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‘Best Practices for Digital Asset Exchanges’ is a first-of its kind report released by ASIFMA, the region’s leading trade association for the financial industry. The report aims to guide digital exchanges towards international best practices and highlights key areas for consideration, including the listing processes, market abuse issues, regulatory considerations, cybersecurity and engagement with external stakeholders. We are delighted to have assisted ASIFMA with the preparation of this report. We trust that these recommendations are…
To promote the development of Insurtech in Hong Kong, the Insurance Authority (IA) launched two initiatives on 29 September 2017, “Insurtech Sandbox” and “Fast Track”. Insurtech Sandbox Insurtech Sandbox aims to facilitate a pilot run of innovative Insurtech applications by authorized insurers in their business operations. Insurtech Sandbox allows authorized insurers to experiment with new Insurtech and other technology applications without the need to achieve full compliance with the IA’s usual regulatory requirements. Under the…
Summary Hong Kong has recently introduced fit and proper requirements for “key persons in control functions”. As a result, an insurer must now obtain the Insurance Authority’s prior approval before appointing a key person in a control function. Individuals who were key persons in control functions before 26 June 2017 can benefit from the Insurance Authority’s transitional arrangements which allow an application for approval to be lodged up to 30 September 2017 and for the…
Following a consultation paper issued by the Securities and Futures Commission (SFC) in July 2015, the SFC, on 24 July 2017, published consultation conclusions and further consultation on the proposed capital and other prudential requirements for licensed corporations engaged in over-the-counter derivatives (OTCD) activities and other proposed changes to the Securities and Futures (Financial Resources) Rules (FRR). With the aim of aligning Hong Kong regulation with international standards, yet being conscious of the need to…
On 6 July 2017, the Hong Kong Monetary Authority (HKMA) issued a circular in respect of its Supervisory Policy Manual module RE-1 “Recovery Planning” (SPM RE-1).  The circular provides certain categories of authorized banks in Hong Kong (AIs), in particular, overseas incorporated banks with branch operations in Hong Kong and Hong Kong incorporated small scale banks, with guidance on their recovery planning obligations under SPM RE-1. The HKMA has already required other categories of AIs…
On 28 June 2017, the Securities and Futures Commission (SFC) launched a consultation on the proposed rules and code for Hong Kong-incorporated open-ended fund companies (OFCs). At present, Hong Kong investment funds can only be established in the form of a unit trust, and not in corporate form. This is due to the restrictions under the Companies Ordinance (Cap. 622) (CO) relating to capital reductions and distributions out of capital. These restrictions make establishing investment…
On 28 June 2017, Hong Kong’s Legislative Council considered the new Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) (Amendment) Bill 2017 (the Bill). Subject to the Bill being passed by the Legislative Council, the Government proposes to implement the amendments on 1 March 2018. The Bill proposes to introduce statutory customer due diligence (CDD) and record keeping requirements for Hong Kong trust or company service providers (TCSPs), solicitors, accountants and real estate agents. Secondly, the…
On 23 June 2017, the Securities and Futures Commission (the SFC) issued a circular clarifying certain competency requirements for market participants seeking to be licensed for Type 9 (asset management) regulated activity (Type 9 RA). Pursuant to the circular, the SFC has provided public guidance on the circumstances in which an applicant’s existing experience could expedite their application to be approved as a responsible officer for Type 9 RA. In particular, the SFC clarified that:…
Hong Kong’s Securities and Futures Commission (SFC) will introduce a new system for mandatory electronic filing of disclosure of interests notifications (DI notices), which will come into effect on 3 July 2017. From that day onwards, market participants are required to submit DI notices electronically through the new Disclosure of Interests Online System (DION System). The changes will affect how substantial shareholders, directors and chief executives of listed corporations and even listed corporations themselves comply…
The Hong Kong Securities and Futures Commission (SFC) and the United Kingdom Financial Conduct Authority (FCA) signed a Co-operation Agreement on 12 May 2017 to facilitate innovation in financial services in their respective markets – the latest development in the trend of cross-border collaboration among regulators in the Fintech and Regtech space. Each of the SFC and FCA have agreed (on a non-binding basis) to refer to one another innovator businesses from their respective jurisdictions…