Hong Kong
On 9 October 2024, the Securities and Futures Commission (SFC) issued a circular identifying various deficiencies and substandard conduct among licensed corporations managing private funds and discretionary accounts (asset managers). The circular outlines significant risks posed by these issues, which breach obligations under the SFC’s Code of Conduct, FMCC, and Internal Control Guidelines. The SFC emphasises the responsibility of senior management to ensure compliance and improve supervisory practices, as well as the importance of addressing conflicts of interest, enhancing risk management, providing adequate information to investors and adopting appropriate valuation methodologies. For more information, please click here.
On 21 October 2024, the SFC announced the launch of the Fund Authorisation Simple Track (FASTrack) to expedite fund applications from mutual recognition of funds jurisdictions (MRF Jurisdictions). This initiative allows for approvals within 15 business days for eligible simple funds, effective 4 November 2024, during a six-month pilot period. For more information, please click here.
On 21 October 2024, Hong Kong Exchanges and Clearing Limited (HKEX) announced the upcoming launch of the integrated fund platform (IFP) to enhance Hong Kong’s fund distribution network. Starting at the end of 2024, the IFP will feature a public-facing information portal for SFC-authorised funds, offering one-stop access to essential fund information. Management companies will not need to file separately for the portal, as data will be sourced from existing SFC filings. Further technical details will be provided by HKEX. For more information, please click here.
On 24 October 2024, the SFC extended the parallel run period for its online application/submission system, e-IP, to 29 November 2024. From 30 November 2024, all investment product applications and submissions to the Investment Products Division must be made via e-IP. Launched on 29 July 2024, e-IP aims to streamline processes and will incorporate user feedback for enhancements. It will also facilitate reporting and payment of recurring fees. For more information, please click here.
On 25 October 2024, the SFC announced refined requirements for enhanced fund data reporting for SFC-authorised funds, effective 31 January 2025. This update supersedes previous circulars and outlines new reporting frequencies: monthly for subscriptions and redemptions, quarterly for liquidity profiles and asset allocation, and annually for securities financing transactions. Management companies must submit reports via the e-IP system on WINGS within specified timeframes. Sample reporting forms are provided to assist in preparation. For more information, please click here.
On 28 October 2024, the Hong Kong Monetary Authority (HKMA) announced a collaboration with the Banco Central do Brasil (BCB) to conduct cross-border tokenisation experiments under Project Ensemble and the Drex pilot programme. This partnership will connect their CBDC infrastructures to explore payment-versus-payment and delivery-versus-payment use cases in trade finance and carbon credits. Building on a 2018 agreement, the initiative aims to foster innovation and create a more integrated global financial market, with both parties emphasising the importance of collaboration. For more information, please click here.
On 3 October 2024, the SFC welcomed the publication of a voluntary code of conduct (VCoC) for environmental, social, and governance (ESG) ratings and data providers in Hong Kong. Developed by the Hong Kong ESG Ratings and Data Providers Working Group and supported by the SFC, the VCoC is based on international best practices from the International Organization of Securities Commissions (IOSCO). Signatories must publicly attest to their compliance, helping asset managers assess ESG products effectively. This initiative aims to enhance the quality and transparency of ESG information, reducing greenwashing in Hong Kong's sustainable finance sector. For more information, please click here.
On 28 October 2024, the SFC outlined its vision for developing a robust fintech ecosystem in Hong Kong during Fintech Week 2024. Dr Eric Yip, Executive Director of Intermediaries, highlighted initiatives to enhance the virtual asset market, including a swift licencing process for virtual asset trading platforms (VATPs) and the establishment of a consultative panel to support sustainable business models. The SFC is also collaborating with the government to regulate virtual asset services and is actively involved in Project Ensemble for tokenisation. For more information, please click here.
Enforcement
On 9 October 2024, the SFC reprimanded and fined CSC Futures (HK) Limited $4.95 million for violations of anti-money laundering and counter-financing of terrorism (AML/CFT) regulations from January 2017 to December 2018. The SFC found that CSC failed to conduct due diligence on customer supplied systems used by clients, hindering its ability to assess money laundering and terrorist financing risks. Additionally, significant deposits into client accounts did not match their declared financial profiles. The SFC deemed CSC's compliance systems inadequate and emphasised the need for strong deterrence against such failures to protect market integrity. For more information, please click here.
On 15 October 2024, the SFC reprimanded and fined Zheshang International Financial Holdings Co., Limited $2.66 million for failing to comply with AML/CFT regulations between June 2016 and October 2018. The SFC found that Zheshang did not implement an effective monitoring system to detect suspicious trading patterns, missing 23,370 self-matched trades in client accounts. Additionally, significant deposits in two accounts did not align with clients' financial profiles, and Zheshang failed to maintain records of client inquiries. For more information, please click here.
On 25 October 2024, the Court of First Instance granted an interim injunction against 11 suspected manipulators of shares in Ding Yi Feng Holdings Group International Limited, following proceedings initiated by the SFC. The court's order prohibits the manipulators from removing or disposing of their assets in Hong Kong, valued up to $6,353,386,915, ensuring sufficient assets are available for potential restoration orders. This interim injunction will remain in effect until further court instructions. For more information, please click here.
On 30 October 2024, the Eastern Magistrates’ Court sentenced Ms Lai Ka Yi to two weeks in prison and ordered her to pay $98,000 in compensation for conducting unlicensed securities activities. This marks the first instance of an immediate jail sentence for such an offense under section 114 of the SFO, alongside a compensation order in an SFC prosecution. Between April and May 2018, Lai misled a personal acquaintance into providing funds for investment, ultimately failing to return the investment. For more information, please click here.
This document is provided for information purposes only and does not constitute legal, tax, investment, regulatory, accounting or other professional advice. For more information on the legal and regulatory status of IQ-EQ companies please visit www.iqeq.com/legal-and-compliance.