Asia Financial Regulatory Update - April 2025
Hong Kong SAR
Capital Markets
SFC proposals to enhance powers addressing corporate misconduct: The Securities and Futures Commission (SFC) has issued a consultation paper inviting comments on proposed enhancements to the Securities and Futures (Stock Market Listing) Rules addressing IPO cases and post-IPO matters. The proposals are aimed at enhancing the SFC’s ability to more effectively and efficiently address potential corporate misconducts. These proposals seek to strengthen the regulatory framework, allowing the SFC to take more targeted investigation and intervention in the more serious cases to prevent or reduce financial harm to the investing public. For example, one of the measures proposed would allow the SFC to impose post-IPO conditions on listing applicants if potential misconduct is identified during IPO vetting. The deadline for submitting comments on the consultation proposals is 23 May 2025. Read more.
SFC guidance to clamp down on aggressive IPO financing practices: The SFC’s circular for licensed corporations (LCs) on IPO subscription and financing services sets out guidance to enhance their current risk management practices in this area and protect investors from financial risks. The SFC recently found that some LCs were substandard in carrying out IPO financing activities, for example by not checking on clients’ financial position before accepting subscription orders. The SFC is therefore setting out expected standards of conduct and control measures for LCs, including the collection of minimum upfront subscription deposits and reminding firms to segregate upfront subscription deposits that are not placed with designated banks for pre-funding confirmation. The circular also reminds LCs of the requirement to comply with the Fast Interface for New Issuance (FINI) investor identification rules. Compliance with FINI was also reiterated by the Hong Kong Monetary Authority (HKMA) in their circular reminding all Registered Institutions of their obligations on investor identification in IPO subscription services.
Fintech
HKMA Distributed Ledger Technology (DLT) Research Paper: The HKMA has published a research paper on using DLT in the financial sector as part of its ongoing support of firms to adopt innovative fintech solutions. The paper contains an overview of what DLT is as well as practical guidance on using it, featuring ten real-world adoption cases to provide insights into the latest development of DLT and effective implementation. The paper also analyses the potential risks associated with the adoption of DLT and offers recommendations on how to mitigate them.
Banking
IA and HKMA Guidance on Indexed Universal Life Insurance: Indexed Universal Life Insurance Products for Professional Investors (IUL) insurance products have been growing in popularity among high net worth clients, and both the HKMA and the Insurance Authority (IA) have been receiving questions on certain aspects of the IULs. The IA and the HKMA have responded by issuing a joint circular clarifying the regulatory application to IUL products. The circular notes that IULs, unlike traditional universal life insurance, include a cash value linked to indices, classifying them under ‘Class C (linked long term)’ business under the Insurance Ordinance. The products must therefore meet specific regulations such as the IA’s guidelines GL15, GL26, GL28, and GL30 in relation to underwriting and selling investment-linked plans. Importantly, when offered exclusively to high-net-worth clients defined as Professional Investors (PIs), some requirements may be modified without impacting policyholder protection. The circular includes an annex detailing how various guidelines apply to IUL product offerings for PIs, ensuring insurers and intermediaries adhere to the outlined provisions.
HKMA Consolidates Guidance on Selling Accumulators: The HKMA’s recent circular on accumulators seeks to consolidate and update the product specific requirements on accumulators, which was previously set out in multiple circulars issued over the last few years. The HKMA sets out which previous circulars are superseded in Annex 2 to the circular. The HKMA also provides clarifications the exemptions for certain professional investors and on dealing with sophisticated professional investors when selling accumulators as part of the consolidated guidance on accumulators which is set out in Annex 1.
Wealth Management Connect – Increase in Customer Limit: Non-locally incorporated Authorised Institutions engaging in private banking business can now provide Wealth Management Connect Southbound Scheme services to 3000 customers who do not meet the “private banking customers” monetary threshold. This figure is up from the 1000 customers permitted previously, and the change took immediate effect from the publication of the circular on 21 March 2025. The monetary threshold for “private banking customers” has been defined to include investable assets under the Authorised Institution’s management threshold of USD 1 million, or USD 3 million investable assets in any banks or institutions.
Enforcement
Securities Margin Financing Failures by Licensed Corporation and its Responsible Officer: The SFC has taken action against an LC and its Responsible Officer (RO) in connection with multiple failings over several years in the provision of securities margin financing. The LC failed to execute key controls, including setting triggers for securities purchasing, managing margin calls effectively, enforcing credit limits, and promptly collecting margins due from clients. These shortcomings were initially identified through an SFC’s review of the LC’s business in 2015. The issues identified resulted in repeated SFC warnings from 2015 onwards, yet persisted under the RO’s oversight. The SFC found these breaches risked potential financial loss and compromised client interests, attributing them to the RO’s inadequate discharge of his duties including his oversight responsibilities. The LC received a reprimand and a HK$5 million fine, while the RO faces a seven-month suspension from March to October 2025.
SFC Suspends Finfluencer for 16 months: There has been a lot of focus on so-called ‘finfluencers’ (financial influencers operating generally on social media) amongst standard setting regulatory bodies such as IOSCO. The SFC has been alert to the risks they pose too and has just taken action against suspended finfluencer Franky Wong, a licensed representative at Tse’s Securities Limited, for 16 months due to his criminal conviction for providing unlicensed investment advice on the messaging app Telegram. Despite holding an SFC licence, Wong conducted regulated activities in a personal capacity outside his employment at Tse’s Securities Limited by operating a subscription-based chat group on Telegram, unlawfully advising on securities.
Singapore
Capital Markets
Response to Consultation Paper on Proposed Legislative Amendments to the Requirements for Enhancing Pre and Post- Transaction Safeguards for Retail Clients: The Monetary Authority of Singapore (MAS) has issued their responses to a consultation paper which sought feedback on proposed legislative amendments to the requirements in Notices and Guidelines to enhance pre and post-transaction safeguards for retail clients. The revised Notices, Guidelines and FAQs will come into effect on 29 December 2025. A circular informing financial advisory firms of the issuance of response to the consultation paper has also been published by the MAS.
Response to Consultation Paper on Proposed Amendments to the Capital Framework for Approved Exchanges and Approved Clearing Houses: The MAS has published their responses to the consultation paper on proposed amendments to the capital framework for Approved Exchanges (AEs) and Approved Clearing Houses (ACHs). The review aimed to ensure that the capital framework for AEs and ACHs remain fit for purpose and to incorporate international practices that have evolved over time. MAS also noted that the proposed capital framework can be applied to other capital market financial market infrastructures, including trade repositories and has extended the Consultation Paper to Licensed Trade Repositories during the consultation period. Following this consultation response, the MAS will issue a notice for the revised capital framework and set out consequential amendments under the relevant regulations.
Consultation Paper on Providing Retail Access to Private Market Investment Funds: The MAS has published a consultation paper seeking feedback on a proposed regulatory framework that provides retail investors with access to private market investments through authorised long-term investment funds (LIF) with appropriate safeguards in place. Under the proposed framework, a LIF can take two possible fund structures: (1) a fund structure that makes direct private market investments (Direct Funds), which provides investors with greater visibility of the underlying assets; and (2) a long-term investment fund-of-funds (LIFF) structure that primarily invests in private market investment funds, which is beneficial for investors who may wish to tap on the LIFF manager’s expertise in selecting and monitoring a LIFF’s underlying private market investment funds, and provide diversification. The MAS is seeking feedback on the appropriate regulatory requirements for each of the two structures and on the type of private market investment assets that can be suitably offered to retail investors under this framework. The MAS has also announced in a media release that it is seeking feedback on this framework. The consultation closes on 26 May 2025.
Digital Assets / Banks
Consultation Paper on the Prudential Treatment of Cryptoasset Exposures and Requirements for Additional Tier 1 and Tier 2 Capital Instruments for Banks: The MAS has published a consultation paper seeking feedback on proposed amendments to the standards relating to the regulatory frameworks for, among other things, cryptoasset exposures for Singapore-incorporated banks. These proposed amendments are aimed at implementing the standards relating to prudential treatment and disclosure of cryptoassets exposures, published by the Basel Committee on Banking Supervision. These amendments are intended to take effect from 1 January 2026. The consultation closes on 28 April 2025.
Commodity Financing
Governance and Risk Management of Commodity Financing: The MAS has published an information paper setting out supervisory to guide banks and finance companies in their governance and risk management of their commodity financing activities. This follows a series of thematic inspections evaluating the governance and risk management practices of certain banks involved in commodity financing, particularly within the oil and gas sector's commodity trader client segment. The paper identifies areas for improvement and shares good practices that banks and finance companies should aim to adopt. Read more in our blogpost.
Fintech
Singapore and Vietnam Deepen Collaboration for their Financial / FinTech Sectors: The MAS and the State Bank of Vietnam have agreed to enhance their existing Memorandum of Understanding to further support collaboration on joint digital innovation projects, payment connectivity and FinTech operations. The MAS and the State Securities Commission of Vietnam also exchanged a letter of intent to facilitate sharing of information relating to their capital markets and digital assets regulatory frameworks, including anti-money laundering/countering of terrorism financing. This is expected to support a more stable, fair, transparent and sustainable development of both the capital markets and digital asset markets of the two countries.
AML/CFT
Publication on Countering Proliferation Financing: The AML/CFT Industry Partnership (ACIP) Counter-Proliferation Financing Working Group has published a best practice paper, in consultation with the industry across various financial and non-financial sectors. While this paper aims to guide primarily banks in Singapore on understanding and managing proliferation financing (PF) risks by providing an overview of PF risk typologies, PF risk assessment methods, mitigating strategies, high risk areas and best practices, and the importance of public-private partnerships, the principles and practices are also applicable to non-banks (such as payment service providers). The paper also addresses the commonalities and differences in PF risks between the banking sector and non-banking sectors identified to be higher-risk, such as corporate service providers, digital payment token services providers, law firms, maritime insurers, and remittance agents.
Scams
Issuance of Joint Advisory on Scammers Impersonating Officers from MAS, NTUC Union and Financial Institution Representatives: The Singapore Police Force (SPF) and the MAS have issued a joint advisory to alert members of the public to scams involving impersonation of MAS officials and representatives from NTUC Union and financial institutions (i.e., Income Insurance and Unionpay staff). This is the 4th joint advisory published by the SPF and the MAS on scams in the last 3 months, indicating the growing number of incidents of payment fraud / scams which has become an area of concern for the authorities.
Issuance of Joint Advisory on Scam Involving Digital Manipulation: The SPF, the MAS and the Cyber Security Agency of Singapore have issued a joint advisory warning the public of scams where digital manipulation through AI is used to create deepfakes, in particular, impersonate senior executives at victims’ companies. Employees were asked by scammers impersonating ‘senior executives’ on a video call to transfer substantial amounts of money from the company’s bank account – in reality, these ‘senior executives’ were deepfakes generated by artifiical intelligence. The advisory sets out precautionary measures businesses are advised to adopt to lower this risk, including establishing protocols for employees to verify the authenticity of video calls or messages, being mindful and verifying sudden fund transfer instructions, analysing audio-visual elements of video calls and alerting employees to this risk.
Enforcement Actions
MAS Issues Prohibition Order Against an Individual for Forgery and Cheating: The MAS has issued a 6-year prohibition order under the Financial Services and Markets Act 2022 to Mr Lim Kok Tiong Danny, a former representative at Professional Investment Advisory Services (PIAS), a licensed financial adviser and exempt insurance broker, after he was convicted of forgery and cheating. His offences included (i) forging client signatures to transfer their accounts from Mr Lim’s former employer to PIAS, and (ii) lending his bank account to receive money from unknown sources and remitting these moneys to unknown designated bank accounts.
