Asia Financial Regulatory Update - May 2025

Hong Kong SAR

Derivatives

SFC Increases position limits for Hang Seng Index Derivatives: The Securities and Futures Commission (SFC) has published its consultation conclusions on raising position limits for exchange-traded derivatives tied to the Hang Seng Index, Hang Seng China Enterprises Index, and Hang Seng TECH Index. The changes are aimed at enhancing market liquidity, hedging efficiency, and supporting market growth, with the new limits expected to take effect in July 2025, pending legislative amendments. While stakeholders broadly supported the proposal in last year’s consultation, some respondents sought further increases to match global benchmarks, regular reviews, and clarifications on existing exemptions. The SFC confirmed that current authorisations for exceeding statutory limits will remain valid. It balances market development needs with financial stability, ensuring the position limits are forward-looking yet prudent.

Annual update to Financial Services Providers List under OTC Derivatives Clearing Rules: The Hong Kong Monetary Authority (HKMA) and the SFC have launched a consultation on the proposed annual update to the Financial Services Providers (FSP) list under the OTC Derivative Transactions Clearing Rules. These updates ensure Hong Kong remains aligned with global reforms in OTC derivatives markets required by the G20. The FSP designation captures international entities active in OTC derivatives outside Hong Kong, enabling their transactions with local prescribed persons to fall under Hong Kong's mandatory clearing obligations. The latest review proposes the addition of Morgan Stanley Bank, N.A. to become a clearing member of a recognised central counterparty. The consultation has since closed on 16 May 2025, and revisions are expected to take effect on 1 January 2026.

Fintech

HKMA and SFC guidance to permit staking services: Certain intermediaries will now be able to provide staking services, subject to stringent conditions to address investor demand and support Hong Kong’s virtual asset growth. The SFC now permits SFC-licensed virtual asset trading platforms (VATPs) to provide staking services, subject to stringent conditions to address investor demand and support Hong Kong’s virtual asset growth. VATPs must retain full control of client assets, implement strong internal controls to mitigate risks, and ensure transparency by disclosing fees, risks, lock-up terms, and third-party involvement. If validation is outsourced, due diligence and ongoing monitoring of third-party providers are required. Platforms need the SFC’s prior approval and must comply with specific licence terms before offering these services. The SFC has also said it may allow SFC-authorised VA Funds to engage in staking and other VA-related activities conducted through SFC-licensed VATPs, or where applicable, AIs subject to adhering to certain conditions. Read more on our post. 

Market Infrastructure

SFC advances Uncertificated Securities Market initiative: The SFC has confirmed the enactment of legislation to enable the implementation of the uncertificated securities market (USM) initiative, targeted for early 2026, pending market readiness. Under the USM framework — more than a decade in the making — newly listed securities must be issued in paperless form from the outset, while existing paper certificates will remain valid during a transitional shift towards digitalisation. The SFC, in partnership with HKEX and the Federation of Share Registrars, is establishing a five-year phased implementation plan covering issuers from Hong Kong, Mainland China, Bermuda, and the Cayman Islands. To support this transition, a dedicated USM webpage with FAQs has been launched to guide market participants. Issuers and stakeholders are encouraged to start preparations now and work closely with share registrars to coordinate their readiness and timing for participation.

Sustainable Finance

HKMA 2025 key sustainability initiatives: The HKMA has published its Sustainability Report 2024, detailing its initiatives to embed sustainability in Hong Kong’s financial system. Key initiatives planned for 2025 include conducting thematic examinations on banks’ climate risk management, enhancing climate stress testing, and embedding climate considerations into the Supervisory Review Process. The HKMA also aims to establish regulatory requirements for climate reporting aligned with Basel and International Sustainability Standards Board (ISSB) standards, finalise guidance on banks’ transition planning in the Supervisory Policy Manual, and promote good practices in climate risk management and green fintech adoption. Further goals include expanding the Hong Kong Taxonomy and supporting the issuance of green bonds.

Banking

Banking Industry Integrity Charter: The HKMA has written to Authorised Institutions (AIs) updating them on the Banking Industry Integrity Charter (BIIC). Launched in October 2024 by the Independent Commission Against Corruption (ICAC), with support from the HKMA and the Hong Kong Association of Banks, the BIIC aims to strengthen anti-corruption efforts in Hong Kong's banking sector. To date, 48 AIs have joined. In the letter to AIs, the HKMA urges those not yet enrolled to join the BIIC to enhance their integrity frameworks, as well reminding AIs to (i) report corruption promptly (full evidence is not required when reporting concerns to the ICAC), and (ii) assist investigations (respond promptly to ICAC requests for records or support).

Strengthening the Fight Against Fraud and Money Laundering: The HKMA has issued a circular for AIs on advancing financial crime measures through legislative and operational updates. This legislation allows voluntary sharing of information on suspected money laundering or financial crimes via platforms such as FINEST. Retail banks are advised to familiarise themselves with thresholds, "safe harbour" protections, and confidentiality requirements, as well as to update systems accordingly. As part of broader efforts to combat scams and fraud, the HKMA is encouraging AIs to adopt the expanded Scameter data to better identify suspicious transactions and associated risks. Pilot programmes are currently in progress, with wider implementation planned after system readiness is achieved. The circular also highlights examples of effective anti-fraud practices, which AIs are expected to integrate into their AML frameworks. Additionally, AIs should prepare for thematic reviews on these matters by the HKMA later this year. 

Revised SPM Module Collateral and Guarantees: The HKMA has issued a revised Supervisory Policy Manual (SPM) Module CR-G-7 on “Collateral and Guarantees” following an industry consultation. The updates reflect the increasing complexity of credit activities, incorporate Basel III property valuation standards, and align with Financial Stability Board guidance on mortgage underwriting practices. The guidance will apply proportionately, based on an AI’s credit risk profile. Institutions are required to review their risk management systems, ensure alignment with the updated requirements, and implement necessary changes within two years.

Singapore

Capital Markets

Comments by MAS on Market Conditions: The Monetary Authority of Singapore (MAS) stated in a media release that Singapore’s foreign exchange and money markets are functioning normally and emphasised its readiness to curb excessive volatility in the Singapore dollar while maintaining market order. The MAS is closely monitoring developments and assessing their impact on the economy.

Digital Economy

The National Bank of Cambodia (NBC) Formally Joins the Regional Payment Connectivity Initiative: The NBC, the central bank of Cambodia, has officially joined the Regional Payment Connectivity (RPC) initiative as the ninth ASEAN central bank, further strengthening regional financial integration in Southeast Asia. The RPC initiative aims to promote, faster, cheaper, more transparent and more inclusive cross-border payments. Since its inception, it has fostered and accelerated the development of cross-border payment connectivity in the region through, among others, quick response (QR) code-based payment and fast payment modalities.

Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT)

Consultation Paper on the Proposed Amendments to AML/CFT Notices for Financial Institutions (FIs) and Variable Capital Companies (VCCs): The MAS has published a consultation paper seeking feedback on proposals to amend the AML/CFT Notices for FIs and VCCs. The proposed amendments take reference from the latest revised standards set by the Financial Action Task Force (FATF). This includes: (i) amendments to clarify that money laundering includes proliferation financing (PF) and that ML/TF risk assessments carried out by FIs and VCCs include PF risk assessment; and (ii) amendments to align the wording of MAS Notice TCA-N03 with the Trustees Act 1967 and contemplated legislative changes, arising from the revised FATF Recommendations 25. 

Scams

Joint Advisory on Scammers Impersonating Officials from the MAS: The Singapore Police Force (SPF) and the MAS have alerted the public to scams leveraging the MAS’ Register of Representatives e-service platform to deceive victims into believing that they are MAS officials. Since March 2025, there have been at least 3 cases reported, with losses amounting to at least S$614,000. 

Joint Advisory on Impersonation Scams Involving Chinese Messaging and Payment Platforms: The SPF and MAS has released a joint advisory to remind the public to remain vigilant against impersonation scams involving Chinese messaging and payment platforms such as WeChat, UnionPay or Alipay. Since January 2025, at least 678 cases were reported, with total losses amounting to at least S$17.4 million. The MAS has issued 6 joint advisories on scams in 2025, reflecting an alarming rise in scam tactics targeting consumers.

Cybersecurity

Joint MAS-CSA Media Release on Ransomware Attack on Toppan Next Tech: The Cyber Security Agency of Singapore (CSA) has launched the expanded Cyber Essentials and Cyber Trust certification marks  to include coverage of cloud security and artificial intelligence security. The CSA is considering requiring organisations to obtain these certification marks before they can be licensed or able to bid for government contracts that will provide them access to sensitive data. Similarly, following concerns regarding the recent ransomware attack on Toppan Next Tech mentioned above, the CSA has also encouraged organisations to ensure their third-party vendors have adequate security in place if they have access to sensitive data and is assessing the possibility of requiring vendors themselves to obtain these certifications. The Singapore government in also considering including cybersecurity considerations into its procurement decisions. These developments signal the increasing importance and greater scrutiny over organisations’ cybersecurity measures, in light of the growing number of cybersecurity attacks recently. 

MAS’ Experts Panel Proposes Ways to Enhance Technology Resilience and Tackle Emerging Threats: The MAS Cyber and Technology Resilience Experts (CTREX) Panel have recommended strategies for Singapore’s financial sector. Key suggestions include enhancing operational resilience, preparing for quantum security threats, addressing IT supply chain risks, and adopting advanced anti-scam measures. The two-day event also involved a seminar with senior technology professionals from the financial industry.

Enforcement Actions

MAS Enforcement Report 2023/2024: The MAS has published the MAS Enforcement Report 2023/2024, which sets out the enforcement actions taken by MAS for the period of 1 July 2023 to 31 December 2024, as well as the MAS’ enforcement priorities for 2023/2024 and 2025/2026. The report highlights the MAS’ continued focus on combating market abuse, financial services misconduct, AML control breaches and implementing new investigation powers. Key legislative updates include expanded investigative powers under the Financial Institutions (Miscellaneous Amendments) Act 2024 and expanded powers to issue prohibition under the Financial Services and Markets Act 2022, which strengthen the MAS’ ability to address serious misconduct cases. Looking ahead, MAS will focus on enforcing AML/CFT controls and building enforcement capabilities in the digital asset ecosystem.