Asia Financial Regulatory Update - March 2025

Hong Kong SAR

Funds

SFC Widens Range of Alternative Funds that can be Listed: The Securities and Futures Commission of Hong Kong (SFC) has outlined the requirements for authorising and distributing closed-ended collective investment schemes (Alternative Funds) intended for listing on the Stock Exchange of Hong Kong Limited (SEHK). While Alternative Funds are already permitted to be listed on the SEHK, the new guidance allows funds to be listed even where they mainly invest in private, illiquid assets. This new guidance aligns with the HKSAR Government’s plan to broaden private equity fund distribution as set out in its 2024 Policy Address. Key requirements for these listings include obtaining SFC authorisation under the Securities and Futures Ordinance, adhering to the OP and UT Code standards, and appointing qualified management and listing agents. Detailed information regarding investment strategies, valuation, and risks must be disclosed, while intermediaries are tasked with assessing clients' knowledge before facilitating transactions. Moreover, funds must meet specific size and market capitalisation criteria and engage in investor education efforts to ensure transparency and informed participation.

Derivatives

SFC Consultation on Exchange-Traded Derivatives’ Position Limits: The SFC has launched a consultation (which closes on 28 March 2025) on proposed relaxations to position limits on exchange traded derivatives, mainly to recalibrate for growth in market capitalisations on the indexes. The prescribed position limits regime caps the number of specified futures/options contracts and stock options contracts that any person may hold or control (unless the person is authorized to hold or control those contracts in excess of the prescribed limits). The SFC regularly reviews the position limits to ensure the regime keeps pace with market development. 

Fintech

SFC Releases Digital Asset Road Map: The SFC has released a regulatory roadmap for Hong Kong’s virtual asset market, indicating several initiatives it will be exploring. It emphasises regulatory harmonisation, investor protection, and market accessibility. Key initiatives include support for proposed licensing regimes for OTC virtual assets trading and virtual asset custody services, enhancing cross-agency collaboration, and expanding product offerings. It aims to balance innovation and stability, fostering a resilient virtual asset ecosystem. Enhanced regulations, such as those for Finfluencers, and education efforts seek to empower investors and navigate risks associated with virtual assets. As this publication is a roadmap, the SFC has not yet shared concrete steps regarding definitive changes to rules or consultations on any changes, with the industry needing to wait for further details on timing for any planned steps set out in the roadmap.

Cybersecurity

SFC Releases Cybersecurity Review: The Securities & Futures Commission of Hong Kong (SFC) has released a Report on the 2023/24 Thematic Cybersecurity Review of Licensed Corporations highlights some significant cybersecurity breaches by licensed corporations (LCs) from 2021 to 2024. Key vulnerabilities include weak management oversight and poor cybersecurity controls. The SFC urges enhanced standards for phishing, outdated software, and remote access, and has recently run webinars on cybersecurity for LCs (materials have been made available). The SFC also plans to conduct a future comprehensive review in 2025 and provide guidance to LCs to help them better manage cybersecurity risk. The report is the second thematic review, the last one being the 2019/20 Thematic Cybersecurity Review of Licensed Corporations.

ESG

HKMA Publishes Guide on the Use of Greentech in the Banking Sector: The Hong Kong Monetary Authority (HKMA) has issued a circular highlighting the publication of an Adoption Practice Guide on Greentech in the Banking Sector. The Guide explores adopting fintech solutions that can help Authorised Institutions (AIs) address environmental sustainability and climate-related challenges. It includes practical insights and case studies for AIs to advance their net-zero transition agenda with greentech solutions, such as streamlining data management, enhancing transparency, improving risk management, and strengthening customer communication around sustainability commitments.

Green and Sustainable Finance Cross-Agency Steering Group Priorities for 2025: The Green and Sustainable Finance Cross-Agency Steering Group (the Steering Group) has set out three key priorities this year to enhance the development of sustainable finance in Hong Kong after their meeting on 6 February 2025. The priorities build on sustainable finance initiatives announced or launched in the past year, such as the Roadmap on Sustainability Disclosure, the Hong Kong Taxonomy for Sustainable Finance, and the Hong Kong Green Fintech Map. The Steering Group’s key priorities for 2025 are to (i) work on developing a comprehensive sustainability disclosure framework, (ii) reinforce Hong Kong’s role as a leading sustainable and transition finance hub, and (iii) harness data and technology to facilitate sustainability reporting and promote sustainable financing activities.

Banking

HKMA Consultation on Amendments to the BCR: The HKMA is carrying out a soft consultation on a set of proposed amendments to the Banking (Capital) Rules (BCR). The HKMA notes that the proposed amendments mainly cover (i) the revised capital treatment for AIs' direct holdings of certain non-capital LAC liabilities and (ii) revisions to certain definitions/provisions to enhance clarity and align with the Basel Framework or within the BCR and are prepared based on the current version of the BCR, which came into operation on 1 January 2025. The HKMA intends to implement these latest proposed amendments on 1 January 2026, concurrently with the previously outlined amendments related to the prudential treatment of cryptoasset exposures.

Singapore

Capital Markets

The Equities Market Review Group Published a Comprehensive Set of Measures to Strengthen Singapore’s Equity Measures: The Equities Market Review Group has announced a set of measures to strengthen the competitiveness of Singapore’s equities market. This includes enhancing investor interest through various initiatives by the Monetary Authority of Singapore (MAS) such as the Equity Market Development Programme, improving attractiveness for quality listings through tax rebates and support for local enterprises, and adopting a more pro-enterprise regulatory stance and shifting Singapore towards a more disclosure-based regulatory regime. The MAS and Singapore Exchange Regulation (SGX RegCo) will issue detailed public consultations on these proposals by mid-2025. 

Payments

Establishment of New Payments Entity: The MAS and the Association of Banks in Singapore have announced that a new entity will be set up to consolidate the administration and governance of Singapore’s national payment schemes, such as Fast And Secure Transfers (FAST), Inter-bank GIRO System, PayNow and Singapore Quick Response Code (SGQR). This entity seeks to improve governance, ensure resilience, and promote growth while maintaining existing operations and scheme rules. The entity will also collaborate with the MAS on the development of Singapore’s national payments strategy, ensuring a safe, efficient, and innovative payments infrastructure.

Enforcement Actions

Civil Penalty Actions Taken Against Five Individuals for False and Unauthorised Trading: Mr Lim Tiong Hian (the former Chairman of Epicentre Holdings Limited), Mr Aw Yong Leon Heng, Mr Neo Say Hwee, Mr Cheng Jia Hong and Mr Chang Bing Quan Daryl had civil penalty actions taken against them for false trading, unauthorised trading and abetment of false/unauthorised trading (for some individuals). The individuals paid civil penalty amounts of between S$50,000 to S$150,000 to the MAS as part of their settlement agreements.