of the "transfer, acceptance, and processing" of complaints. Consumers can check the progress of their cases via SMS notifications and making enquiries.

According to, on the first day of launch, the platform's WeChat mini program received more than 60,000 visits, and 33 complaints and mediation cases were handled and concluded that day.  [15 Mar 2024]

PBOC issues new rules to allow local and foreign investors to trade interbank bonds over the counter from 1 May 2024

The People’s Bank of China (PBOC) has issued new rules to allow mainland Chinese as well as international investors to invest in interbank bonds through over-the-counter trades from 1 May 2024.

In an interview, a PBOC representative stated that this initiative is conducive to broadening investment channels for residents, optimising the structure of the financial system, and the development of multi-level bond markets. At present, the scale of government bonds held directly by Chinese residents remains relatively small, hence there is still much room for improvement in light of the mature bond market. Investing in the bond market through over-the-counter channels can efficiently convert savings into bond investments and increase residents' income.  [29 Feb 2024]

NDRC unveils new edition of green and low-carbon transition industry guidance catalogue

China’s National Development and Reform Commission (NDRC), in collaboration with nine other major departments, has released the 2024 edition of the Catalogue of Industries for Green and Low-carbon Transition to further promote the country's green development initiatives, building upon the previous edition published in 2019.

The industries specified in the new catalogue are grouped into 7 categories, including energy saving and carbon reduction, environmental protection, recycling, clean energy and low carbon transformation, ecological protection, restoration and utilisation, green infrastructure upgrading, and green services.

According to Briefing China, one notable change from the 2019 edition is the renaming from “Catalogue for Green Industries” to “Catalogue of Industries for Green and Low Carbon Transition”, indicating a broader focus on decarbonisation objectives within existing industries.  [29 Feb 2024]

SSE introduces ESG index for STAR Market

The Shanghai Stock Exchange (SSE) has announced its launch of an environmental, social, and governance (ESG) index for the Science and Technology Innovation Board (STAR Market) on 21 March 2024.

This new index, the SSE STAR ESG index, is constituted by 50 listed companies with the highest ESG scores among securities of listed companies on the STAR Market. It aims to reflect the performance of securities with high ESG evaluations in the STAR Market.

This follows the SSE's introduction of two other indexes on 4 March 2024 – SSE STAR Growth Momentum 50 Strategy Custom Index and SSE STAR Top Strategy Custom Index. They track the performances of listed companies on the STAR Market based on factors such as the growth rates and momentum, market value, R&D investment, and growth potential.  [28 Feb 2024]

China broadens state secrets law to include "work secrets" and protection of technological innovation (among others), taking effect on 1 May 2024 - check

The Standing Committee of China's National People's Congress has, for the first time in more than 10 years, passed amendments to the PRC Law on Guarding State Secrets. The amended law will take effect on 1 May 2024.

According to Xinhuanet (articles 1 and 2), the amended law codifies effective measures and practical experience gained in the work to guard state secrets since the previous amendment. It stresses the importance of upholding the Communist Party's leadership over the work to guard state secrets. It also mandates an annual review of state secrets and stipulates that intellectual property rights in the field of confidentiality will be protected. In addition, it makes improvements to the provisions regarding the classification and declassification of state secrets, such as clarifying the responsibilities of relevant personnel.

A spokesperson of the National Administration of State Secrets Protection has commented (among other things) that in view of the rapid advancements in technology, the amended law attaches great importance to the confidentiality and protection of technological innovation.

In addition, a new provision has been added to the law which specifies that government agencies and units shall apply "work secret management measures" to protect matters that are generated or obtained in the course of performing their functions that are not state secrets but would cause adverse effects if leaked. Measures for the management of work secrets will be separately stipulated.  [27 Feb 2024]


Taiwan to lower substantial shareholding reporting threshold and implement electronic reporting starting 10 May 2024

Taiwan's Financial Supervisory Commission R.O.C. (FSC) has announced that the lowering of the reporting threshold of substantial shareholding from 10% to 5% will take effect on 10 May 2024. The reporting mechanism will updated from paper-based to electronic, and will be administered by the Taiwan Stock Exchange (TWSE) and the Taipei Exchange (TPEx).

The new system for reporting substantial shareholdings will help improve the transparency of shareholding information and enhance Taiwan's corporate governance standards. To assist investors in understanding the new substantial shareholding reporting requirements, the TWSE and TPEx have conducted several briefing sessions and established dedicated webpages with educational materials. Further briefing sessions will be held.  [19 Mar 2024]

FSC plans to introduce draft crypto bill in September 2024

The Chairman of the FSC, Mr Huang Tianmu, has announced the FSC's intention to propose a draft bill in September 2024 to regulate cryptocurrencies, according to the United Daily News. The FSC is also looking to tackle risks associated with cryptocurrencies, such as fraud, and implement a registration system similar to that under anti-money laundering laws.

In terms of allowing Taiwanese investors to access overseas Bitcoin exchange-traded funds, the FSC's Securities and Futures Bureau has requested the Taiwan Securities Association to study this issue, and expects the results to be released in April 2024.

Currently, Taiwan has around ten entities that offer cryptocurrency services.  [4 Mar 2024]

FSC looks to international standards to regulate ETFs

The FSC has announced enhanced supervisory measures for exchange traded funds (ETFs), drawing from the "Good practices relating to the implementation of the IOSCO principles for exchange traded funds – final report" issued by the International Organisation of Securities Commissions in May 2023. The enhanced measures are being implemented in phases, and cover the following areas:

  • Product structure – (i) enhanced management measures relating to real-time estimated net value of ETFs, and (ii) enhanced management measures for participating securities firms and liquidity providers;
  • Information disclosure – enhanced disclosure requirements relating to (i) investment trust companies providing customised or SmartBeta index ETFs, and (ii) ETF dividend distribution from income equalisation funds; and
  • Liquidity provision – (i) enhanced management measures in relation to ETF liquidity providers, and (ii) strengthened measures to prevent and control excessive discounts and premiums. [29 Feb 2024]


Japan to introduce 5-year residency program for venture capitalists and angel investors

Japan is set to launch a new visa program to grant up to five years residency to eligible angel investors, aimed at attracting investors to support the country's startup ecosystem, according to Nikkei.

The new visa status will be available as soon as April 2024, and will be applicable to 13 national strategic special zones in Japan, including Shibuya, Tokyo. Conditions for the residency include investment plans, the investor's track record and the amount of assets held, with the specifics to be determined at a stage.

In order to prevent illegal activities such as money laundering, angel investors will be certified and managed by the local authorities overseeing the strategic special zones. Approved investors will also be required to engage in activities that will lead to the development of startups, such as corporate advising.

In October 2023, Tokyo's Shibuya ward submitted a proposal to create a residency program for angel investors. The government is looking to implement the proposal in all strategic special zones.  [16 Mar 2024]

FSA seeks to amend bill to revitalise capital market

According to Regulation Asia, the Financial Services Agency (FSA) has submitted a draft bill to the Diet to amend the Financial Instruments and Exchange Act and the Act on Investment Trusts and Investment Corporations.

The amendments are aimed at revitalising Japan's capital market by enhancing the sophistication and diversity of the firms in the asset management industry through (among others):

  • Allowing asset management firms to outsource their middle and back-office operations (such as legal, compliance and accounting);
  • Relaxing the registration requirements for investment management firms that outsource operations to registered businesses, and reducing capital requirements for those that do not accept deposits from clients;
  • Allowing the establishment of trading platforms dedicated to unlisted stocks, to promote investment in start-ups and early-stage companies;
  • Relaxing the entry requirements for brokerage firms seeking to provide trading services for unlisted securities, and for firms wishing to provide a venue for electronic trading of unlisted securities;
  • Enhancing the transparency and fairness of the listed stock market by enhancing disclosures of shareholding status and major transactions by shareholders;
  • Lowering the threshold for triggering a mandatory tender offer from one-third in a company to 30%. [15 Mar 2024]


SCM Chairman discusses corporate governance

The Securities Commission Malaysia (SCM) has published a speech delivered by its Chairman, Dato’ Seri Dr. Awang Adek Hussin, at the Institutional Investors Council of Malaysia-Securities Industry Development Corporation (IIC-SIDC) Corporate Governance Conference. The speech focused on the importance of good governance, the impact of governance failures beyond financial losses, and the expectation that institutional investors to play a greater role in driving responsible and sustainable value creation in companies.  [5 Mar 2024]

BNM: Exposure draft on product transparency and disclosure

BNM has published an exposure draft introducing new and enhanced disclosure requirements, aimed at ensuring that product disclosure continues to serve its purpose in facilitating consumers to assess product suitability and make informed financial choices.

BNM invites feedback on the regulatory requirements in the exposure draft, including suggestions on specific issues or areas which need further clarification, or alternative proposals which BNM should consider. Feedback must be submitted by 29 March 2024.  [29 Feb 2024]

BNM: Climate risk stress testing methodology

BNM has published a methodology paper on climate risk stress testing which sets out BNM's expectations for financial institutions (FIs) carrying out the industry-wide 2024 climate risk stress testing exercise. The exercise aims to provide FIs with hands-on experience in quantifying climate risk, refining their existing risk management strategies and exploring new stress testing approaches that are relevant for assessing climate-related risks.  [29 Feb 2024]

BNM: Policy document on fintech regulatory sandbox framework

BNM has published a policy document which sets out BNM's revised Financial Technology Regulatory Sandbox Framework. The revisions are focused on ensuring proportionate regulatory facilitation and improving the operational efficiency of the existing sandbox procedures through:

  • simplifying the sandbox’s Stage 1 (eligibility) assessment; and
  • introducing a Green Lane, which aims to provide a risk-proportionate and accelerated pathway for innovative solutions by financial institutions with solid risk management capabilities.  [29 Feb 2024]

BNM/SCM: Statement on 12thJC3 meeting

BNM and Securities Commission Malaysia (SCM) have published a joint statement from the 12th Joint Committee on Climate Change (JC3) meeting held on 23 February 2024.

The statement confirms that the JC3 will continue to work with the Government, the financial industry and its partners on specific action plans to support a just and orderly transition of the economy. In addition, efforts will be made to integrate a broader consideration of nature and environmental risks with the ongoing development of climate strategies by financial institutions (FIs).

A key focus area in the coming year will be on supporting the financial industry’s development of credible transition plans. This includes work to publish a JC3 Transition Finance Framework to guide the development of credible transition finance solutions.  [29 Feb 2024]


SEBI: Beta version of T+0 rolling settlement cycle

The Securities and Exchange Board of India (SEBI) has issued a circular regarding a new framework for the introduction of a beta version of T+0 rolling settlement cycle on an optional basis in the equity cash market for a limited set of 25 scrips and with a limited number of brokers. This would be in addition to the existing T+1 settlement cycle.  [21 Mar 2024]

IFSCA issues circular regarding AML/CFT/KYC compliance

The IFSCA has issued a circular explaining that all regulated entities are required to immediately complete their registration on the Financial Intelligence Unit - India Financial Intelligence Network (FIU-IND FINNET) 2.0 portal, for compliance with the Anti Money Laundering, Countering the Financing of Terrorism and Know Your Customer (AML/CFT/KYC) Guidelines, 2022.

The non-registration with the FIU-IND by any regulated entity shall be construed as contravention of the provisions of the respective IFSCA regulations, circulars, guidelines, directions or instructions issued thereunder.  [14 Mar 2024]

IFSCA: Settlement of client's funds lying with broker dealer

The International Financial Services Centres Authority (IFSCA) has issued a circular regarding the settlement of clients' funds lying with broker-dealers. Presently, unutilised funds must be transferred back into the client’s account within 30/90 days depending on the client's preference. The circular notes that, to facilitate ease of doing business, IFSCA has decided that settlement of funds shall be done as per the Agreement/Consent letter between the broker-dealer and its client. [14 Mar 2024]

IFSCA: Clarifications regarding FMEs set up by SWFs

The IFSCA has issued a circular, which clarifies that, in relation to Sovereign Wealth Funds (SWFs) that wish to set up Fund Management Entities (FMEs) in IFSC, where the SWF is the ultimate contributor and beneficiary:

  • the requirement of appointment of an independent custodian shall not be applicable to open-ended Restricted Schemes and all other schemes with assets under management (AUM) above USD 70 million; and
  • the requirement of having the office space of the FME to be dedicated, secured and accessible only by authorised person(s) of the FME is relaxed to the extent that the FME and trustee of Scheme(s) set up in the form of trust, may occupy the same office space if their services are not offered to any third party.  [11 Mar 2024]

RBI consults on disclosure framework on climate-related financial risks

The Reserve Bank of India (RBI) has published a consultation on a draft disclosure framework on climate-related financial risks. The draft guidelines will apply to scheduled commercial banks (excluding local area banks, payments banks and regional rural banks); tier-iv primary (urban) co-operative banks; all-India financial institutions; and top and upper layer non-banking financial companies (NBFCs).

Responses to the consultation are requested by 30 April 2024.  [28 Feb 2024]

RBI updates Enabling Framework for Regulatory Sandbox

The RBI has published an updated version of the Enabling Framework for Regulatory Sandbox. Among other changes, the timelines of the various stages of the Regulatory Sandbox process have been revised from seven months to nine months. The updated framework also requires sandbox entities to ensure compliance with provisions of the Digital Personal Data Protection Act, 2023. The objective of the Regulatory Sandbox, as stated in the framework, is to foster responsible innovation in financial services, promote efficiency and bring benefit to consumers.  [28 Feb 2024]

SEBI consults on amendments to the additional disclosure framework for FPIs

The Securities and Exchange Board of India (SEBI) has published a consultation on two proposals to amend the additional disclosure framework for foreign portfolio investors (FPIs).

The first proposal is to exempt Category I university funds and university related endowments FPI that meet certain objective criteria from the requirement of enhanced disclosures. The second proposal is to exempt enhanced reporting requirements for some funds with concentrated holdings in entities with no identified promoter group, where there is no risk of breach of minimum public shareholding (MPS).

Responses to the consultation are requested by 8 March 2024.  [27 Feb 2024]

SEBI consults on ease of doing business initiatives for mutual funds

SEBI has published a consultation on proposals regarding ease of doing business initiatives for mutual funds. The consultation provides details of the recommendations made by the working group for review of compliance requirements for mutual funds. Responses to the consultation are requested by 15 March 2024.  [23 Feb 2024]


BOT holds discussions with banks on environmental sustainability

The BOT's Deputy Governor for Financial Institutions Stability has held discussions with banks regarding ways to promote the financial sector with products that can help finance the business sector's transition to environmental sustainability. To achieve this goal, the BOT has allowed commercial banks which are domestic systemically important banks (D-SIBs) and other interested commercial banks to develop products that help finance the sector to adapt and transition to environmental sustainability.  [13 Mar 2024]

SECT becomes a TNFD member

The Securities and Exchange Commission Thailand (SECT) has announced that it has become an official member of the Task Force on Nature-Related Financial Disclosures (TNFD) forum. Through its membership, the SECT aims to raise awareness and encourage business sectors to incorporate nature-related risks into their strategic planning and risk management and to follow international standard disclosure guidelines. This also contributes to the sustainable development of the Thai capital market, the implementation of the National 20-Year Strategy, and the move towards the United Nations Sustainable Development Goals (SDGs).  [12 Mar 2024]


BSP directs banks to use the PhilID as valid IDs in customer KYC

The Bangko Sentral ng Pilipinas (BSP) has directed banks and other BSP-supervised financial institutions (BSFIs) to place the Philippine identification card (PhilID) at the top of the list of acceptable valid identifications.

The BSP said all BSFIs must adopt enhanced measures to ensure the broad acceptance of the PhilID, whether the physical card or the ePhilID, as a valid and sufficient proof of identity and age in all financial transactions, subject to authentication. BSFIs may use the PhilSys Check identity authentication tool to verify if the data stored in the QR code match the information printed on the face of the ID.  [13 Mar 2024]


OJK issues new regulation to boost financial sector innovation

Indonesia’s Financial Services Authority (OJK) has issued a new regulation to boost the development of financial sector technology innovation and advance the digital assets ecosystem, according to Regulation Asia.

The new regulation will create an “integrated fintech ecosystem with an activity-based approach” aimed at supporting innovation while ensuring consumer protection and effective risk mitigation.

The regulation also makes improvements to OJK's regulatory sandbox for testing and developing innovative financial technologies, such as crypto assets. The improved sandbox framework incorporates several significant aspects, including the addition of eligibility criteria, the imposition of testing plan requirements, and the determination of results and exit policies from the sandbox.

The OJK stated that the regulation also establishes an obligation for operators to obtain a permit status, while also improving coordination among supervisors and promoting increased financial literacy and consumer protection.  [8 Mar 2024]

OJK issues Climate Risk Management and Scenario Analysis guidance for banking sector

Indonesia’s Financial Services Authority (OJK) has issued a Climate Risk Management & Scenario Analysis guideline for the banking sector to manage climate management risks.  It consists of 6 books that complement each other – The first book is the climate risk management framework, supported by the other five books:

  • Technical guideline on measuring climate risk;
  • Methodology of carbon emission calculation;
  • Supporting data on physical risk potentials in Indonesia;
  • Supporting data on Indonesia macroeconomy projection; and
  • Report paperwork on climate risk and carbon emission impact submitted by banks to OJK.

The guideline provides an integrated framework that encompasses the areas of governance, strategy, risk management, and disclosure, to evaluate the resilience of bank business models and strategies in addressing climate change in the short, medium, and long term. The guideline takes into account common practices and international standards which are adapted to the Indonesian context and national interests.  It is a living document and will be periodically updated in accordance with global policies, best practices of the financial industry, and stakeholders' demands. [5 Mar 2024]

Bappebti calls for review of crypto tax policy in Indonesia

The Commodity Futures Trading Regulatory Agency (Bappebti) has reportedly asked the Ministry of Finance to reconsider the country's tax regime for cryptocurrencies, which currently subjects crypto transactions to a 0.11% value-added tax and a 0.1% income tax, ahead of the transfer of crypto regulatory oversight from Bappebti to the Financial Services Authority (OJK) in January 2025.

According to Indonesia Business Post, the current tax structure has contributed significantly to state revenue, generating over IDR 259 billion (US$16.5 million) and accounting for more than 50% of the income in the fintech industry. However, there are increasing concerns over high taxes imposed on crypto transactions, which may cause some investors to opt for foreign markets. [28 Feb 2024]


HoSE trials new trading system developed by KRX

According to Viet Nam News, the Ho Chi Minh Stock Exchange (HoSE) has initiated a trial run of a new trading system developed by Korea Exchange (KRX). This system introduces several new features, the most prominent being the support for retail investors to trade on a dedicated platform and conduct same-day buying and selling transactions (T+0).

It is reported that in a recent document sent to securities firms, the HoSE had revealed a plan to test the new system from 4 to 8 March 2024. Securities firms were required to prepare their systems for the transfer, undertake system checks, and perform a cutover test on 7 March 2024. They were also required to conduct a trial of order placement and trading activities from 11 to 15 March 2024 to ensure seamless operations, simulating a normal trading day.

HoSE and KRX had entered into a contract in 2012 for the design, supply, installation and transfer of the system, with official operation targeted for the first quarter of 2015. However, the system faced persistent delays and setbacks, extending the rollout schedule to nearly 10 years.  [4 Mar 2024]


Gareth Thomas photo

Gareth Thomas

Partner, Hong Kong

Gareth Thomas
Richard Norridge photo

Richard Norridge

Partner, Head of Private Wealth and Charities, London

Richard Norridge
Hannah Cassidy photo

Hannah Cassidy

Partner, Head of Financial Services Regulatory, Asia, Hong Kong

Hannah Cassidy

Key contacts

Gareth Thomas photo

Gareth Thomas

Partner, Hong Kong

Gareth Thomas
Richard Norridge photo

Richard Norridge

Partner, Head of Private Wealth and Charities, London

Richard Norridge
Hannah Cassidy photo

Hannah Cassidy

Partner, Head of Financial Services Regulatory, Asia, Hong Kong

Hannah Cassidy
Gareth Thomas Richard Norridge Hannah Cassidy