Australia

ASIC cancels licence of Viridian Equity Group Pty Ltd following payments by Compensation Scheme of Last Resort

ASIC has cancelled the Australian financial services licence (AFSL) of Viridian Equity Group Pty Ltd (Viridian), following the Compensation Scheme of Last Resort (CSLR) making payments to Viridian’s clients.

The CSLR payments occurred after the Australian Financial Complaints Authority (AFCA) made three determinations against Viridian in October 2024, which Viridian failed to pay. These determinations related to complaints received by AFCA about investments in a failed property-development managed investment scheme. That project was restricted to wholesale and sophisticated investors. However, according to AFCA, Viridian incorrectly assessed the complainants as sophisticated investors and allowed them to participate despite their ineligibility. In March 2025, the CSLR made payments to the complainants totalling $450,000 for the AFCA determinations.

Where a CSLR payment is made in relation to an AFCA determination, ASIC must cancel the AFSL or credit licence of the firm against whom the determination was made. The cancellation is mandatory and not subject to discretion or merits review.

The cancellation of Viridian’s licence is the latest in a string of such cancellations since the inception of the CSLR. The CSLR, which commenced operations in April 2024, can pay compensation of up to $150,000 to a consumer who has an unpaid AFCA determination in their favour. [28 Apr 2025]

AFCA releases latest edition of its Systemic Issues Insights Report

The Australian Financial Complaints Authority (AFCA) has published the latest edition of its Systemic Issues Insights Report (edition 6), covering the major systemic issues identified by AFCA across the financial services industry in the first half of FY24-25. The report highlights two major areas for improvement:

  • Financial firms’ scam response protocols and customer support.
  • Insurance firms’ claims-handling processes, especially with respect to the transparency of communication and timeliness of claims resolution.

AFCA, which was established in 2018 as an independent dispute-resolution body to replace the Financial Ombudsman Service, has released biannual systemic-issues reports since FY21-22. [28 Apr 2025]

Financial services provider penalised $11m over 'cookie-cutter' advice and conflicted-remuneration bonuses

DOD Bookkeeping Pty Ltd (in liquidation), formerly Equiti Financial Services Pty Ltd, has been penalised $11,030,000 after the Federal Court of Australia found that it breached conflicted-remuneration rules and its advisers provided inappropriate 'cookie-cutter' advice to clients.

Over the period from May 2015 to April 2018, three advisers of Equiti provided financial advice that followed a 'template format' advising clients to: establish a self-managed super fund (SMSF); roll over their existing superannuation into the newly established SMSF; and have the trustee of the SMSF purchase real property, borrowing the funds to do so. In the case of at least 12 client groups, this advice was implemented, and the purchase of the property was facilitated by a related company, Equiti Property Pty Ltd.

The Court found the advice given followed a 'cookie-cutter' approach that was 'focussed upon manoeuvring the clients into property purchases through SMSFs', with 'little to no heed … paid to the particular circumstances of the clients'. The Court also concluded that bonuses paid to the three advisers, which were paid after the sale of property had settled, influenced the advice they provided and breached conflicted-remuneration laws. In this respect, the Court noted that the bonuses were 'substantial both in amount and … as a proportion of each Adviser’s total remuneration'.

Following the decision, the Deputy Chair of the Australian Securities and Investments Commission (ASIC), Sarah Court, said that '[m]isconduct exploiting superannuation savings is an ASIC enforcement priority' and that '[t]he size of [the] penalty demonstrates the seriousness of this misconduct' in this case. [24 Apr 2025]

Full Federal Court finds that Block Earner did not engage in unlicensed conduct, holding that a product allowing customers to 'loan' cryptocurrency in return for interest not a 'financial product'

The Full Court of the Federal Court of Australia has found in favour of a cross-appeal brought by Block Earner, a digital-asset service provider, against a decision of the Federal Court of Australia (primary decision). The primary decision had held that Block Earner engaged in unlicensed conduct by offering its “Earner product”, which allowed customers to “loan” specified cryptocurrency in return for interest paid at a fixed rate, without an Australian financial services license (AFSL).

The Full Court found that, contrary to the arguments of ASIC, Block Earner had not engaged in unlicensed conduct as the Earner product was not in fact a 'financial product'.

Primary decision:

ASIC first commenced proceedings against Block Earner in November 2022, arguing that it had engaged in unlicensed financial services conduct when offering its digital-asset-related Earner product. It was common ground between the parties that if the Earner product constituted a financial product within the meaning of the Corporations Act 2001 (Cth) (Act), then Block Earner had engaged in unlicensed conduct by carrying on a financial services business without holding an AFSL.

The primary judge accepted ASIC’s case that the Earner product was a financial product because it involved Block Earner: (i) operating a managed investment scheme; and (ii) offering a financial investment scheme. However, despite making declarations of contravention against Block Earner, the primary judge ordered that, in the circumstances, Block Earner should be relieved from liability to pay a penalty.

Decision of the Full Court:

ASIC appealed from the decision of the primary judge, contending that a penalty should have been imposed. Block Earner cross-appealed, arguing that the Earner product was not a financial product for the purposes of the Act.

The Full Court dismissed ASIC’s appeal and allowed Block Earner’s cross-appeal. The Full Court concluded that the Earner product was not a financial product as it was neither a managed investment scheme nor a facility to make a financial investment. The Full Court also rejected an alternative argument by ASIC that the Earner product was a financial product in the form of a derivative. Accordingly, the declarations of contravention against Block Earner were set aside, and ASIC was ordered to pay the costs of the proceedings.

ASIC is considering the decision. [22 Apr 2025]

ASIC consults on plan to increase visibility of firms’ breach and complaints data

ASIC has released a consultation paper on its plans to publish two ‘dashboards’ containing firm-level Reportable Situations (RS) and Internal Dispute Resolution (IDR) data. Under the present RS regime, Australian financial services and credit licensees must self-report certain matters to ASIC, including breaches of obligations and investigations into potential breaches. Although ASIC has published high-level insights into these RS reports, this has not previously included firm-level data. Similarly, under the current IDR reporting framework, financial firms must record all complaints received through their IDR processes and provide this data to ASIC.

ASIC is now proposing to publish information received through these data-collection processes at a firm level. ASIC Commissioner Alan Kirkland said the publication of firm-level data would ‘encourage firms to lift their game’. ASIC explained that the specific objectives of the proposal were to:

  • enhance accountability and transparency, providing an incentive for improved behaviour;
  • help firms and consumers identify areas where substantial numbers of significant breaches and complaints are occurring; and
  • allow firms to target their efforts to improve compliance and consumer outcomes.

ASIC is currently seeking feedback on:

  • how it will present and contextualise the data;
  • the scope of data publication; and
  • the data elements it proposes to publish.

ASIC anticipates that publication of the dashboards will commence from September-December 2025. Comments on the proposal are requested by 14 May 2025. [10 April 2025]

Hong Kong

SFC proceeds with position limit increases for key stock index derivatives following consultation

The SFC has published the conclusions to its consultation (see our previous update) on the proposed increases of position limits for exchange-traded derivatives based on the three major stock indices in Hong Kong, namely the Hang Seng Index, Hang Seng China Enterprises Index and Hang Seng TECH Index. Under the proposal, the position limits for the futures and options contracts of such indices will be increased by 50%, 108% and 43% respectively to 15,000, 25,000 and 30,000 position delta.

Respondents to the consultation (which ended on 28 March 2025) have shown strong support for the proposal, noting that the changes will facilitate market liquidity, hedging efficiency and further market growth. The SFC will proceed to implement the proposal after considering the feedback, the historical and potential market growth, as well as utilisation of the limits by market participants. To this end, it will amend the Securities and Futures (Contracts Limits and Reportable Positions) Rules, as well as the Guidance Note on Position Limits and Large Open Position Reporting Requirements.

Subject to the legislative process, the new position limits are expected to take effect in July 2025. The SFC has gazetted the amendments to the Securities and Futures (Contracts Limits and Reportable Positions) Rules, which are proposed to take effect on 2 July 2025. [30 Apr & 2 May 2025]

SFC reprimands and fines licensed corporation HK$4.2 million for regulatory breaches relating to handling of client assets

The SFC has reprimanded and fined a licensed corporation HK$4.2 million for regulatory breaches in relation to the handling of client assets.

The SFC's investigation found that between 3 December 2017 and 23 October 2020, the licensed corporation relied on the expired standing authority of 7,911 clients and loaned their Hong Kong-listed securities pursuant to a securities borrowing and lending agreement. The incident arose from the licensed corporation's failure to send these clients renewal notices of the standing authority due to a programming error.

The licensed corporation's failure is in breach of various provisions of the Securities and Futures (Client Securities) Rules (CSR) and the SFC's main code of conduct. The corporation self-reported its breaches of the CSR and took remedial action, including activating revised renewal notices, obtaining updated standing authorities from clients, and enhancing the relevant internal processes. [28 Apr 2025]

SFC announces formal adoption of FASTrack from 5 May 2025 following six-month pilot

The SFC has issued a circular to inform applicants seeking authorisation of unit trusts and mutual funds that the Fund Authorisation Simple Track (FASTrack) will be formally adopted from 5 May 2025, upon the end of a six-month pilot period.

On 4 November 2025, the SFC launched FASTrack for simple funds domiciled and regulated in 'mutual recognition of funds' jurisdictions that apply for authorisation for public offering in Hong Kong (see our previous update).

FASTrack aims to grant fund authorisation within 15 business days from the submission of application(s), if successful, in order to promote authorisation efficiency and maintain the competitiveness of Hong Kong's asset management industry. Since its launch, its implementation has overall been smooth and has met the 15-business day timeframe, with positive feedback from applicants.

The SFC will continue to monitor and enhance the operation of FASTrack where appropriate. [28 Apr 2025]

HKMA and Cyberport launch second cohort of GenA.I. Sandbox to accelerate A.I. innovation in financial sector

The HKMA, in collaboration with the Hong Kong Cyberport Management Company Limited (Cyberport), has announced the launch of the second cohort of the Generative Artificial Intelligence Sandbox (GenA.I. Sandbox) initiative. The sandbox aims to provide a risk-controlled environment for banks to develop and test innovative solutions using artificial intelligence (AI), further advancing the adoption of AI technology in the financial sector.

Ms Carmen Chu, Executive Director (Banking Supervision) of the HKMA, made the announcement in her opening remarks at FiNETech5, the fifth edition of the FiNETech series (see our previous update regarding the fourth edition of the series).

In light of the positive responses received in the first cohort started in January 2025 (see our previous update), the second cohort will continue to focus on use cases that further enhance risk management, anti-fraud measures and customer experience.

A key addition to the second cohort is the introduction of the GenA.I. Sandbox Collaboratory, a platform comprising a series of practical workshops that facilitates early engagements between banks and technology providers. These workshops are designed to drive the conversion of problem statements into practical use cases, which can then be trialed in the GenA.I. Sandbox. In response to the growing threat of deepfake scams, a dedicated workshop on combatting deepfake attacks with AI will be held in the coming weeks.

In its circular, the HKMA invited authorised institutions to apply for the second cohort of the sandbox. The HKMA stated that given the growing importance of managing risks associated with AI adoption, all use cases in the second cohort are expected to incorporate robust AI safety validation into their technical trials and valuations. The HKMA encourages the development of use cases with a component of AI-assisted second and third lines of defence to enhance AI governance.

Applications for the second cohort are open until 31 August 2025. Similar to the first cohort, applications will be prioritised based on various factors (see annex for details). Selected projects will tentatively be announced in the fourth quarter of 2025. [28 Apr 2025]

HKMA publishes presentation materials for upcoming briefing to LegCo Panel on Financial Affairs on 6 May 2025

The HKMA has published presentation materials for its upcoming briefing to the Legislative Council (LegCo) Panel on Financial Affairs on 6 May 2025. Areas of the HKMA's work include (among others):

Banking Stability

  • Prudential treatment of cryptoasset exposure – Pursuant to the industry's feedback on the initial proposals for the local implementation of the prudential treatment, the HKMA is now in the process of conducting statutory consultations on the draft amendments to the relevant rules. The HKMA plans to submit the legislative amendments to LegCo for negative vetting in July 2025, with a target implementation date of 1 January 2026 (slide 55).
  • Enhancements to Banking Ordinance – The HKMA consulted on various proposed enhancements to the Banking Ordinance (see our previous update), including in relation to simplification of three-tier banking system, regulation of bank holding companies, engagement of skilled persons, extension of the HKMA's investigation and enforcement powers and other technical amendments, and is preparing the legislative amendments. Separately, amendments to the Banking Ordinance were proposed to LegCo in April 2025 to facilitate information sharing among banks for the prevention and detection of crime (slides 55-56).
  • Resolution regime – Among other things, the HKMA set out and communicated 2025 resolution planning priorities for domestic systemically important banks and other large banks (slide 57).
  • Green and sustainable banking – The HKMA plans to publish the second phase prototype of the Hong Kong Taxonomy for Sustainable Finance for public consultation in the summer of 2025. Following the launch of the Roadmap on Sustainability Disclosure in Hong Kong by the Government in December 2024 (see our previous update), the HKMA will consult the market on aligning disclosure requirements for the banking sector with relevant international frameworks and standards. After conducting industry consultation on transition planning guidelines, the HKMA plans to finalise the guidelines within 2025 (slide 58).
  • Banking consumer protection – The HKMA introduced various measures to tackle the increase in fraud and scams. It has also conducted an industry consultation to gather feedback on the implementation of Phase 1 of the mandatory reference checking scheme and to work with the industry associations on further refinements of the scheme for the next phase (slide 61).
  • Banking investor protection – Among other things, the HKMA issued a joint circular with the Insurance Authority on sale of index universal life insurance products, commenced a joint consultation with the Insurance Authority on the proposal to rename insurance products with saving features, and issued guidance to banks on the provision of staking services for virtual assets from custodial services (slide 62).

Financial Infrastructure

  • Fintech initiatives – The HKMA is progressing with various central bank digital currency projects (including Project mBridge, Project Ensemble, and Project e-HKD+) and the Commercial Data Interchange (slides 68 and 69).
  • Regulatory development of the over-the-counter (OTC) derivatives market – Following the publication of the consultation conclusion paper on enhancements to the Hong Kong OTC derivatives reporting regime, the HKMA and SFC published the updated supplementary instructions for the enhanced reporting requirements in December 2024. The proposed enhancements will be gazetted in the second quarter of 2025 for implementation on 29 September 2025 (see our previous update) (slide 71).

Hong Kong as an International Financial Centre

  • Developing the asset and wealth management industry – The HKMA is working with other Government agencies and financial regulators on various initiatives, including reviewing the existing tax concession measures applicable to funds, single family offices and carried interest (slide 75).
  • The HKMA and the Financial Services and the Treasury Bureau introduced the Stablecoins Bill into the LegCo in December 2024 (see our previous update). The HKMA has also continued to maintain dialogue with the participants of the stablecoin issuer sandbox (slide 84). [28 Apr 2025]

HKMA publishes Annual Report 2024 and Sustainability Report 2024

The HKMA published its Annual Report 2024, which contains an overview of the HKMA's work in 2024 and priorities and plans for 2025 and beyond.

The priorities for 2025 and beyond include (among others):

  • Maintaining banking stability – This includes monitoring and/or providing guidance relating to credit, liquidity and market risks, enhancing the operational and cyber resilience of the banking sector, combatting money laundering and terrorist financing (including introducing system reforms, innovations and other initiatives, to enhance the resilience of Hong Kong's ecosystem), carrying out on-site examinations and off-site surveillance of conduct relating to wealth management and Mandatory Provident Fund-related businesses, implementing the new Basel standards in Hong Kong, updating various Supervisory Policy Manual modules, refining proposals to expand the investigation and enforcement powers of the HKMA following consultation, and continuing the multi-year programme to build an operational resolution regime for banks.
  • Building a safe and inclusive banking sector – This includes continuing to monitor the implementation of the Code of Banking Practice and developments in innovative banking services and popular banking products, protecting bank customers against the risk of rising fraud and scams through education efforts, implementing the Payment Arrangements for Property Transactions proposal, reviewing the Mandatory Reference Checking Scheme with a view to expanding the scope of staff, and participating in global financial consumer efforts.
  • Future-proofing the banking sector – This includes conducting a comprehensive review of the evolution of banks’ fintech adoption and their future fintech strategies, embarking on a strategic transformation programme for its core supervisory functions, implementing a data-driven and technology empowered supervision framework, and leading a collaborative study to identify potential talent gaps in the banking sector.
  • Oversight of financial market infrastructures – This includes continuing active participation in the international working groups relating to cross-border payments and monitoring the implementation of new and innovative financial market infrastructure related initiatives.
  • Enhancing Hong Kong's competitiveness as an international financial centre – This includes deepening connectivity between the financial markets of Hong Kong and the Mainland, enhancing Hong Kong’s role as an offshore renminbi business hub, strengthening connections within Greater Bay Area, enhancing financial platform competitiveness, reinforcing Hong Kong’s position as a fintech hub in Asia, ensuring the reliability and efficiency of Hong Kong’s critical financial infrastructure, ensuring the safety and soundness of the local retail payment industry, and implementing the licensing regime for stablecoin issuers.

The HKMA has also issued its Sustainability Report 2024, which sets out its strategies and priorities with regards to building a climate-resilient banking sector, enhancing the green and sustainable finance ecosystem, investing responsibly, and moving forward as a sustainable organisation. [25 Apr 2025]

SFC and HKMA publish updated technical specifications and Gazette notice for upcoming enhancements to OTC derivatives reporting requirements, taking effect on 29 September 2025

The SFC and the HKMA have published further updated versions of the Administration and Interface Development Guide (AIDG), FAQs and the Supplementary Reporting Instructions (SRI), as part of the communications on enhancements to Hong Kong’s over-the-counter (OTC) derivatives reporting requirements. The updates clarify industry participants’ questions and address their concerns on the implementation of the enhanced reporting requirements which will take effect on 29 September 2025. The updated AIDG, FAQs and SRI can be accessed via the SFC's dedicated webpage.

The HKMA has also published a notice in the Government Gazette to give legal effect to the mandatory data elements for OTC derivatives reporting. The notice will come into effect on 29 September 2025, superseding the previous notice G.N. 3344 published in the Government Gazette on 30 June 2022. A marked-up version is attached to the SFC's circular, showing some minor changes made against the version attached to the SFC-HKMA consultation conclusions of 26 September 2024 (see our previous update).

Reporting entities are reminded to review the updated AIDG, FAQs, SRI and the Gazette Notice, and to make best efforts to prepare for the upcoming implementation. [25 Apr 2025]

SEHK issues circular regarding E2E test session for phase 1 minimum spreads reduction

The Stock Exchange of Hong Kong Limited (SEHK) has issued a circular regarding an end-to-end (E2E) test session from 26 May 2025 to 6 June 2025 for the implementation of phase 1 minimum spreads reduction (see our recent update regarding the implementation).

Exchange participants and broker supplied systems vendors are strongly encouraged to join the E2E test session to verify the respective system changes. HKEX Orion Market Data Platform – Securities Market will be available for testing during the same period – market participants (including information vendors) should refer to a separate notice (and enclosure) for detailed arrangements.

Upon completion of the E2E test session, a mandatory market rehearsal will be arranged. All exchange participants will be required to participate to confirm their readiness, with details to follow in due course. [25 Apr 2025]

SFC CEO delivers speech on fostering future-ready capital markets in a new era of uncertainty

Ms Julia Leung (the SFC's CEO) gave keynote remarks on 24 April 2025 at the OSC Dialogue organised by the Ontario Securities Commission.

Ms Leung noted that with the escalating trade war, the biggest question for capital market regulators is how one can ensure the resilience and robustness of the markets and prepare financial institutions for a future of uncertainty. She emphasised the importance of harnessing the disruptive forces – such as geopolitical tensions, new technologies including blockchain and generative artificial intelligence, and climate risk – into positive agents of change to drive market progress.

Ms Leung discussed the SFC's strategies to harness the changing tides to ensure the resilience and competitiveness of the markets:

  • Bolstering resilience – The surveillance system for on-market trading, investor ID system, and rigorous stress testing (among others) have helped maintain resilience against unexpected shocks.
  • Keeping our markets efficient and competitive – Among other initiatives, the SFC is working with the stock exchange to improve the liquidity and efficiency of the listed securities market, including conducting a comprehensive review to reduce transaction costs and raise capital efficiency while staying laser-focused on investor protection. The stock exchange has also improved the efficiency of vetting IPOs and introduced broad-ranging enhancements to attract new economy stocks to list in Hong Kong.
  • Further broadening and deepening our markets – Hong Kong has introduced several Connect schemes to enable overseas investors to participate in the Mainland’s stock market, bond market as well as over-the-counter swap market. The SFC strives to further diversify the investor base and forge closer bilateral links with overseas markets to promote mutual benefits. It is strengthening connectivity with both new markets (such as the Middle East and Southeast Asia), as well as traditional markets including Canada.
  • Harnessing innovative technology to future-proof our financial markets – One of the SFC's core initiatives is setting out a comprehensive, competitive regulatory framework for Hong Kong’s virtual asset market focused on investor protection. The recently-published 'ASPIRe' roadmap aims to enhance the security, innovation and growth of our market under a five-pillar framework (see our previous update).

Lastly, Ms Leung noted that for the above strategies to succeed, the SFC relies on international regulatory cooperation to mitigate financial risks, combat crime and ensure market resilience. She highlighted the role of the International Organisation of Securities Commissions in coordinating global responses to market turmoil and emerging risks. [25 Apr 2025]

HKFE and SEHK issue circular regarding practice session for large-scale error trade handling procedures

To enable exchange participants of Hong Kong Futures Exchange Limited (HKFE) and options trading exchange participants of The Stock Exchange of Hong Kong Limited (SEHK) to have a better understanding of the Large-Scale Error Trade Handling Procedures, which is supplemental to the Error Trade Handling Procedures, the HKFE and the SEHK have jointly scheduled a practice session to be held on Saturday, 7 June 2025.

The objective of the practice session is to enable exchange participants to familiarise themselves with the large-scale error trade handling procedures and the relevant market communications under a simulated event. Exchange participants are expected to pay close attention to the simultaneous market communications, which include HKATS market messages and other communications via the HKEX website, together with the subsequent operational arrangements for the trade cancellations.

Exchange participants are strongly encouraged to arrange for their trading related staff and/or responsible officers to participate in the practice session, and should submit the registration form by 30 May 2025. [23 Apr 2025]

HKSCC and SEHK issue circulars regarding connectivity test and practice sessions for enhancement of settlement arrangement for multi-counter eligible securities in CCASS

The Hong Kong Securities Clearing Company Limited (HKSCC) has issued a circular regarding a connectivity test and practice sessions for the enhancement of the settlement arrangement for multi-counter eligible securities in the Central Clearing and Settlement System (CCASS) by adopting a single tranche multiple counters arrangement. The enhancement will come into effect in June 2025 tentatively, subject to regulatory approval (see our previous update).

The connectivity test will take place on 17 May 2025 and is optional but highly recommended. The first practice session will take place on 24 May 2025 and is mandatory for clearing participants that will clear and settle for cross-counter trades of multi-counter eligible securities (but highly recommended for other clearing participants). The second practice session will take place on 7 June 2025 and will only be mandatory for clearing participants that have failed the first practice session.

The circular provides information for preparation and registration for the connectivity test and practice sessions. The HKSCC has further updated the FAQ to provide more detailed information regarding the enhancement, particularly the migration arrangements outlined in Part 6 of the FAQ.

Separately, The Stock Exchange of Hong Kong Limited (SEHK) has issued a circular regarding the practice session on 24 May 2025 and registration information. A detailed activity rundown will be sent to registered exchange participants by 22 May 2025. Exchange participants, along with their clearing participants (if applicable), are advised to review their internal systems and operation arrangements in order to ensure a smooth transition, including pre-trade checking, and to prevent any settlement failure. [23 Apr 2025]

SFC on track to launch USM regime in early 2026

The SFC has announced that it is on track to launch the uncertificated securities market (USM) regime in early 2026.

All USM-related primary law amendments were enacted by the end of 2024, and the Legislative Council has recently completed its negative vetting process for all USM-related subsidiary legislation. The legislation has however not yet come into effect. See our February 2025 updates here and here for recent developments.

Under the USM regime:

  • Newly listed securities will have to be in paperless form from the time of listing (i.e. investors will no longer be able to hold these securities in paper form).
  • With regard to existing securities, investors may continue to hold their paper certificates, which will not be invalidated. Specific deadlines will be set for each issuer to take steps to enable investors to hold and transfer the securities in their own names without paper (a five-year timetable will be set). Thereafter, issuers will no longer be able to issue new paper certificates.

The SFC is working with the HKEX and the Federation of Share Registrars Limited on a detailed five-year implementation timetable which will cover issuers from Hong Kong, Mainland China, Bermuda and Cayman Islands.

To help the market better understand and prepare for this new regime, the SFC has launched a dedicated USM webpage to provide one-stop access to all useful information. The webpage includes a set of FAQs to help listed issuers and investors better understand their rights and obligations under USM. Issuers are encouraged to reach out to their share registers to discuss the possible timing of their participation and to start making preparations. [17 Apr 2025]

SFC and HKMA consult on annual update to FSP list under OTC derivatives regulatory regime

The SFC and HKMA have issued a joint consultation on the annual update to the list of financial services providers (FSP) under the over-the-counter (OTC) derivatives clearing regime. Interested parties are invited to submit their comments by 16 May 2025.

This update proposes adding one entity to the FSP list to ensure that the list remains relevant and appropriate. If adopted, the update will take effect on 1 January 2026.

The concept of FSP has been introduced to the clearing regime to identify major OTC derivatives dealers outside Hong Kong. Central clearing is required for certain transactions conducted between a major dealer outside Hong Kong (i.e. an FSP) and a prescribed person (i.e. an authorised institution, an approved money broker or a licensed corporation). [17 Apr 2025]

SFST welcomes LME's approval of first batch of warehouses in Hong Kong

The London Metal Exchange (LME), a wholly-owned subsidiary of the HKEX, has approved the first batch of applications to establish warehouses in Hong Kong, involving four warehouse facilities. The approval is expected to promote Hong Kong's commodity market and strengthen its position as an international financial, shipping, and trading centre.

This follows the announcement by the LME in January 2025 that it would include Hong Kong as an approved delivery point within its global warehousing network and would accept applications from warehouse operators to become approved for the storage of LME-registered brands of metals (see our previous update).

The Secretary for Financial Services and the Treasury (SFST), Mr Christopher Hui, welcomed the approval, highlighting the efforts of the Government and the industry in exploring new growth areas. The establishment of LME-approved warehouses in Hong Kong will provide convenient, cost-effective, and safe delivery channels for metals trading in the region. It will attract relevant enterprises to establish a presence in Hong Kong, turning the city into an operation centre for international commodity trading, storage, delivery, shipping and logistics, and risk management, and will also promote the development of related financial transactions such as futures.

The Government understands that other operators are applying to become approved warehouses and will provide assistance on technical matters as appropriate. [15 Apr 2025]

HKMA issues circular to introduce three enhancements to e-banking security measures to tackle digital fraud

The HKMA has issued a circular to introduce three enhancements to e-banking security measures, designed in consultation with the Hong Kong Police Force and the Hong Kong Association of Banks.

The HKMA notes that although recent measures (such as the expansion of the Suspicious Account Alert mechanism in December 2024, see our previous update) have been effective, the modus operandi of fraudsters continue to evolve rapidly. In particular, there are early signs of use of advanced technologies (such as artificial intelligence and deepfake) by bad actors to enhance the sophistication of their deception techniques.

The three enhancements require authorised institutions (AIs) to embrace 'e-banking security ABC', i.e. provide convenient means for customers to:

  • 'Authenticate in-App' – Facilitate customers to adopt bound devices by default (instead of SMS one-time passwords), for authenticating specified internet banking activities, including logins to internet banking and high-risk transactions (such as fund transfers to unregistered third parties) – to be implemented by the fourth quarter of 2025;
  • 'Bye to unused functions' – Empower customers to make own choice of deactivating higher risk functions in internet banking, using a phased approach as appropriate, and starting with two functions, namely online increase of transfer limits and online registration of third-party payees – to be implemented by the third quarter of 2025; and
  • 'Cancel suspicious payments' – Further enhance the effectiveness of alerts displayed under the Suspicious Account Alert Mechanism, including by adjusting their duration and content – to be implemented by the second quarter of 2025.

Further details of the enhancements are set out in the annex to the circular. AIs should endeavour to meet the specified implementation timelines, but the HKMA is prepared to discuss alternative proposals and mitigation measures with individual AIs that encounter genuine difficulties.

Although these measures target individual customers of retail banks, AIs are encouraged to consider extending them to other types of customers (such as business customers and private bank customers) as appropriate, especially where the nature of transactions conducted by these customers may bear similarities with retail banking.

AIs should clearly communicate the implementation specifics to customers in easy-to-understand language.

The HKMA will strengthen consumer education around 'e-banking security ABC' and plans to issue guidance to elevate the ecosystem’s readiness to combat the deepfake-enabled modus operandi. [14 Apr 2025]

HKMA supports new practice published by HKAB on handling of cash in bank accounts of deceased account holders

The HKMA has issued a circular to draw licensed banks' attention to the new practice to enable cash at bank accounts of deceased account holders to be released to probate grantees more efficiently, as set out in the Guideline on handling cash at bank of deceased account holders published by the Hong Kong Association of Banks (HKAB). The Judiciary has also noted the new practice.

The new practice seeks to minimise the unnecessary time and effort of grantees going back and forth between banks and the Probate Registry for amendments of grants arising from minor variations to the cash held at the bank accounts of the deceased, thereby enabling the earlier release of money to the beneficiaries of the estates who may need such money to meet various needs, and at the same time enhancing the efficiency of the process for banks and the Probate Registry.

Where the bank account balance as of the deceased date stated on a probate application is different from what is stated in the record of a bank as at the money release date, the bank may, subject to its discretion after taking into account the particular circumstances of each case, nonetheless proceed to release money in the bank accounts (without amendment to the grant) if the deviation from the actual bank balance is traceable and/or reasonable and is within the specified thresholds.

Banks are expected to have in place processes and procedures in handling requests from grantees, and to exercise judgement to determine whether such variations are traceable and/or reasonable. [14 Apr 2025]

New measures to combat financial crime announced by HKMA, HKPF and HKAB

The HKMA, the Hong Kong Police Force (HKPF) and The Hong Kong Association of Banks (HKAB) have jointly announced a series of new measures to combat financial crime (including fraud and associated mule account networks), to keep pace with the evolving nature of fraud and with international good practices. These measures are also set out in an HKMA circular to retail banks:

  • Expanded use of Scameter data – The HKMA and the HKPF have expanded the use of Scameter data, and expect banks to combine this with network analytics capabilities to identify more suspicious accounts and alert potentially at-risk customers.
  • Bank-to-bank information sharing – The HKMA has proposed legislative amendments to enable bank-to-bank information sharing when banks become aware of activity that may indicate possible prohibited conduct (including money laundering and terrorist financing) (see our previous update). While ten banks are already sharing information on the Financial Intelligence Evaluation Sharing Tool platform operated by the HKPF, an updated platform capable of accommodating increased information exchanges is intended to be operational by the end of the year (subject to the passing of the legislative amendments).
  • Sharing of good practices – The HKMA has shared (via private channels) good practices on anti-fraud and anti-money laundering systems to help banks enhance the effectiveness of their systems to prevent, detect and disrupt fraud and scam-related money laundering activities. This follows its circular of 20 December 2024 on measures to protect bank customers from authorised payment scams (see our previous update).
  • Thematic reviews – The HKMA will work collaboratively with banks to review system performance through thematic reviews, in which it will collect information to monitor the effectiveness of banks’ implementation of measures related to authorised payment scams and mule account networks, as part of its ongoing supervision. It will also establish a regular communication platform with the industry to continuously strengthen the banking sector’s ability to detect mule account networks.

Enhanced publicity and education efforts – The HKMA, the HKPF and the banking industry will strengthen efforts to disseminate messages to customers regarding 'Don’t Lend/Sell Your Account', including outreach activities to targeted segments, and enhance industry coordination through the formation of the Anti-fraud Education Taskforce by the HKAB comprising 18 major banks. [10 Apr 2025]

SFC provides staking guidance for licensed VATPs and authorised VA funds via circulars

The SFC has provided regulatory guidance (via circulars) to licensed virtual asset trading platforms (VATPs) on their provision of staking services, and to SFC-authorised funds with exposure to virtual assets (VAs) on their engagement in staking. The SFC's Executive Director of Investment Products, Ms Christina Choi, referred to the issue of these circulars in her keynote speech at the Hong Kong Web3 Festival.

Staking refers to the process of committing or locking client VAs for a validator to participate in a blockchain protocol’s validation process based on a proof-of-stake consensus mechanism, with returns generated and distributed for that participation. In setting out its regulatory approach, the SFC recognises the potential benefits of staking in enhancing the security of blockchain networks and allowing investors to earn yields on VAs within a regulated market environment.

In its circular to VATPs, the SFC sets out its regulatory approach and expected standards for providing staking services to clients. VATPs should obtain the SFC's prior written approval before providing such services (the SFC will impose specific conditions on their licences). The key requirements include:

  • Maintaining possession or control of all mediums through which client VAs may be withdrawn from the staking services;
  • Maintaining effective policies to prevent or detect errors and other improper activities associated with the staking services, ensuring the 'staked' client VAs are adequately safeguarded, and implementing internal controls to manage operational risks and address any conflict of interests;
  • Disclosing general information and risks associated with staking services on the VATPs' websites and (if relevant) mobile applications; and
  • Acting with due skill, care, and diligence when including a blockchain protocol for providing staking services;
  • Performing proper due diligence and ongoing monitoring on third-party service providers where the provision of staking services is outsourced.

In a separate updated circular (which supersedes the previous version of 22 December 2023 – see our previous update), the SFC stated that it may allow authorised VA funds to engage in staking and other VA-related activities conducted through licensed VATPs, or where applicable, HKMA authorised institutions (AIs) (or subsidiaries of locally incorporated AIs), subject to adhering to various guiding principles, including those relating to internal controls, monitoring of counterparties and service providers, and disclosure. Prior consultation with and approval of the SFC are required before authorised VA funds can engage in staking and other VA-related activities.

The SFC has added a new Question 20F to its FAQs on the Code on Unit Trusts and Mutual Funds, detailing the requirements that should be observed by management companies of authorised VA funds which engage in staking. [7 Apr 2024]

HKMA issues circular setting out standards expected of AIs regarding provision of staking services for VAs from custodial services

The HKMA has issued a circular outlining the standards expected of authorised institutions (AIs) related to the provision of staking of virtual assets (VAs) from custodial services. The circular applies to AIs and subsidiaries of locally incorporated AIs that provide staking services from custodial services to their clients. Locally incorporated AIs should ensure that the business conduct, practices and controls of such subsidiaries comply with the circular.

Staking services refer to any arrangements which involve the process of committing or locking client VAs for a validator to participate in a blockchain protocol’s validation process based on a proof-of-stake consensus mechanism, with returns generated and distributed for that participation.

AIs and subsidiaries of locally incorporated AIs should (among other things):

  • Maintain possession or control of all mediums through which the client VAs may no longer be staked;
  • Maintain effective policies to prevent or detect errors and other improper activities associated with their staking services, ensure the 'staked' client VAs are adequately safeguarded, as well as implement internal controls to manage operational risks and address any conflict of interests;
  • Disclose general information about their staking services and the risks that clients may be exposed to in using their staking services;
  • Act with due skill, care and diligence when including a blockchain protocol for providing staking services;
  • Perform proper due diligence and conduct ongoing monitoring on third party service providers where staking services involve outsourcing to such providers.

Before engaging in staking services, AIs and subsidiaries of locally incorporated AIs should implement adequate policies, procedures, systems and controls to ensure compliance with the requirements set out in the circular (and other applicable requirements), and discuss these with the HKMA in advance. They may also test their staking-related operations and controls using the HKMA's Supervisory Incubator for Distributed Ledger Technology. [7 Apr 2024]

HKEX announces SSE and SZSE Program Trading Management Measures (taking effect on 7 July 2025) and consultation on Northbound Program Trading Reporting Guidelines and accompanying instructions

The HKEX has issued a circular to inform China Connect exchange participants (CCEPs) and trade-through exchange participants (TTEPs) that:

  • The Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) have announced Program Trading Management Measures (in Chinese only) in relation to the regulations on program trading activities conducted in the A-shares market, including Northbound Trading under Stock Connect, which will take effect on 7 July 2025; and
  • The SSE and the SZSE have published market consultations on the Northbound Program Trading Reporting Guidelines and the Northbound Program Trading Fill-in Instructions (in Chinese only) (the consultation period will end on 17 April 2025).

CCEPs and TTEPs are strongly encouraged to take note of the new requirements in the management measures and the consultation, and assess the impact of such changes to their operations and systems.

There will be no system change to the Orion Trading Platform – China Stock Connect in relation to the management measures. CCEPs and TTEPs can however verify their systems in the end-to-end testing environment on an optional basis from 22 April 2025 to 16 May 2025 to ensure smooth functioning and readiness of their systems under the new requirements. [3 Apr 2025]

HKEX clearing houses issue circulars to remind clearing participants regarding payment obligations

The Hong Kong Securities Clearing Company Limited, HKFE Clearing Corporation Limited, The SEHK Options Clearing House Limited, and the OTC Clearing Hong Kong Limited have published circulars to emphasise the importance of having proper risk management and robust funding arrangements in place to adequately monitor their exposure and fulfill their payment obligations on time.

Clearing participants should adhere to the settlement timelines stipulated by their clearing houses. Failure to do so constitutes an event of default under the relevant rules, the consequence of which includes default actions and/or disciplinary actions against the participant concerned, which may lead to suspension of trading / participantship / membership, imposition of penalties and/or additional risk management measures.

Participants are strongly advised to review their existing operational and monitoring procedures and introduce enhancement measures where appropriate. The circulars set out examples of areas that should be covered in the review.

As best practice, participants should have established procedures and capability to project the amount of payment obligations and arrange sufficient funding to meet such requirements in a timely manner. A summary of payment obligations and (where applicable) information on cash prepayment arrangements are set out in the appendices to the circulars for reference. [2 & 3 Apr 2025]

Singapore

MAS speech: Role of asset management in managing uncertainty

MAS has published a speech by its Managing Director Chia Der Jiun on the role of the asset management industry in sustaining investor confidence and contributing to the resilience of markets. The speech focused on how the industry can help in building more resilient markets, providing products and portfolios that meet investors’ diversification and retirement needs, and supporting better informed investors. [23 Apr 2025]

MAS: Response to PQ on standards of corporate governance for SFOs

MAS has published its response to a Parliamentary question (PQ) on the standards of corporate governance that are imposed on single family offices (SFOs) seeking tax incentives under the fund tax incentive schemes.

MAS confirmed that it is for the family to establish the governance and controls needed. It added that, consistent with the approaches taken in other major financial centres, SFOs do not need to be regulated nor be subject to specific corporate governance standards beyond those which apply to all corporate entities, whether they receive tax incentives or otherwise. [8 Apr 2025]

MAS: NBC joins Regional Payment Connectivity initiative

MAS has announced that the National Bank of Cambodia (NBC) has joined the Regional Payment Connectivity initiative, bringing the total number of signatories to nine Association of Southeast Asian Nations (ASEAN) central banks. The initiative aims to promote, faster, cheaper, more transparent and more inclusive cross-border payments. [8 Apr 2025]

MAS: Response to PQ on protecting customer information

MAS has published its response to a Parliamentary question (PQ) on the measures in place to protect customer information from unauthorised access or disclosure by bank employees. MAS stated that, under the Banking Act, banks and their officers are strictly prohibited from disclosing customer information to any external party unless expressly permitted. Individuals found to be in breach of the Act are liable to fines or imprisonment, or both.

Furthermore, under MAS’ Notice on Technology Risk Management, banks must put in place IT controls to protect customer information from unauthorised access or disclosure. MAS expects banks’ internal audit functions to address all material risks, including data loss. [8 Apr 2025]

MAS: Response to PQ on safeguards against 'finfluencers' providing financial advice

MAS has published its response to a Parliamentary question (PQ) on whether it is reviewing the safeguards in place to ensure that non-licensed individuals and 'finfluencers' do not provide financial advice, and whether there has been an increase in complaints against such individuals.

MAS confirmed that it had received eight complaints against 'finfluencers' so far in 2025, already exceeding the average of five complaints per year over the last five years. The regulator says that it will be monitoring this area closely. It also reiterated that a 'finfluencer' providing advice must be regulated under the Financial Advisers Act and must first be appointed as a representative by a licensed financial advisory firm. Even if 'finfluencers' are not providing financial advice, they must not make false or misleading statements on any capital markets products, or they may be liable for an offence under the Securities and Futures Act. [8 Apr 2025]

MAS and SPF issue joint alerts

MAS and the Singapore Police Force (SPF) have issued the following joint alerts:

Malaysia

BNM: Launch of cross-border QR payment phase 2 between Malaysia and Cambodia

BNM has announced the launch of phase 2 of the cross-border QR payment linkage between Malaysia and Cambodia. With this expansion, Malaysian travellers can now pay Cambodian merchants by scanning the KHQR using native mobile payment application of participating financial institutions. [8 Apr 2025]

Thailand

BoT sets standards for banking sector

The BoT has published a number of standards for the banking sector aimed at preventing technological crimes. The notice covers measures in respect of account opening and impersonation, mule accounts, and reporting of digital fraud. [28 Apr 2025]

SECT: Centralised LTF database portal

The SECT has announced that a new centralised service providing investors with access to consolidated data of their long-term equity funds (LTF) holdings will be available on the Stock Exchange of Thailand (SET) website from 2 May 2025. The initiative follows the Government's recent introduction of tax incentives aimed at bolstering investments in ESG stocks and strengthening the Thai capital market. [28 Apr 2025]

SECT consults on amendments to qualifications criteria for foreign mutual funds

The SECT has published a consultation on proposed principles and draft amendments to the qualification criteria for foreign mutual funds investible by Thai mutual funds. The proposal aims to increase investment choices and support the development of diverse financial products. [25 Apr 2025]

BoT to set out responsibilities of financial institutions and PSPs

The BoT has announced that it is in the process of preparing a notice to define the duties and responsibilities of financial institutions and payment service providers (PSPs), following the publication of the Decree on Measures to Prevent and Suppress Technological Crime in the Government Gazette. A key aspect of this legislation is the establishment of a mechanism for relevant service providers such as financial institutions, PSPs, telecommunications service providers (telcos), social media service providers (social platforms), and digital asset business operators. The BoT expects to set out the duties and responsibilities by the end of April 2025. [13 Apr 2025]

SECT ready to elevate restrictions on illegal digital asset platforms

The SECT has announced that is ready to coordinate with relevant agencies to elevate restrictions on foreign digital asset platforms engaging in solicitation or advertising services to investors in Thailand. The announcement follows the coming into force of new laws that allow the blocking process to be carried out more quickly. SECT encourages investors to use services from licensed digital asset business operators in Thailand to ensure protection under the Digital Asset Business Law. [13 Apr 2025]

SECT: Board approves regulation amendments to strengthen overall market stability

The SECT has announced that the SECT Board passed a resolution approving amendments to the regulations of the Stock Exchange of Thailand (SET) aimed at enhancing oversight of orderly securities trading by removing Non-SET100 Index securities from short selling eligibility. The regulations will take effect on 16 April 2025. [11 Apr 2025]

SECT strengthens measures to combat digital asset mule accounts, money laundering

The SECT has approved certain amendments to laws aimed at strengthening measures against cybercrime and mule accounts, enhancing the security of public financial transactions and improving the effectiveness of combating online scams. The amendments clarify the mechanisms for information exchange with relevant agencies and elevate measures for preventing the use of foreign digital asset exchanges as a channel for money laundering. [8 Apr 2025]

BoT: Project Nexus partners incorporate NGP to run cross-border payment scheme

With its partners – the RBI, BNM, BSP, and MAS – the BoT has announced the formal incorporation of Nexus Global Payments (NGP) in Singapore to operationalise and manage a multilateral instant cross-border payments scheme. NGP is commencing a procurement process to appoint a Nexus Technical Operator to undertake the technical build and run the day-to-day operations of the Nexus scheme. [3 Apr 2025]

India

SEBI consults on mandatory dematerialisation of securities

SEBI has published a consultation on proposals relating to the mandatory dematerialisation of existing securities of select shareholders prior to the initial public offering. Responses are requested by 20 May 2025. [30 Apr 2025]

SEBI: Extension of timeline for implementation of optional T+0 settlement cycle

SEBI has extended the timeline for qualified stock brokers to put in place the necessary systems and processes for enabling the participation of investors in optional T+0 settlement cycle to 1 November 2025. [29 Apr 2025]

SEBI consults on amendments to dispute resolution mechanism

SEBI has published a consultation on proposed amendments to its master circular on online resolution of disputes in the Indian securities market. The amendments seek to impart more clarity, remove ambiguity and stipulate additional norms with respect to the dispute resolution mechanism. Responses are requested by 12 May 2025. [21 Apr 2025]

SEBI: Extension of trading window closure to immediate relatives of designated persons

SEBI has announced that it has extended the framework for restricting trade by designated persons (DPs) of listed companies to immediate relatives of DPs. The circular also provides the procedure for implementation of the system to restrict trading as well as a flow chart depicting the process to be followed by listed companies, depositories and stock exchanges. [21 Apr 2025]

SEBI consults on investment limits in REITs and InvITs

SEBI has published a consultation on proposals to enhance limits for investments by mutual funds in real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) to provide more investment avenues and further diversification to schemes of mutual funds. Responses are requested by 11 May 2025. [17 Apr 2025]

SEBI consults on investment charters – investment advisers, research analysts, RTAs

SEBI has published consultations on draft investor charters for investment advisers, research analysts and registrars to an issue and share transfer agents (RTAs) which aim to enhance financial consumer protection. Relevant stakeholders are required to bring the charters to the notice of their clients and/or shareholders. Responses to the consultations are requested by 2 May 2025. [11 Apr 2025]

RBI: Statement on developmental and regulatory policies

The RBI has published a statement on developmental and policy measures related to banking regulation, fintech and payment systems. These include a draft framework for securitisation of stressed assets; a generic regulatory framework for all forms of co-lending arrangements among regulated entities; revised guidelines on non-fund based facilities; and transaction limits in the Unified Payments Interface. [9 Apr 2025]

SEBI: Clarification on framework for specialised investment funds

SEBI has issued a circular to clarify that the provisions of the June 2024 Master Circular for Mutual Funds on the maturity of securities in interval schemes will not be applicable to interval investment strategies under the specialised investment fund regulatory framework. [9 Apr 2025]

RBI: Theme neutral On Tap application facility – regulatory sandbox

The RBI has announced its decision to allow theme neutral applications as part of the On Tap facility under its regulatory sandbox. Applications involving any technology/theme can be made under this facility. The RBI has also provided an illustrative list of topics for guidance. [9 Apr 2025]

FPI additional disclosure threshold increased

SEBI has decided to increase the threshold of equity holding by foreign portfolio investors (FPIs) in the Indian markets that obligates additional disclosures from INR 25,000 crore to INR 50,000 crore. The circular has immediate effect. [9 Apr 2025]

SEBI consults on investor charter for KRAs

SEBI has published a consultation on a proposed investor charter for KYC (Know Your Client) Registration Agencies (KRAs). The charter covers the services provided to investors, rights of investors, various activities of KRAs, dos and don’ts for investors, and a grievance redressal mechanism. Responses are requested by 25 April 2025. [4 Apr 2025]

Philippines

BSP implements reforms in the FX derivatives market

BSP has announced that its Monetary Board approved amendments to foreign exchange (FX) regulations aimed at broadening Filipinos’ access to more hedging instruments and deepening the country’s capital market. The amended regulations expand the list of allowable FX hedging instruments involving the Philippine peso. The circular will take effect 15 banking days after its publication either in the Official Gazette or in a newspaper of general circulation in the Philippines. [24 Apr 2025]