Series
Publications
Series
Publications
HKMA Consults on Amendments to Hong Kong Banking Ordinance: As part of the ongoing review of the Banking Ordinance by the Hong Kong Monetary Authority (HKMA), it has published a consultation paper proposing amendments to various sections of the Ordinance. The paper looks at potentially establishing a statutory regime for the regulation and supervision of designated locally incorporated holding companies of locally incorporated banks, as well as permitting the HKMA to engage skilled persons to help the regulator perform its functions under the Banking Ordinance. In addition, the paper also refers to multiple ‘technical’ amendments, including to areas such as indirect controller definitions, HKMA approval for amalgamation, and e-mail and e-signature requirements.
Liquidity Management and Supervisory Expectations for MMFs: The Securities and Futures Commission (SFC) issued a circular outlining requirements for management companies of SFC-authorised money market funds (MMFs) to uphold effective liquidity risk management policies. The circular does not introduce any new requirements, but it reminds intermediaries of SFC expectations and sets out examples of good practice in a separate appendix. Managers need to consider factors such as investment strategy, investor base, and redemption policies, guided by the SFC's 2016 liquidity risk management circular. The SFC's thematic review of MMFs in 2023 observed increased outflows due to interest rate shifts but reported no liquidity issues.
Update to Mutual Recognition of Funds Between the Mainland and Hong Kong: The SFC and the China Securities Regulatory Commission have issued a joint announcement finalising the amendments to the Memorandum of Regulatory Cooperation on the Mutual Recognition of Funds between the Mainland and Hong Kong. The amendments were announced earlier this year and are now confirmed to be taking effect from 1 January 2025. The changes include a widening of the types of funds which would be eligible for the scheme, and an increase to the limit on the sale of Hong Kong funds to the Mainland under the scheme (from 50% to 80%).
SFC Suggests Asset Managers Use ESG Service Providers Who Use Voluntary Code of Conduct: Following the publication of Hong Kong’s first voluntary code of conduct (VCoC) for ESG ratings and data products providers (see our previous blog on the publication of the VCoC), the SFC issued a circular to asset managers encouraging them to consider using the VCoC during their due diligence and assessment processes of third-party ESG service providers. However, asset managers are free to refer to other similar or higher standards for their due diligence and ongoing assessments if deemed necessary and appropriate.
HKMA Publishes Good Practices on Transition Planning: In 2023, the HKMA published a set of high-level principles on transition planning for banks, which indicated that the regulator would carry out a survey of banks’ transition planning practices. The HKMA caried out the survey in late 2023, and has now published a circular with an overview of the good practices it identified with the aim of supporting banks to further their own transition plans. The HKMA also revealed that it will be consulting on a new Supervisory Policy Manual module on “Transition Planning” to set out expectations on how accredited investors should manage and address the risks associated with the net-zero transition.
SFC Guidance on the Use of Generative AI language Models: The SFC has addressed the use of generative AI language models (AI LMs) by licensed corporations to enhance client interactions and internal operations in a recent circular. While the SFC emphasises the potential benefits, it highlights the risks such as inaccuracy, bias, cyber threats, and over-reliance on AI outputs. Therefore, a risk-based approach is at the core of the circular, picking up on four core principles including senior management responsibility for governance and oversight; AI model risk management (ensuring robust validation and monitoring); cybersecurity and data risk management,; and third-party provider risk management. Additionally, firms are reminded that they may need to notify the SFC for some AI implementations.
HKEX Plans to Digitalise ETP Servicing: On 5 November 2024, HKEX announced plans to digitise and automate the in-kind creation and redemption process for relevant exchange-traded products (ETP) in 2025 through the adoption of a web-based platform. The platform will be integrated into the ETP creation and redemption process, connecting key ETP participants with the use of DLT and smart contracts. This should increase overall ETP market efficiency and support the continued growth of secondary market activity for ETPs.
HKMA Fines China CITIC Bank For AML Transaction Monitoring Failures: The HKMA has fined China CITIC HK$4 million after identifying transaction monitoring failures which occurred over an extended period of time. The HKMA carried out an investigation into China CITIC which identified the deficiencies which took place over nearly three years. The HKMA found that China CITIC had launched an automated transaction monitoring system which had not properly implemented detection rules, highlighting inadequate testing and controls around inputs into the system.
SFC Bans RO Fund Manager For Life And Fines Him $1.7 Million For Serious Misconduct: An individual, Mr Ng Ka Shun, who was a Responsible Officer and Manager-in-Charge of Agg. Asset Management Limited has been banned for life and fined by the SFC following financial misconduct and fund mismanagement. The financial misconduct was particularly egregious as the SFC identified that Mr Ng had misled the SFC that Agg. Asset Management Limited had the correct amount of liquid capital during its licence application and then continued to do so for 34 months after licensing. The SFC also found the firm mismanaged two funds in its capacity as investment manager, with Mr Ng responsible for making investment decisions for both funds during the material time.
SFC Suspends Former Yuanta Securities Licensee For 26 Months: The SFC has suspended the licence of Mr Wang Shian-tang, a former licensed representative of Yuanta Securities (Hong Kong) Limited for 26 months from 20 November 2024. The SFC found breaches of General Principle 1 of the SFC’s Code of Conduct as a result of Mr Wang entering into a secret profit-sharing agreement with a client, and also through Mr Wang carrying out personal dealing in breach of Yuanta’s policies.
MAS and ABS announce launch of Electronic Deferred Payment Solutions: The Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS) have announced two new e-payment solutions, Electronic Deferred Payment (EDP) and EDP+, to be launched in mid-2025. These solutions are intended to support the transition to e-payments for both corporate and retail cheque users, and will complement existing e-payment modes (e.g. GIRO and MEPS+). In addition, the solutions will address the use cases of post-dated payments and transactions that require greater certainty of payment.
Consultation Paper on Roadmap to Sunset Corporate Cheques and Transition Plan for Retail Cheques: The MAS has published a consultation paper, seeking views on their proposals to (i) manage the timeline for phasing out SGD corporate cheques and launch the EDP solution for post-dated payments, and (ii) sunset the current Cheque Truncation System in favour of a cost-efficient cloud-based system for remaining cheque users (which include users of SGD retail cheques, USD corporate and retail cheques and cashier’s orders). In particular, to allow users more time to transition away from corporate cheques, MAS and the banking industry will extend the processing of corporate cheques for an additional year, until 31 December 2026.
MAS announces plans to support commercialisation of asset tokenisation: The MAS has announced plans to advance tokenisation in financial services. These include (i) Project Guardian, which is an initiative by the MAS to explore the use of tokenisation within capital markets, has had many successful trials, (ii) Global Layer One (GL1), which was launched in 2023 to build digital infrastructures, is expanding its scope to support the development of an ecosystem of compatible market structures, enabling tokenised assets to be traded seamlessly across borders, (iii) two frameworks (Guardian Fixed Income Framework and Guardian Funds Framework), which were developed to facilitate broad based acceptance and implementation of tokenised assets by financial institutions, and (iv) access to common settlement facility for tokenised assets.
Issuance of Information Paper on Artificial Intelligence (AI) Model Risk Management: The MAS has issued an information paper setting out good practices relating to AI model risk management, which were observed during MAS’ recent thematic review of selected banks (though the good practices are generally applicable to other financial institutions as well). The information paper focuses on the following key areas: (i) AI governance and oversight; (ii) AI identification, inventorisation and risk materiality assessment; and (iii) AI development, validation, deployment, monitoring and change management.
Banque de France and MAS Conduct Groundbreaking Post-quantum Cryptography Experiment to Enhance Communication Security: The Banque de France and the MAS have announced their successful completion of a joint experiment in post-quantum cryptography (PQC) to enhance communication security against cybersecurity threats posed by quantum computing. This marks a crucial milestone in protecting international electronic communications. A technical report detailing the results and takeaways from the experiment was also published.
MAS Rationalises Leverage Requirements and Introduces Additional Disclosures for REITs: The MAS has revised the Code on Collective Investment Schemes to rationalise leverage requirements for the REIT sector and for additional disclosures to be made in a REIT’s financial result announcement and annual reports.
MAS issues publications relating to outsourcing by banks: The MAS has published the Notice of cancellation of Notices 634 and 1108 Banking Secrecy – Conditions for Outsourcing and FAQs on MAS Notice 658 and 1121 (Banks). The FAQs provide clarifications to some frequently asked questions on MAS’ Notices on Management of Outsourced Relevant Services for Banks (MAS Notice 658) and Merchant Banks (MAS Notice 1121).
MAS issues Notice on Risk Based Capital Adequacy Requirements for Banks Incorporated in Singapore: The MAS has revised Notice 637 (Risk Based Capital Adequacy Requirements for Banks Incorporated in Singapore), primarily to (i) provide clarification on interpretation issues (consistent with the BCBS), and (ii) implement various other technical revisions.
MAS publishes Responses to Consultation Paper on Proposed Enhancements to the Deposit Insurance Scheme in Singapore: The MAS has published Part 2 of its responses to its consultation paper on its proposed enhancements to the deposit insurance scheme in Singapore. The MAS has indicated that there will be subsequent consultations on the necessary legislative changes to effect the relevant proposals.
Guidelines on Licensing and Conduct of Business for Fund Management Companies: The MAS has updated its Guidelines on Licensing and Conduct of Business for Fund Management Companies [SFA 04-G05] to provide further guidance on examples of scenarios which may give rise to potential conflicts of interest, and good practices to ensure proper conflict management.
Response to Consultation Paper on Proposed Framework for Single Family Offices: The MAS has responded to the feedback received on its consultation paper, which proposed a framework for single family offices operating in Singapore. The framework would harmonise the criteria for a simplified class exemption regime, while addressing potential money laundering risks posed by single family offices.
FAQs on Financial Advisers Act, Financial Advisers Regulations, Notices and Guidelines: The MAS updated its FAQs on the Financial Advisers Act 2001 (FAA), to clarify that the FAA may apply to activities performed by financial influencers (finfluencers).
Publication of Compliance Toolkit for Approvals, Notifications and Other Regulatory Submissions to MAS: The MAS has published a Compliance Toolkit for Approvals, Notifications and Other Regulatory Submissions to the MAS for financial advisers to provide guidance on applications requiring approval from the MAS, notifications to be submitted to the MAS and regulatory submissions to the MAS (e.g. financial returns).
Australia and Singapore Collaborate to Support Sustainable Infrastructure and Decarbonisation in Southeast Asia: The Australian Government has approved an investment of USD 50 million in the Green Investments partnership (GIP) under Singapore's Financing Asia’s Transition Partnership (FAST-P) initiative, to support clean energy transition and sustainable infrastructure in Southeast Asia.
TRACTION Outlines Integrity, Scalability and Demand Considerations in Utilising Transition Credits to Accelerate the Early Retirement of CFPPs: The Transition Credits Coalition (TRACTION) has released an interim report on using transition credits to accelerate the early retirement of Coal-fired Power Plants (CFPPs), building on earlier studies around concepts and frameworks to scale the earlier retirement of CFPPs in Asia through the generation of high-integrity carbon credits. The final TRACTION report will be released at COP30, and will serve as a playbook to scale the implementation of transition credits.
Singapore Commits US$500 Million in Matching Concessional Funding to Support Decarbonisation in Asia: The Minister for Sustainability and the Environment has announced Singapore's commitment of up to US$500 million in concessional funding for the FAST-P initiative, which will be used to crowd in commercial capital and other sources of finance to support Asia's green transition with an overall goal to raise up to US$5 billion to support Asia’s green and transition financing needs.
BlackRock and MAS spearhead collaboration to unlock investment opportunities in decarbonisation in Asia: The MAS, BlackRock IFC, MUFG, NEXI, and AIA have signed a Statement of Intent to collaborate on developing an Industrial Transformation infrastructure debt programme under the FAST-P initiative, a blended finance initiative aimed at mobilising capital for Southeast Asian decarbonisation projects. The programme aims to address Southeast Asia's decarbonisation financing gap by exploring opportunities to provide debt financing to private-sector borrowers seeking to decarbonise their businesses (e.g., in hard to abate sectors).
MAS Announces Green Finance and Capital Markets Initiatives to Strengthen Financial Cooperation with China: The MAS has announced new green finance and capital markets initiatives to strengthen financial collaboration with China. Key initiatives include: (i) expanding the Common Ground Taxonomy to incorporate the Singapore-Asia Taxonomy, which is intended to enable easier comparison of the green taxonomies of Singapore and China and facilitate the provision of cross-border green loans, green bond issuance, and fund investments, (ii) piloting an "over-the-counter" bond market framework between China and Singapore to enhance international investors’ access to China's bond market, and (iii) strengthening collaborations in indices and ETF product links to enrich the regional capital markets ecosystem.
MAS Imposes Civil Penalty of $2.4 million on JPMorgan Chase Bank, N.A. for Misconduct by its Relationship Managers: The MAS has fined JPMorgan Chase Bank $2.4 million for not preventing misconduct by its relationship managers, who overcharged clients on spreads in 24 OTC bond transactions. JPM admitted liability, paid the penalty, refunded clients, and improved its pricing frameworks and controls to prevent future misconduct, with ongoing reviews into the individual RMs involved.
MAS issues Prohibition Orders against an Individual for Cheating, Forgery and Acquiring Benefits of Criminal Conduct: The MAS has issued a 14-year prohibition order against Mr Loh Sheng Yang following his conviction for defrauding victims of over $1 million through fictitious UOB deposit products.
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