APAC Monthly Private Wealth Legal Developments – June 2022

Welcome to Herbert Smith Freehills’ monthly private wealth industry updates in Asia.

Every month we survey ten Asian jurisdictions for legal developments concerning trust and estate planning which are of interest to the private wealth industry, and provide a succinct summary in a table format.  The jurisdictions covered in the update are Hong Kong, Singapore, China, Taiwan, Japan, India, Malaysia, Indonesia, Thailand and the Philippines. We hope that these updates will prove to be a useful resource to keep private clients, business people, and lawyers abreast of legal updates in the region.

Hong Kong

SFC launches consultation on proposed amendments to SFO to strengthen enforcement

The Securities and Futures Commission (SFC) has launched a two-month consultation on proposed amendments to the Securities and Futures Ordinance (SFO) to enable it to take more effective enforcement action. Key proposals include amendments to section 213 SFO to allow the SFC to apply to the Court of First Instance for injunctions and other orders after exercising any of its powers under section 194 or 196 SFO (disciplinary action) against a regulated person, and amendments to the exemption under section 103(1) SFO so that unless authorised by the SFC, investment product advertisements intended for sale to professional investors (PIs) only may only be issued to PIs who have been identified in advance through know-your-client and related procedures.  Feedback on the proposals is sought by 12 August 2022.

HKEX launches consultation on proposed revisions to position limits and LOP reporting requirements

The Hong Kong Exchanges and Clearing Limited (HKEX) has launched a consultation on proposed revisions to position limits and large open position (LOP) reporting requirements.  The proposals seek to provide more capacity and flexibility for investors as they look to manage their market exposure and support HKEX’s continuing role as Asia's leading derivatives trading and risk management centre.  The proposals include (among others) adding two additional tiers to the existing three-tier single-stock option (SSO) position limit model and expanding the position limit of SSOs. Responses to the proposals are required to be submitted by 30 June 2022.

SFC publishes updated illustrative template for product KFS relating to ILAS

The SFC has updated the illustrative template for the product key facts statement (KFS) relating to investment-linked assurance schemes (ILAS).  Product KFSs are aimed at giving prospective investors a concise and user-friendly summary of the key features and risks of a product.  The ILAS is a long-term investment-cum-life insurance product which is only suitable for investors who are prepared to hold the investment for a relatively long period.  The ILAS KFS includes information on what an ILAS is and how it works, as well as the key risks, fees and charges, intermediaries' remuneration and other information.  KFS illustrative templates for other product types can be found on a designated SFC webpage.

Singapore

Singapore Green Bond Framework introduced for upcoming inaugural Singapore Sovereign Green Bond issuance

The Singapore Government published the Singapore Green Bond Framework, a governance framework for sovereign green bond issuances under the Significant Infrastructure Government Loan Act 2021. The Framework details the Singapore Government’s intended use of green bond proceeds, governance structure to evaluate and select eligible projects, operational approach to manage green bond proceeds, and commitment to post-issuance allocation and impact reporting. The Framework is aligned with internationally recognised market principles, standards, and best practices, and will serve as a benchmark for the corporate green bond market.

MAS publishes information papers on environmental risk management

Following on from a thematic review conducted in 2021 with selected banks, insurers, and asset managers into progress on implementing the Monetary Authority of Singapore (MAS) Guidelines on Environmental Risk Management, MAS has published three information papers which highlight emerging and/or good practices and areas for further work.  MAS comments that firms should refer to the industry practices described in the papers, and assess whether they are applicable to their own business.  Firms should also pay attention to the impact of their efforts on business strategies and risks, on the financial system, and on the broader transition to a sustainable economy. MAS provides, as an example, the withdrawal of credit by banks from sectors which are consider to have higher climate-related risks; MAS notes that this could have an impact on companies' transition plans, potentially stranding assets and rendering transition disorderly.

MAS launches Project Guardian – working with the industry to pilot digital asset use cases

MAS has announced the commencement of Project Guardian, a collaborative initiative with the financial industry that seeks to explore the economic potential and value-adding use cases of asset tokenisation. Project Guardian.  MAS aims to develop and pilot use cases in the four main areas of open, interoperable networks, trust anchors, asset tokenisation and institutional grade DeFi protocols.

Malaysia

BNM Assistant Governor addresses sustainability programme

Bank Negara Malaysia (BNM) has published the opening remarks delivered by the Assistant Governor at the Sustainability Leadership Programme for Financial Institutions.  The Assistant Governor offered some perspectives on the role for financial institutions in the transition to a sustainable economy, focusing on sector agility in the face of rapid technological change and climate change, and the importance of coordination by financial institutions (such as through mainstreaming Value-Based Intermediation (VBI) and Open Data) to solve real world issues.

Thailand

SECT consults on proposed changes to the regulatory approach on ready-to-use utility tokens and digital asset exchange supervision

The Securities and Exchange Commission, Thailand (SECT) is seeking feedback on its proposal to strengthen the rules on the public offering of listed, ready-to-use utility tokens and on digital asset exchange supervision. Under the proposal, any ready-to-use token issuer that seeks to list its tokens on a digital asset exchange will have to obtain approval from the SECT and file a registration statement with a draft prospectus. Newly issued, ready-to-use utility tokens must be offered via an SECT-approved initial coin offering (ICO) portal operator and the tokens must not be for use as a mean of payment (MOP). The proposal also provides the exemption from the SECT’s authorisation, if a ready-to-use utility token will not be listed on the exchange and qualifies as a plain-vanilla or uncomplicated utility token. In addition, the issuers of listed, ready-to-use utility tokens are required to disclose the information about the tokens and the projects on an ongoing basis in order to ensure that there is adequate information to inform decision-making by investors/purchasers. Feedback is requested by 29 June 2022.

Philippines

BSP works closely with stakeholders to tackle cyber crimes

The Bangko Sentral ng Pilipinas (BSP) has issued a press release to advise that it is coordinating closely with BSP-supervised financial institutions (BSFIs), industry associations, and other government agencies to curtail illegal online gambling, money-laundering, and terrorist-financing activities.  Recently, the BSP issued memoranda that outlined supplementary controls that BSFIs can use to prevent unauthorised transactions in online channels, and also reiterated enhanced know-your-customer (KYC) mechanisms to detect possible suspicious transactions.

BSP marks enactment of FCPA

The BSP has published a press release following the enactment of the Financial Products and Services Consumer Protection Act (FCPA), which was signed by the President on 6 May 2022.  The FCPA covers all financial products and services offered by any financial service provider, including those accessed and delivered through digital channels. The new law institutionalises consumer protection, enables adjudication of complaints, promotes transparent and reasonable pricing, authorises financial regulators to carry out enforcement actions, and fosters fair treatment of consumers while protecting their data. FCPA also has penal provisions for violations of the Act.

The contents of this document are for reference purposes only. Some of the information comes from public sources and this may not be comprehensive, accurate or up to date; where we have relied on third party information and sources, this has not been verified by us. The document does not constitute legal advice, and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication, and any facts in this document should be checked for your specific circumstances at the time you wish to use or refer to them.