APAC Monthly Private Wealth Legal Developments – December 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

HKEX launches two crypto asset ETFs

The HKEX has announced the listing of two crypto asset exchange traded funds ("ETFs"), following the publication of a circular by the SFC earlier setting out the requirements for authorisation of virtual asset ("VA") futures ETFs for public offering in Hong Kong (see our previous update).

The two newly listed ETFs, namely CSOP Bitcoin Futures ETF (Stock code: 3066) and CSOP Ether Futures ETF (Stock code: 3068), both managed by CSOP Asset Management Limited, track the standardised, cash-settled Bitcoin futures contracts and Ether futures contracts traded on the Chicago Mercantile Exchange, respectively. These ETFs are the first crypto asset ETFs in Asia.

The Stock Exchange of Hong Kong has also issued a circular to its participants, reminding them to note and understand VA futures ETFs features and corresponding obligations when providing services to clients, in preparation for the listing of VA futures ETFs. The participants should refer to the circular published by the Securities and Futures Commission ("SFC") relating to authorisation and point of sale requirements for further information.

Similar to other exchange traded products and stocks, margin financing is allowed for VA futures ETFs, subject to an individual participant’s risk management policy.  However, in view of the high volatility of VA Futures ETFs, the participants should be particularly prudent in providing clients margin financing for trading such products, and adhere to SFC's guidelines on securities margin financing activities.

SFC publishes presentation materials for two recent AML/CTF webinars

The SFC has issued a circular regarding the publication of the presentation materials used at the two recent webinars on anti-money laundering and counter-financing of terrorism ("AML/CTF"), which were held on 30 November and 1 December 2022, respectively (see our previous update).

The presentation materials published by the SFC are as follows:

• Anti-Money Laundering and Counter Financing of Terrorism Webinar 2022;
• 2nd Money Laundering and Terrorist Financing Risk Assessment Report of Hong Kong;
• Proliferation Financing: Risk Assessment and Mitigation; and
• Suspicious Transaction Reporting – Legal obligations, trend analysis and case study.

HKEX to introduce HKD-RMB dual counter model and dual counter market making programme and commence onboarding in first half of 2023

The HKEX has announced the introduction of a new Hong Kong Dollar ("HKD")-Renminbi ("RMB") Dual Counter Model ("Model") and an inaugural Dual Counter Market Making ("DCMM") Programme in its securities market, further supporting the listing, trading and settlement of RMB counters in Hong Kong.  The HKEX expects to commence onboarding for these initiatives in the first half of 2023, subject to regulatory approval and market readiness.

Under the proposed Model, investors will be able to interchange securities listed in both HKD and RMB counters, following enhancements to be made to existing trading and settlement arrangements. The Model is expected to cover equity securities listed in both HKD and RMB counters only.

To support the liquidity of RMB counters and minimise price discrepancies between the two counters, the HKEX will introduce a new DCMM Programme.  Dual counter market makers engaged to conduct market making and liquidity providing activities may be qualified for stamp duty exemption for their eligible transactions, subject to the relevant legislative amendments being passed by the Legislative Council (see our previous update).

These measures will pave the way to support the initiative of allowing Mainland investors to trade RMB-denominated securities through southbound Stock Connect currently being explored with the Mainland authorities.

Other existing listing, trading, clearing and settlement arrangements will generally apply to RMB counters in the Model. The HKEX will announce the commencement date of the Model and publish a list of dual counter securities for the market making programme in due course.

The Stock Exchange of Hong Kong Limited and the Hong Kong Securities Clearing Company Limited have each published a circular to provide further details. They will jointly arrange three webinar briefing sessions on 5, 6 and 9 January 2023, conducted either in Cantonese and English, to provide an overview of the trading and settlement arrangements of the Model for participants. Interested participants should register for the sessions by 29 December 2022.

Further, a web corner has been established as a centralised point of information on the details of the Model for market participants’ reference. A set of FAQs pertaining to the Model and related arrangements will be available on the web corner tentatively in the second week of January 2023.

Singapore

MAS/SGX: Proposed arrangements following the cessation of the Covid-19 (Temporary Measures) (Alternative Arrangements for Meetings) Orders

The Monetary Authority of Singapore ("MAS") has confirmed that the Ministry of Law has announced that the Covid-19 (Temporary Measures) (Alternative Arrangements for Meetings) Orders ("Orders") which enable entities to hold meetings through electronic means, will cease with effect from 1 July 2023. These entities include companies, variable capital companies and business trusts. SGX-listed issuers will be required to return to physical general meetings from 1 July 2023. Between now till the revocation date of the Orders, listed issuers may continue to utilise the Checklist issued by the Accounting and Corporate Regulatory Authority ("ACRA"), MAS and Singapore Exchange Regulation ("SGX RegCo") (available here), read together with the Regulator’s Column issued by SGX RegCo (available here), on the conduct of general meetings.

ACRA and MAS are working on legislative amendments to provide companies, variable capital companies and business trusts with the option to conduct general meetings by electronic means after the Orders are revoked. Details of the proposed amendments to the Companies Act, the Variable Capital Companies Act, and the Business Trusts Act, will be shared in early 2023. SGX RegCo will work closely with MAS to provide guidance for listed issuers to have the option to conduct hybrid meetings.

Malaysia

BNM consults on Capital Adequacy Framework (Basel III – Risk-Weighted Assets) – Exposures to Central Counterparties

The Bank Negara Malaysia ("BNM") has published an Exposure Draft on Capital Adequacy Framework (Basel III – Risk-Weighted Assets) – Exposures to Central Counterparties, setting out proposed capital requirements on financial institutions’ exposures to central counterparties under the Basel III capital adequacy framework. Feedback on the proposals are sought by 17 February 2023.

JC3 issues Climate Data Catalogue and accompanying Report

The Joint Committee on Climate Change ("JC3"), which is co chaired by representatives of the BNM and the Securities Commission Malaysia (SC) has issued the Climate Data Catalogue (“Data Catalogue”) and an accompanying Report on Climate Data Catalogue: Key Findings & Recommendations to Bridge Data Gaps that summarises its key findings and outlines recommendations to bridge the data gaps. The data catalogue contains critical data needed by the financial sector to support pre-identified use cases, and includes data that are available, partially available, and unavailable, as well as observations on data gaps.

Thailand

SEC imposes civil sanctions on two offenders for manipulating MBAX stock price

The Securities and Exchange Commission ("SEC") has imposed civil sanctions against two individuals requiring them to pay a total of 8,674,903 baht, and imposing a period of prohibition from trading in securities and futures contracts for 8 months and 15 days, and from being a director or executive for 17 months. The SEC's investigation revealed that the individuals had sent continuous trading orders through 8 trading accounts in a manner that secure the price of Multibax Public Co. Ltd. shares at an artificial level.

Philippines

BSP highlights digitalisation during FinEd Expo

The Bangko Sentral ng Pilipinas ("BSP") highlighted how digitalisation can support the financial health of Filipino families during the 5th Financial Education ("FinEd") Expo held virtually from 21 to 25 November 2022. Themed “Owning the Future: Rebuilding and Strengthening Financial Health through Financial Literacy,” FinEd Expo 2022 put the spotlight on responsible personal debt management, financial planning, and risk management.

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.