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Richard Norridge

Partner, Head of Private Wealth and Charities, London

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Hannah Cassidy

Partner, Head of Financial Services Regulatory, Asia, Hong Kong

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Jojo Fan

Managing Partner, China, Hong Kong

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ASIC: Sanlam admits to inadequate oversight of authorised representatives

The Australian Securities and Investments Commission (ASIC) has released an update in relation to its investigation of the Australian arm of South African financial services conglomerate, Sanlam Group. ASIC found that Sanlam, amongst other things, failed to adequately supervise its authorised representatives and corporate authorised representatives. A number of these were fintechs who offered online trading platforms and cryptocurrency-based investment products. ASIC stated that 'licensees like Sanlam must have robust compliance processes that are fit-for-purpose to ensure that those who operate under their licence comply with the law'.  [23 Dec 2024]

Federal Court finds CFD issuers engaged in systemic unconscionable conduct

ASIC has announced that the Federal Court found that collapsed contracts for difference (CFD) issuer, Union Standard International Group Pty Ltd (USG), and two of its former corporate authorised representatives engaged in systemic unconscionable conduct and other contraventions of the law between 2018 and 2020. The Court heard that customers of the two corporate authorised representatives lost over $83m during the period of the breaches by the CFD issuers, which include systemic unconscionable conduct, misleading and deceptive conduct and the provision of unlicensed personal advice. The Court found that the two corporate authorised representatives employed a system of conduct and engaged in patterns of behaviour that were unconscionable as they:

  • derived the bulk of their revenue from customers’ trading losses;
  • provided a remuneration incentive to account managers to encourage and pressure customers to deposit more funds into their trading accounts;
  • failed to address known misconduct by account managers;
  • failed to give vulnerable customers any adequate explanations about the relevant financial products and the risks involved in trading in them;
  • made misleading or deceptive representations, including about profits that could be generated;
  • employed inappropriate, unfair or sharp practices;
  • pressured vulnerable customers to trade and deposit more funds into their trading accounts, including encouraging customers to fund their trading through superannuation accounts or credit cards; and
  • provided personal advice to their customers when they were not licensed to do so.

USG was held liable for this conduct as the AFS licensee holder who authorised them to operate.

For the first time in Australia, the Court also found that USG breached its general obligation to ensure that the financial services covered by its Australian financial services licence were provided ‘efficiently, honestly and fairly’, where it offered those services to customers in China, and it knew, or ought reasonably to have known, that those customers were likely be contravening Chinese law and it failed to take any reasonable steps to warn its customers that it was exposing them to potential civil and criminal liability in China. In line with this, Justice Wigney held that the general obligations of AFS licensees are not limited to financial services provided to customers in Australia.  [20 Dec 2024]

Regulatory Initiatives Grid – December 2024

The Australian Treasury has released the Regulatory Initiatives Grid – Edition 1 (RIG) which lists regulatory reform priorities and initiatives that will materially affect the financial sector over the next two years. The contributing agencies to the RIG include: the Australian Treasury; the Federal Attorney-General’s Department; the Australian Transaction Reports and Analysis Centre; the Australian Financial Security Authority; the Australian Taxation Office; ASIC; the Reserve Bank of Australia; the Australian Prudential Regulation Authority (APRA); and the Australian Competition and Consumer Commission.

In a 'snapshot', the RIG Report identifies the following as currently underway: five policy developments; 25 developments of legislation, regulations and instruments; 30 ongoing program implementation initiatives; and 11 reviews / evaluations. The RIG Report divides the financial system into eight sectors for the purposes of reporting: banking, credit and lending; collective management and investment management; financial advice; financial markets; insurance and reinsurance; payment services and digital assets; and superannuation and retirement income.

Stakeholders will have the opportunity to have a say on the long-term design of the RIG, with it being intended that the RIG will be refined following feedback to ensure it remains fit for purpose.  [19 Dec 2024]

ASIC sues crypto company for consumer protection failures

ASIC has announced that it commenced legal proceedings in the Federal Court against a cryptocurrency company (and published the Statement of Claim and Originating Process) seeking penalties, declarations and adverse publicity orders. ASIC alleges that from 7 July 2021 – 21 April 2023, the company misclassified 505 Australian retail investors (83% of its Australian client base) as wholesale clients, with ASIC Deputy Chair Sarah Court stating that ASICs case alleges the company’s 'compliance systems were woefully inadequate and exposed more than 500 clients to high-risk, speculative products without the right consumer protections in place' with many clients suffering 'significant financial losses'. ASIC alleges that between July 2022 – April 2023, the company failed to:

  • give a Product Disclosure Statement to retail clients;
  • make a Target Market Determination;
  • have a compliant internal dispute resolution system;
  • do all things necessary to ensure that its financial services were provided efficiently, honestly and fairly;
  • comply with the conditions of its licence; and
  • ensure that its employees were adequately trained and competent.  [18 Dec 2024]

APRA review highlights the need for improved valuation and liquidity risk governance in superannuation

APRA has released its findings from a review into superannuation trustees’ progress in implementing enhanced valuation governance and liquidity risk management requirements. APRA has said that the findings will help trustees in aligning their practices with Prudential Standard SPS 530 Investment Governance (SPS 530), including in relation to the use of independent external asset valuations and the effective management of potential conflicts of interest in valuation processes. The review, which commenced in December 2023, examined the practices of 23 in-scope trustees which had a range of different asset sizes and business models. Key findings include:

  • while trustee capability and approach had generally improved since the last review in 2021, a significant proportion of trustees still displayed material gaps in key areas, with 12 of the licensees requiring material improvements in either or both their valuation governance or liquidity risk management frameworks to meet the requirements of SPS 530;
  • in relation to unlisted asset valuation governance, there was particular weakness in board oversight and conflict of interest management, revaluation frequency and triggers, valuation control, and fair value reporting; and 
  • in relation to liquidity risk management, there was particular weakness in liquidity stress trigger frameworks, unlisted asset liquidity risks and liquidity action plans.

APRA has said that these findings are 'concerning and highlight the need to further lift practices across the industry'. APRA intends to engage directly with those trustees identified as having deficiencies. The regulator expects them to formulate appropriate and timely remediation plans. Further, it expects all trustees to review the findings, assess themselves against SPS 530, and, if needed, enhance their valuation governance and liquidity risk frameworks. APRA has noted that where necessary, it will take further action to enforce SPS 530 and related requirements.  [17 Dec 2024]

ASIC sues an Australian bank alleging failures to adequately protect customers from scams

ASIC has announced that it has commenced legal proceedings in the Federal Court against an Australian bank (and published the Concise Statement and Originating Process) seeking declarations of contraventions, pecuniary penalties, adverse publicity orders, and costs. ASIC is alleging that the bank failed:

  • from January 2020, to have adequate systems and processes to ensure that significant, widespread or systemic non-compliance with its obligations to investigate reports of unauthorised transactions within specified timeframes and to promptly reinstate banking services to customers who reported unauthorised transactions; and
  • from 1 January 2023 to 1 June 2024, to have adequate controls for the prevention and detection of unauthorised payments.
  • As a result, ASIC is alleging that the bank failed to do all things necessary to ensure that the financial services and credit activities were provided efficiently, honestly and fairly in contravention of s 912A(1)(a) of the Corporations Act 2001 (Cth) and s 47(1)(a) of the National Consumer Credit Protection Act 2009 (Cth).

ASIC Deputy Chair Sarah Court said: 'all banks need to pull their weight in the fight against scams. We will not hesitate to take court action where we consider banks fail to comply with their obligations to protect their customers.'  [16 Dec 2024]

ASIC: Crypto exchange operator to pay $8m following enforcement action

ASIC has announced that the Australian operator of the Kraken crypto exchange has been ordered to pay $8m, following the legal proceedings brought by ASIC against it for unlawfully issuing a credit facility to more than 1,100 Australian customers. Bit Trade Pty Ltd, which operated the crypto exchange, offered its customers a ‘margin extension’ product without a target market determination (TMD). The product provided for margin extensions to be made and repaid in either digital assets or national currencies.

The Federal Court of Australia held that the product was a credit facility and required a TMD, as the product offered margin extensions in national currencies. Therefore, the company had breached its design and distribution obligations (DDO) each time it offered a margin extension option without a TMD.

This was ASIC’s first penalty against an entity for failing to have a TMD, and comes shortly after ASIC commenced industry consultation with the digital assets sector.  [12 Dec 2024]

ASIC reissues Regulatory Guide 133 on funds management and custodial services

ASIC has reissued Regulatory Guide 133 Funds management and custodial services: Holding assets (RG 133) to provide the latest guidance to asset-holding Australian financial services (AFS) licensees. This version of RG 133 includes the following amendments:

  • updated references to relevant legislative instruments, including those imposing financial requirements; and
  • good practices for cryptoassets holders (such as custodians of cryptoassets which are financial products), including maintaining robust information security controls and risk management processes.  [10 Dec 2024]

ASIC consults on proposal to remake relief instrument for 31-day notice term deposits

ASIC has published a consultation on its proposal to remake a legislative instrument in respect of 31-day notice term deposits.

Currently, authorised deposit-taking institutions (ADIs) are required to provide a pre-maturity notice before a term deposit rolls over into a new term and a post-maturity notice to communicate a grace period of seven days to exit the term deposit.

Following feedback that some ADIs were finding it difficult to comply with the existing one business day timeframe required for post-maturity notices, ASIC proposes to give ADIs the option of combining the pre- and post-maturity notices into a single notice that must be given to the depositor at least seven days, and no longer than 14 days, before maturity.

ASIC invites feedback on its proposal to remake the legislative instrument, which is due to sunset on 1 April 2025. Submissions are requested by 7 February 2025.  [10 Dec 2024]

ASIC Speech: The case for prohibiting unfair trading practices in financial services

ASIC has published the keynote address by its Commissioner Alan Kirkland at the Australasian Consumer Law Roundtable. The Commissioner stated that, while ASIC supports the Government’s proposed unfair trading practices prohibition, the prohibition should be extended to the ASIC Act at the same time as reforms to the Australian Consumer Law. He also noted that 'the current proposal would apply to businesses trapping consumers into an unwanted subscription – but not to businesses making it hard for customers to switch to a better financial product' and would similarly 'apply to dynamic pricing practices for airfares or concert tickets – but not for insurance', thereby 'creating a two-tiered system for the same types of manipulative conduct'.

Mr Kirkland added that 'in the absence of an unfair trading practices prohibition, ASIC must fall back on a complex range of provisions to address conduct that is manifestly unfair to consumers'. Finally, Mr Kirkland noted that an alignment is also needed given 'that business practices don’t always neatly fall neatly into "financial" or "non-financial" categories, as highlighted by a number of current areas of concern'.  [6 Dec 2024]

AUSTRAC takes action to stamp out financial crime through cryptocurrency ATMs

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has announced that it is cracking down on cryptocurrency ATM providers in Australia which do not comply with the country’s anti-money laundering (AML) regime. AUSTRAC confirmed that an internal cryptocurrency taskforce has been established to ensure that digital currency exchanges (DCEs) that provide crypto ATM services meet minimum standards and have robust practices in place to identify and minimise the risk that their machines will be used to move money associated with scams, fraud or other proceeds of crime. AUSTRAC CEO Brendan Thomas said AUSTRAC will be tightening the monitoring of crypto ATM providers, and will take action against operators that are flouting the rules. Mr Thomas further stated that 'this is the first step in AUSTRAC’s focus to reduce the criminal use of cryptocurrency in Australia. We will be focusing on this industry over the course of next year.'

Under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), DCEs, including those providing crypto ATM facilities, have to register with AUSTRAC and are also required to:

  • undertake transaction monitoring;
  • complete know your customer (KYC) information checks on customers;
  • report suspicious activity in suspicious matter reports (SMRs); and
  • submit threshold transaction reports (TTRs) for cash deposits and withdrawals of $10,000 or more.  [6 Dec 2024]

Treasury: Beneficial ownership reforms affecting unlisted companies

The Australia Treasury has announced that the Government committed to making an open register of beneficial ownership. Following a consultation in 2022, the Treasury has updated the policy specifications for the requirements of unlisted companies. Under the updated policy specifications, the new regulatory regime will include:

  • a requirement for unlisted companies to collect, verify and record information about their beneficial owners;
  • a requirement for beneficial owners to self-identify to unlisted companies; and
  • appropriate ASIC powers to enforce the new obligations.

The first stage of unlisted changes will affect unlisted proprietary companies, unlisted public companies (including companies limited by guarantee and no liability companies), and unlimited liability companies. During the first stage, access to beneficial ownership information will be limited to journalists, academics, entities with anti-money laundering and counter-terrorism financing (AML/CTF) reporting requirements, and specified regulators and law enforcement agencies. During this stage, public access will be limited to academics and journalists who will only have access to the subset of beneficial ownership information that is suitable for public use via a request to ASIC. It is intended that this subset of information will be made publicly available when the register is centrally maintained on a public, Commonwealth-operated register.

The next stage of the reform will involve consulting on the draft legislation.  [5 Dec 2024]

ASIC invites feedback on proposed updates to digital asset guidance

ASIC has announced that it will be consulting on proposals to update Information Sheet 225 Crypto Assets (Info Sheet 225). The proposals are aimed at providing greater clarity about the current law, including by adding 13 practical examples of how the current financial product definitions apply to digital assets and related products. ASIC has said that generally, its existing approach to financial services licences will apply to digital assets, for instance, whether an applicant is proposing to deal in traditional securities or securities based on a digital asset platform, the same licensing regime applies. The consultation seeks feedback on:

  • ASIC’s updated guidance in Info Sheet 225, including the worked examples;
  • the application of the existing AFS licence processes, ASIC guidance and standard conditions to digital asset businesses;
  • practical licensing issues for wrapped tokens and stablecoins, issues arising from the potential transition to the Government’s proposed digital asset platform and payment stablecoins regimes, and consideration of potential regulatory relief; and
  • a potential class ‘no action’ position for digital asset businesses that are in the process of applying for or varying an AFS licence, Australian Markets Licence or Clearing and Settlement Facility licence.

The consultation will close on 28 February 2025, with ASIC intending to publish the updated Info Sheet 225 in mid-2025.  [4 Dec 2024]

Treasury: Ensuring access to quality and affordable financial advice

The Australian Treasury has announced updates to the Delivering Better Financial Outcomes reforms after consulting widely and through recommendations from the Quality of Advice Review, and released a Fact Sheet regarding these updates. The second tranche of the Delivering Better Financial Outcomes package will expand the provision of advice, remove unnecessary compliance requirements, and allow advisers to focus on providing high-quality advice, while maintaining consumer protections. To achieve these goals, the Government will be introducing a new class of financial advisers to deliver simpler advice to support Australians with simple questions and advice. This new class of advisers will be required to undergo training and requires a new type of licence. Licensees which employ the new class of advisers will also be subject to obligations, including being wholly responsible for the advice provided and being subject to additional monitoring and supervision obligations.

The remainder of the second tranche package will support the provision of targeted, more affordable advice that is meaningful to clients and available at important periods in their life by:

  • modernising the best interests duty into an outcomes-focused duty and removing the existing process-based safe harbour steps;
  • replacing statements of advice with a principles-based record that is in plain English and addresses the client’s needs;
  • clarifying the rules on what advice topics can be paid for via superannuation and the member circumstances that can be considered to support more access to helpful financial advice;
  • allowing superannuation funds to provide ‘nudges’ to members to drive greater engagement with superannuation at key life stages, such as approaching the transition to retirement;
  • the Financial Planners and Advisers' Code of Ethics will be reviewed and updated following the implementation of the Delivering Better Financial Outcomes package; and
  • reviewing the education pathway for professional advisers with a view to increasing flexibility in support of the growth and continuing professionalisation of the financial advice industry. The pathway will be aligned with the education requirements for the new class of advisers.  [4 Dec 2024]

ASIC flags key observations from inaugural IDR data publication

ASIC has released its first publication of industry-wide data reported under the internal dispute resolution (IDR) data reporting framework for the period 1 July 2023 to 30 June 2024. The IDR framework requires most licensed financial firms to report IDR data to ASIC on a six-monthly basis. Key observations from the reported data include:

  • general insurance products were subject to the most complaints (33% of all complaints), followed by credit products (22%) and deposit-taking products (15%);
  • most complaints were about service (45%), followed by charges (22%) and transactions (11%);
  • most outcomes involved an explanation or apology only, or no remedy (43%), followed by a service-based remedy (39%) and a monetary remedy (13%);
  • over three-quarters of all complaints were resolved within one day; and
  • 623,555 complaints resulted in a monetary remedy, collectively totalling over $375 million.

ASIC is concerned some firms were not reporting IDR data as accurately as possible, due to findings of variations in the volume of complaints reported by comparable firms and gaps in the IDR data that indicated the data reported to ASIC may not fully reflect the complaints received by some firms. ASIC also said that the number of firms that declared that they had no complaints to report was higher than it expected. ASIC will assess compliance with the reporting requirements by reviewing firms that make a nil submission against other datasets, including reports of misconduct, reportable situations and data from the Australian Financial Complaints Authority.

From next year onwards, ASIC will publish data about complaints received by individual firms but will consult on the approach to contextualising and presenting the data prior to it being released.  [3 Dec 2024]

SFC bans and fines former RO and MIC of dissolved licensed corporation HK$1.7 million for window-dressing financial resources and mismanaging two funds 

The SFC has banned a former responsible officer (RO) of Agg. Asset Management Limited (Agg), Mr Ng Ka Shun, for life and imposed a fine of HK$1.7 million on him for window-dressing Agg’s financial resources and mismanaging two funds.

Mr Ng was Agg’s sole shareholder, director and RO at the relevant time. He was also Agg’s manager-in-charge (MIC) of various core functions during the period from July 2017 to April 2020. Agg has since been dissolved.

The SFC found that Mr Ng had begun window-dressing Agg’s financial resources when the firm submitted its licence application by misstating the firm’s liquid capital as of 31 July 2017. He continued to perpetuate the facade that Agg had sufficient liquid capital for almost three years (from May 2017 to February 2020) by providing false or misleading information in the financial returns submitted to the SFC. This caused Agg to breach the Securities and Futures Ordinance, the Securities and Futures (Financial Resources) Rules, and the SFC's main code of conduct.
The SFC also found that Agg had mismanaged two funds in its capacity as investment manager, in breach of the Fund Manager Code of Conduct, and seriously jeopardised the interests of the funds’ investors, who suffered substantial losses:

  • In one fund, Agg failed to avoid conflicts of interest and to properly manage the risks of the fund by investing substantially all of its assets in debentures issued by companies controlled by Mr Ng. 
  • In another fund, Agg failed to properly safeguard the fund’s assets by allowing Mr Ng to withdraw part of the investors’ subscriptions from the fund ultimately for his own benefit. Agg also failed to ensure that the fund’s investments were in line with its stated investment objective and that its assets were valued and properly accounted for.

The SFC considers that Agg’s regulatory breaches were attributable to the failure of Mr Ng in discharging his duty as the firm’s senior management and RO, including his failure to ensure the maintenance of appropriate standards of conduct and adherence to proper procedures by Agg.  [23 Dec 2024]

Enhancements made to MRF scheme between Mainland and Hong Kong, effective from 1 January 2025

The SFC has issued a revised circular to reflect enhancements to the mutual recognition of funds (MRF) scheme between the Mainland and Hong Kong, which took effect on 1 January 2025.

The China Securities Regulatory Commission (CSRC) has also published revised Provisions on the Administration of Recognised Hong Kong Funds, and the People’s Bank of China and the State Administration of Foreign Exchange have jointly published revised operating guidelines, for the purpose of implementing the enhancements to the MRF scheme.

The enhancements include:

  • Relaxing the cap on the value of units of a recognised fund sold to investors in the host market from 50% to 80% of the fund’s total assets; and
  • Allowing the delegation of investment management functions of recognised funds to overseas asset management companies within the same group.

In addition, the SFC has updated the following frequently asked questions, information checklist and forms:

HKMA introduces new measures to protect customers from authorised payment scams, to be implemented by AIs by 30 June 2025

The HKMA has issued a circular to provide authorised institutions (AIs) with guidance on measures to prevent, detect and disrupt authorised payment scams (ie, scams where customers are deceived into authorising payments from bank accounts).

In light of the significant increase in scams and fraud cases in recent years, the HKMA implemented a number of initiatives in 2023, such as security enhancements to e-banking services (see our previous update), payment card security for contactless mobile payments (see our previous update), enhanced protection of payment card customers (see our previous update), enhanced approaches for combating digital fraud (see our previous update), and the five anti-deception initiatives rolled out jointly with the Hong Kong Police Force (see our previous update).

The total number of banking complaints dropped notably in the first ten months of 2024 following the implementation of the above measures. However, the number of banking complaints relating to authorised payment scams remained high despite an overall decline.

The HKMA therefore considers it necessary to implement further measures to protect customers from authorised payment scams. The measures cover the following areas and have been formulated after consultation with selected AIs and the Hong Kong Police Force and reference to overseas practices:

  • Comprehensive framework to tackle authorised payment scams;
  • Dynamic monitoring system in response to evolving typologies and risk indicators;
  • Prompt handling of customer alerts;
  • Effective risk mitigating measures;
  • Sharing of intelligence and use of technology;
  • Proactive participation in anti-deception initiatives; and
  • Publicity and education.

AIs should review their existing frameworks and implement the above measures as soon as practicable and no later than 30 June 2025.  [20 Dec 2024]

HKMA streamlines audio-recording requirements for sale of investment and insurance products and sets out expectations on alternative measures

The HKMA has issued a circular setting out streamlined requirements on audio-recording of investment transactions conducted through video-conference. The circular also addresses the HKMA's regulatory expectations for AIs which intend to deploy alternative measures to comply with the HKMA's requirement of audio-recording the face-to-face or video-conference selling process of investment products or annuity insurance products.

Streamlined requirements

  • The HKMA will apply a risk-based approach for investment transactions of retail banking customers. Audio-recording of the sale process or the relevant recap for transactions conducted through video-conference will only be required in the course of (i) the distribution of / advice on complex investment products, or (ii) the solicitation or recommendation of non-complex investment products, exchange-traded derivatives, or standardised structured deposits not regulated by the Securities and Futures Ordinance, involving risk mismatch.

Alternative measures

  • The HKMA expects that the use of digital tools as alternative measures to comply with the audio-recording requirement for the selling of investment products or the use of alternative measures to comply with the audio-recording requirement for the selling of annuity insurance products should provide at least equivalent protection to customers as that via audio-recording, and serve as reliable evidence for handling any customer complaints or disputes in future. The HKMA has provided further guidance in the circular to aid AIs in ensuring the appropriateness and sufficiency of the alternative measures.
  • The HKMA invites AIs to discuss with the HKMA and demonstrate that the alternative measures can fulfill the expected standards. The alternative measures are not applicable to the sale of protection linked plans, in relation to which its circular of 30 August 2023 applies (see our previous update).

AIs should put in place robust policies, procedures and controls to prevent any possible undue influence or misrepresentation by sales staff both before the start of and during audio-recording.  [20 Dec 2024]

Legislative amendments published in the Gazette to waive stamp duty payable on transactions or transfers of shares or REIT units and on jobbing business of options market makers, and provide revised stamp duty collection arrangement for USM regime

The Government has published in the Gazette the Stamp Duty Legislation (Miscellaneous Amendments) Ordinance 2024, which waives the stamp duty payable on the transfer of shares or units of real estate investment trusts (REITs) and on transactions amounting to jobbing business of options market makers, and provide for a revised stamp duty collection arrangement upon the implementation of the uncertificated securities market (USM) regime in Hong Kong (see our previous update).  

The stamp duty waiver was implemented on 21 December 2024 (see our previous update).  [20 Dec 2024]

SFC and HKMA jointly publish revised FAQs and HKMA issues revised instructions for OTC derivatives reporting, both taking effect on 29 September 2025

The SFC has issued a circular to inform licensed corporations that:

The revised FAQs and SRI will take effect on 29 September 2025. They are published in furtherance of the consultation conclusions issued by the SFC and the HKMA in September 2024 on the mandatory use of unique transaction identifier, unique product identifier, the reporting of critical data elements and the adoption of the ISO 20022 standard (see our previous update).  [20 Dec 2024]

HKSCC announces six planned initiatives for the securities market in 2025

The Hong Kong Securities Clearing Company Limited (HKSCC) has issued a circular regarding the following planned initiatives for the securities market in 2025, to facilitate clearing participants, custodian participants, designated banks and investor participants in their planning and preparation:

  • Upgrade of Report Access Platform: The HKEX plans to upgrade the platform in two phases to promote a secure and efficient information exchange environment. The first phase covers the platform's system upgrade, with the full launch on 24 February 2025. As part of the second phase, the HKEX aims to launch the Secure File Transfer Protocol SFTP service via the platform tentatively in mid-2025 (see our previous update).
  • Change of stock settlement fee on exchange trades: To help facilitate the smooth implementation of the reduction of minimum spreads without increasing the overall market trading cost, the HKEX proposes to restructure the stock settlement fee.
  • Enhancement of settlement arrangement for multi-counter eligible securities: The HKEX aims to enhance the settlement arrangement for multi-counter eligible securities by adopting a single tranche multiple counter arrangement with the benefits of eliminating the need for the manual inter-counter transfer in CCASS. This measure will tentatively come into effect by June 2025, subject to regulatory approval.
  • Fast Interface for New Issuance (FINI) – SWIFT MX migration: The HKEX plans to migrate the SWIFT MT messages currently used by FINI designated banks in IPO public offer money settlement and refund processes to MX messages in FINI. This upgrade from ISO 15022 to ISO 20022 aims to align with the global standard and the go live date is planned for the third quarter of 2025.
  • Implementation of digital platform for exchange traded product (ETP) creation and redemption: To enhance market efficiency and liquidity within the ETP ecosystem, the HKEX will digitise the in-kind creation and redemption processes for relevant ETPs through a new web-based platform. The launch is tentatively scheduled for the fourth quarter of 2025.
  • Implementation of uncertificated securities market: The SFC, the HKEX and the Federation of Share Registrars Limited are advancing the implementation of the uncertificated securities market in Hong Kong to remove the need for manual and paper-based processes for evidencing and transferring legal title to shares and certain securities (see our previous update). The new regime is expected to be implemented by the end of 2025, subject to the completion of the legislative process.  [19 Dec 2024]

SFC provides roadmap on VATP licensing process and details of revamped second-phase assessment

The SFC has granted licences to four virtual asset trading platform (VATP) applicants under its swift licensing process for handling deemed-to-be-licensed VATP applicants. The licences were granted after the SFC completed risk-based on-site inspections on all deemed applicants following the introduction of its inspection programme in June 2024 (see our previous update). 

As a licensing condition, the licensees can operate on a restricted scope of business after completing their rectification actions in response to the SFC’s on-site inspection feedback. They are also required to perform a vulnerability assessment and a penetration test through an independent third party with satisfactory results. 

In light of the effectiveness of directly engaging with the senior management and ultimate controllers of VATPs, the SFC has decided to extend this approach when the VATPs engage an external assessor to conduct their second-phase assessment. The SFC will supervise the entire assessment process through a tripartite engagement together with the VATPs and their external assessors, and will uplift the restriction on business scope after the second-phase assessment is completed to its satisfaction.

The SFC has also revamped the second-phase assessment, focussing on ensuring that the VATP’s policies, procedures, systems and controls are suitably designed and implemented (required to be performed as a direct assurance engagement).

Further details on the licensing process and second-phase assessment are set out in a circular, with a flowchart of the licensing process in the appendix to the circular. 

Going forward, the SFC will:

  • Consolidate the on-site inspection findings and provide additional guidance in early 2025; and
  • Provide additional guidance on the licensing process of new corporations applying for a VATP licence in early 2025.  [18 Dec 2024]

Stablecoins Bill tabled before LegCo

The Stablecoins Bill has been tabled before the Legislative Council (LegCo), following its gazettal on 6 December 2024 (see our previous update, the LegCo brief and second reading speech by the Secretary for Financial Services and the Treasury). The Bill seeks to put in place a regulatory regime for issuers of fiat-referenced stablecoins in Hong Kong. A Bills Committee has been formed and its first meeting will take place on 21 January 2025.  [18 Dec 2024]

Government establishes Working Group on Promoting Gold Market Development

Following the Chief Executive's 2024 Policy Address announcing initiatives relating to the development of a gold market in Hong Kong (see our previous update), the Government announced that the Working Group on Promoting Gold Market Development had been established, and would hold its first meeting within December 2024.

The working group is chaired by the Secretary for Financial Services and the Treasury. Members comprise relevant Government officials, representatives of regulatory bodies, financial institutions, exchanges and industry stakeholders. Other industry experts will also be invited to participate in discussions on specific issues. 

The working group will also explore mutual access with the Mainland financial market when appropriate.  [18 Dec 2024]

HKEX enhances data product offering with launch of HKEX Data Marketplace

The HKEX has announced the launch of the HKEX Data Marketplace, a web-based platform that offers data users a more intuitive experience in accessing the HKEX’s historical and reference data. The new platform will feature a modern user interface with multiple data delivery channels including cloud transfer, providing data directly from the HKEX to offer optimal user experience and convenience.

In its initial stage, the platform will offer shareholding data from the Central Clearing and Settlement System for commercial use, as well as historical full book data from the HKEX’s securities and derivatives markets, and securities market daily non-trading reference data. 

The HKEX will progressively add more data product offerings and functionality to the platform, including tools to customise data and additional options for data delivery, supporting the evolving needs of global investors. The Chinese interface of the HKEX Data Marketplace will be available in the first half of 2025.  [18 Dec 2024]

OTC Clear to accept China Government bonds and policy bank bonds held through Bond Connect as collateral for Northbound Swap Connect from 13 January 2025

The HKEX has announced (via press release and circular) that its clearing subsidiary, OTC Clearing Hong Kong Limited (OTC Clear), will allow offshore investors to use China Government bonds and policy bank bonds held through Bond Connect as collateral for Northbound Swap Connect commencing on 13 January 2025. 

This follows the announcement by the People's Bank of China in July 2024 to support the use of onshore bonds issued by the Ministry of Finance and policy banks on the Mainland and held under Northbound Bond Connect as margin collateral for Northbound Swap Connect transactions (see our previous update). The new eligible collateral can be used to cover initial margin requirements of Northbound Swap Connect, providing greater flexibility to international investors and enhancing their capital efficiency. It will also help vitalise international investors' bond holdings in the China Interbank Bond Market and promote the internalisation of the RMB.

The following rules and procedures have been updated to reflect the above (taking effect on 13 January 2025):

  • OTC Clear has amended the OTC Clear Clearing Rules (clean and marked-up versions) and the OTC Clear Clearing Procedures (clean and marked-up versions) for the purpose of (i) enabling OTC Clear to accept bonds in the China Interbank Bond Market which are traded via Bond Connect issued by the Ministry of Finance of the People’s Republic of China or a policy bank, as eligible non-cash collateral to cover initial margin requirements of Northbound Swap Connect transactions, and (ii) housekeeping; and
  • HKSCC has amended the General Rules of HKSCC (clean and marked-up versions) for the purpose of enabling HKSCC to act as liquidation agent for its affiliates who are recognised clearing houses in respect of eligible collateral comprising bonds in the China Interbank Bond Market which are traded via Bond Connect issued by the Ministry of Finance of the People’s Republic of China or a policy bank.  [16 & 18 Dec 2024]

SFC issues circular to managers of SFC-authorised MMFs regarding liquidity risk management

The SFC has issued a circular to highlight its requirements and expectations for management companies (managers) of SFC-authorised money market funds (MMFs), and sets out good practices for managing the liquidity risk of such funds.  

The circular reminds managers that they are required to maintain and implement effective liquidity risk management policies and procedures to monitor the liquidity risk of the MMFs under their management, and should refer to the SFC's circular of 4 July 2016 (see our previous update).

In 2024, the SFC conducted a thematic review on Hong Kong domiciled MMFs, covering their investment portfolios as at the end of 2023. It also engaged with several managers to understand their liquidity risk management practices, particularly the measures they adopted to meet large redemption requests. While Hong Kong domiciled MMFs reported no liquidity problems in meeting redemptions, the SFC has identified room for improvement in liquidity risk management, including assessment of underlying investments and use of liquidity risk management tools (LMTs) to further enhance the resilience of MMFs.

The SFC reminds managers that:

  • They must take into account both the credit quality and liquidity profile in determining the quality of a money market instrument. Managers should have a prudent internal procedure for assessing whether or not a money market instrument invested by their MMFs is of high quality;
  • They should exercise due care, skill and diligence in managing the liquidity of their MMFs at all times, and ensure fair treatment of both redeeming and remaining investors in meeting redemption requests;
  • It is important to have in place an effective liquidity risk management framework to provide for reasonable liquidity cost, mitigate material dilution and protect the interests of remaining investors upon others’ redemption; and
  • They should review their current policies and procedures to assess the adequacy of their action plans and availability of LMTs, and implement necessary enhancements. 

The good practices set out in the appendix to the circular cover areas including minimum levels of liquid assets, portfolio construction, investor profile, and anti-dilution liquidity risk management tools.  [17 Dec 2024]

HKEX to reduce minimum spreads in Hong Kong securities market in two phases commencing in mid-2025

The HKEX has announced and issued a circular on its consultation conclusions on the proposed reduction of minimum spreads in the Hong Kong securities market. The consultation was launched on 28 June 2024 (see our previous update).

The majority of respondents supported the proposals to reduce minimum spreads of equities, real estate investment trusts and other applicable securities (excluding exchange traded products, debt securities, exchange traded options and structured products) in two phases.

The HKEX will proceed with the reduction of minimum spreads of the applicable securities by 50-60%. Phase 1 will be implemented in mid-2025, while Phase 2 will be implemented in mid-2026, subject to a review of Phase 1 results. The exact effective dates of Phase 1 and Phase 2 will be announced in due course, subject to market readiness. 

In addition, to help facilitate the smooth implementation of the reduction of minimum spreads without increasing the overall market trading cost, the stock settlement fee is proposed to be restructured. The minimum and maximum components would be removed and replaced with an adjusted fee rate charged on notional value traded. The proposal is under consideration by the SFC. Further details, including the fee rates, will be announced in 2025 subject to regulatory approval.

Alongside the changes in minimum spreads, the HKEX will also adjust the order input price limit and make temporary adjustments to the market making obligations for the relevant single stock options, to provide greater flexibility for order input and trading activities under the tightened spreads. 

Interested market participants may enrol in the HKEX's briefing sessions on the implementation plan for minimum spread reduction, which will take place on 13 and 14 January 2025 (Cantonese and English sessions respectively). They should register by 8 January 2025 using the registration form. A playback of the webinar will be available on the designated web corner in due course.  [17 Dec 2024]

Government aims to introduce legislative amendments by 2026 to implement OECD's crypto-asset reporting framework for combatting cross-border tax evasion

The Hong Kong Government has informed the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) of the Organisation for Economic Co-operation and Development (OECD) of Hong Kong's commitment to implementing the Crypto-Asset Reporting Framework (CARF) for enhancing international tax transparency and combating cross-border tax evasion.

The OECD published the CARF in June 2023 with a view to ensuring that global tax transparency would be maintained in light of the rapid growth of the crypto-asset market. As an extension of the existing Common Reporting Standard for Automatic Exchange of Financial Account Information in Tax Matters, the CARF provides for a similar mechanism for annual automatic exchange of tax-relevant crypto-asset account and transaction information among jurisdictions where crypto-asset users or controlling persons are tax residents.

Hong Kong is committed to implementing the CARF on a reciprocal basis with appropriate partners that meet the required standards for protecting data confidentiality and security. In light of the latest timetable set by the Global Forum, the Government aims to commence the first automatic exchanges with relevant jurisdictions under the CARF from 2028, based on the initial plan that the necessary local legislative amendments can be put in place by 2026.  [13 Dec 2024]

HKEX announces multi-year post-trade services enhancement programme for cash equities market, with new features and services rolled out progressively from mid-2025

The HKEX has announced that it is commencing a multi-year post-trade services enhancement programme for its cash equities market. The service enhancements will be released annually from 2025 to 2027, subject to regulatory approval.

The new features will be progressively added to the HKEX’s integrated cash market platform, Orion Cash Platform (OCP), to provide more advanced, reliable and efficient post-trade services for the securities market. They include automated post-trade report download and information exchange, as well as enabling real-time transmission and processing of trade data, related positions and reference data, and real-time matching of settlement instructions. The HKEX’s post-trade systems will become technically ready to support a T+1 settlement cycle by the end of 2025, though any future changes to Hong Kong’s settlement cycle will be subject to extensive market engagement. Further details on the new features, including the targeted implementation times, are set out in a circular.

Meanwhile, the HKEX will continue to provide core post-trade processing through its Central Clearing and Settlement System, CCASS. The HKEX will engage with stakeholders and market participants on the future of CCASS as the new OCP post-trade features progressively become available.

Earlier this year, the HKEX also announced plans to develop the new Orion Derivatives Platform (ODP) for Hong Kong’s derivatives market (see our previous update). The ODP and OCP developments demonstrate the HKEX Group’s strategic focus on building the long-term resilience of Hong Kong’s market infrastructure with technology developed in-house.  [12 Dec 2024]

HKEX launches fund repository as first phase of Integrated Fund Platform

The HKEX has announced the launch of a fund repository, the first phase of its Integrated Fund Platform, which was welcomed by the SFC. This initiative will support the long-term growth of the fund industry by enhancing information transparency and building investor knowledge and understanding of the funds space.

The fund repository will provide streamlined access to essential information on over 2,000 SFC-authorised funds. The HKEX is working on other functionalities of the Integrated Fund Platform, including a business platform and a communications network to facilitate the dealing of funds on a business-to-business basis between fund managers and distributors.

The HKEX has been collaborating with regulators and industry participants and will continue to seek feedback from stakeholders to guide the development of the Integrated Fund Platform.  [13 Dec 2024]

SEHK issues circular to remind exchange participants of upcoming waiver of stamp duty on REIT transactions, effective on 21 December 2024

The Stock Exchange of Hong Kong Limited (SEHK) has issued a circular to remind exchange participants that the Stamp Duty Legislation (Miscellaneous Amendments) Bill 2024 was passed by the Legislative Council on 8 November 2024 (see our previous update), to waive the stamp duty payable on the transactions and transfers of shares or units of REITs. The legislative amendments will be published in the Gazette on 20 December 2024 and will come into operation on 21 December 2024.

The SEHK reminds exchange participants to prepare for the upcoming amendments, including updating their broker supplied systems, back office systems, relevant applications and operational facilities, as necessary.  [11 Dec 2024]

Government gazettes Stablecoins Bill, to be introduced into LegCo on 18 December 2024

The Government has gazetted the Stablecoins Bill, which seeks to put in place a regulatory regime for issuers of fiat-referenced stablecoins in Hong Kong. The Bill will be introduced into the LegCo for first reading on December 18. 

This follows the conclusion of the consultation on the proposed regulatory regime by the Financial Services and the Treasury Bureau and the HKMA in July 2024 (see our previous update).

The Bill aims to enhance the regulatory framework for virtual asset activities, by addressing the potential financial stability risks posed by fiat-referenced stablecoins, ensuring adequate user protection, and harnessing the potential benefits of virtual assets and their underlying technologies. The Bill also seeks to provide the HKMA with necessary supervision, investigation and enforcement powers for the effective implementation of the regime.

Under the proposed licensing regime, a person who carries on any of the following activities has to be licensed by the HKMA:

  • Issuing fiat-referenced stablecoins in Hong Kong in the course of business;
  • Issuing fiat-referenced stablecoins that purport to maintain a stable value with reference to Hong Kong dollars in the course of business; or
  • Actively marketing the person's issue of fiat-referenced stablecoins to the public of Hong Kong.  [6 Dec 2024]

SFC issues circular regarding revised list of persons designated as FSPs under Clearing Rules for OTC derivatives regime

The SFC has issued a circular regarding the publication in the Gazette of a revised list of persons designated as financial services providers (FSPs) for the purposes of the Securities and Futures (OTC Derivative Transactions—Clearing and Record Keeping Obligations and Designation of Central Counterparties) Rules (Clearing Rules). The updated list will take effect on 1 January 2025. 

The SFC reminds licensed persons that if their average total position in over-the-counter (OTC) derivatives during a calculation period reaches the corresponding clearing threshold (USD 20 billion), relevant OTC derivative transactions that they enter into on and after the corresponding prescribed day (seven months after the end of the corresponding calculation period), including those with FSPs, must be centrally cleared in accordance with the Clearing Rules (further details are in the SFC's FAQs).  [6 Dec 2024]

SFC makes available materials from November 2024 AML/CFT webinar

The SFC has issued a circular noting that it has made available on its website the presentation materials used by its staff and speakers from the Financial Intelligence and Investigation Bureau of the Hong Kong Police Force at the recent anti-money laundering and counter-financing of terrorism (AML/CFT) webinar.

Licensed corporations, SFC-licensed virtual asset service providers and associated entities are encouraged to download these materials for reference and internal training as appropriate.  [6 Dec 2024]

HKMA issues circular on introduction of Money Safe protection and disabling of internet banking platforms as part of anti-scam initiatives

Following consultation with the industry, the HKMA has issued a circular to introduce two initiatives to protect customers in view of the surge in fraud and scam cases in recent years.

Money Safe

  • Money Safe (see requirements at Annex to circular) enables customers to protect a portion of their bank deposits from any fund outflows. Customers may choose to release Money Safe protection for transactions after AIs have undertaken a verification process with the customers. 
  • AIs should provide such protection to retail banking individual customers and should also consider offering the same or similar protections to other individual customers (such as private banking customers), based on the needs of such customers.
  • All retail banks (including digital banks) are expected to introduce Money Safe protection to retail banking individual customers as soon as practicable, preferably by 30 September 2025 and in any case no later than 31 December 2025. They are encouraged to consider launching this in phases and introducing similar measures pending full implementation.

Disabling of internet banking platforms

  • To reduce the instances of customers being manipulated to set up internet banking platforms (ie, Internet banking and mobile banking) for their bank accounts which are then misused and result in losses, AIs should provide customers the option of disabling the setting up of such platforms for their accounts, the choice of which can only be changed through verification process with the customers similar to that for releasing Money Safe protection. This measure does not apply to digital banks. 
  • In the meantime, the HKMA is also exploring with the industry to further empower customers to deactivate online registration of third-party payees and online increase of fund transfer limit at Internet banking platforms.
  • All retail banks (excluding digital banks) are expected to introduce the option of disabling the setting up of Internet banking platforms for customer accounts as soon as practicable, preferably by 30 June 2025. Individual banks with genuine difficulties in meeting the timeline may discuss with the HKMA.  [3 Dec 2024]

HKEX issues circular to introduce additional control measure for exchange participants to mitigate risk of order input errors and prevent error trades

The HKEX has issued a circular to exchange participants to announce the introduction of an additional control measure regarding order volume and price deviation settings on the Hong Kong Automated Trading System (HKATS). This is with the aim of mitigating the risk of order input errors.

  • Exchange participants are expected to review and determine the maximum allowable volume parameters and order price deviation with 'Restriction' as the action type according to their own trading patterns, practice and risk management requirements. The parameter settings are to be set at HKATS user and HKATS Online.
  • All HKATS users shall be familiar with the order volume and price deviation settings on HKATS Online.
  • Exchange participants using OMnet Application Programming Interface are requested to review and determine similar price and quantity limits in their systems to minimise error trades resulting from orders entered erroneously.
  • Exchange participants who have changed their parameters must complete and return a confirmation form (attached to the circular) for each HKATS Online user ID by 31 December 2024.
  • Detailed procedures on parameter settings on HKATS Online are set out in Section 7.5 of the HKATS User’s Guide.

This measure is an additional control measure to prevent error trades and does not replace any of the existing internal controls or preventative arrangements of exchange participants.  [2 Dec 2024]

SFC updates FAQs relating to investment products

The SFC has updated the following frequently asked questions (FAQs) relating to investment products:

SFC updates forms and information checklists relating to investment products

The SFC has updated the following forms and checklists relating to investment products:

MAS: Good disclosure practices for ESG funds

MAS has published an information paper setting out good disclosure practices that ESG funds may adopt in their adherence with Circular No. CFC 02/2022: Disclosure and Reporting Guidelines for Retail ESG Funds.  [4 Dec 2025]

New OJK Regulation on the Trading Operation of Digital Financial Assets including Crypto

The Indonesian Financial Services Authority (OJK) issued OJK Regulation No. 26 of 2024 on the Expansion of Banking Business Activities (the 'Regulation 26', in Indonesian language).

Regulation 26 allows banks to make capital participation to financial services institutions and companies that support banking industry which cover (a) companies that are established or whose business activities are to support the business activities of banks and/or subsidiary of a bank; (b) companies that utilise the use of information technology to produce financial product as their main business; (c) companies whose business is characterised as supportive to the banking industry; and (d) offshore companies that satisfy the following criteria: (i) classified as financial services institutions by the authorised institution; and (ii) its business activities are comparable to business activities of financial services institutions in accordance with law governing OJK.

Regulation 26 also allow banks to transfer and/or receive the transfer of receivables, in the form of credit or financing. Banks are not allowed to repurchase the receivables that they have transferred. Banks are required to have policies and procedures in place for transferring or receiving the transfer of receivables, which will include the criteria of receivables to be transferred or received and the mechanism for the transfer of security interest attached to the receivables being transferred or received. Regulation 26 took effect on 13 December 2024.  [13 Dec 2024]

SCM alerts public on fake investment letters using SCM’s name

The SCM has cautioned the public on fake letters and emails purportedly from the SCM. These fraudulent letters and emails are allegedly linked to illegal investment schemes seeking payments from investors, supposedly on behalf of the SCM.

The SCM emphasised that, as a regulatory body, it does not endorse any investment schemes or solicit monies from the public in such capacity.  [9 Dec 2024]

BNM: Updated policy document on product transparency and disclosure

Bank Negara Malaysia (BNM) has published an updated Policy Document on Product Transparency and Disclosure. The updated policy introduces new and enhanced disclosure requirements aimed at enhancing the effectiveness of product disclosure to facilitate consumers' ability to select the right financial products for their needs. Major revisions include:

  • paragraph 11 on new requirements for product disclosure through digital channels;
  • paragraph 12 on enhanced requirements on the sharing of customer information for marketing and promotional purposes;
  • paragraph 14 on revised requirements on the use of Bahasa Melayu; and
  • paragraph 16 on enhanced requirements on the product disclosure sheet.  [3 Dec 2024]

RBI: Reporting platform for transactions undertaken to hedge price risk of gold

The RBI has announced that it has mandated certain reporting requirements in respect of transactions in gold derivatives undertaken by banks and their customers and constituents:

  • banks must report all OTC transactions in gold derivatives undertaken by them in domestic markets, International Financial Services Centre (IFSC) and outside India to the trade repository (TR) of Clearing Corporation of India Ltd. (CCIL) with effect from 1 February 2025;
  • banks must report all OTC transactions in gold derivatives undertaken by their eligible customers and constituents in domestic markets and IFSC to the TR with effect from 1 February 2025.
  • banks must report all the aforesaid transactions undertaken by them or their eligible customers and constituents to the TR before 12:00 noon of the following business day;
  • banks must report all amendments and unwinding of the transactions undertaken in accordance with the relevant regulations to the TR; and
  • the reporting formats shall be as indicated by CCIL with the prior approval of the RBI.

Furthermore, as a one-time measure to ensure completeness of data, banks must report all matured and outstanding OTC transactions in gold derivatives undertaken by them in the domestic markets, IFSC and outside India as well as transactions undertaken by their eligible customers and constituents in domestic markets and IFSC from 15 April 2024 to the TR by 28 February 2025.  [27 Dec 2024]

SEBI: Measures to address regulatory arbitrage – ODIs and FPIs

SEBI has decided to modify certain requirements related to offshore derivative instruments (ODIs) and foreign portfolio investors (FPIs) with segregated portfolios. The provisions of the circular except paragraphs 2.2 to 2.7 will apply immediately; paragraphs 2.2 to 2.7 will come into effect after five months from the date of the circular.  [17 Dec 2024]

SEBI consults on platform for investors to trace inactive and unclaimed mutual fund folios

SEBI has published a consultation on a service platform developed to provide investors with a searchable database of inactive and unclaimed mutual fund folios at an industry level. Responses to the consultation are requested by 7 January 2024.  [17 Dec 2024]

SEBI enhances scope of optional T+0 rolling settlement cycle

SEBI has published a circular which enhances the scope of optional T+0 settlement cycle through a number of measures, including an increase in the number of eligible scrips for trading under optional T+0 settlement cycle. Paragraphs 3.1, 3.2, 4 and 5 of the circular will be effective from 31 January 2025, while paragraphs 3.3, 3.4 and 3.5 will be applicable from 1 May 2025.  [10 Dec 2024]

SEBI consults on operational efficiency in monitoring of NRI position limits in exchange traded derivatives contracts

SEBI has published a consultation on a draft circular on operational efficiency in respect of the monitoring of non-resident Indian (NRI) position limits in exchange traded derivatives contracts, as a measure of ease of doing investment for NRI clients. Responses to the draft circular are requested by 31 December 2024.  [10 Dec 2024]

SEBI consults on proposed framework for ITM single stock option contracts into futures

The Securities and Exchange Board of India (SEBI) has published a consultation on the proposed framework for devolvement of In-The-Money (ITM) single stock option contracts into futures, one day prior to expiry. This change is intended to mitigate potential risks associated with scenarios where significant obligations may arise in the context of physical settlement requirement in single stock derivatives, when an Out-of-The-Money (OTM) option unexpectedly becomes ITM due to sudden price movements near market close on expiry day.

Responses are requested by 26 December 2024.  [5 Dec 2024]

SEBI consults on framework for CAS

SEBI has published a consultation proposing a broad design framework for a Close Auction Session (CAS) in equity markets in India. Views are sought on the desirability, feasibility and efficacy of introducing a CAS framework.

Responses are requested by 26 December 2024.  [5 Dec 2024]

SEBI consults on settlement of account of clients who have not traded in the last 30 days

SEBI has published for consultation a draft circular on the settlement of account of clients who have not traded in the last 30 days. To facilitate ease of doing business as well as to safeguard investors’ interests, it is being proposed that the funds of such clients who have not traded in the last 30 calendar days shall be settled on the upcoming settlement dates of the monthly running account settlement cycle as notified by exchanges in the annual calendar issued by them from time to time.

Responses are requested by 26 December 2024.  [5 Dec 2024]

SEBI clarifies regulatory provisions relating to SDPs

SEBI has published a clarification concerning the interpretations of the regulatory provisions related to Specified Digital Platforms (SDPs) appearing in various news articles. The clarification notes that

  • certain provisions shall not be applicable in respect of an association through an SDP
  • it is not obligatory for any digital platform to be notified as SDP and there is no regulation of these digital platforms by SEBI; however, if the regulated entity is associated with an SDP, it is automatically assured of not being held as violating the provisions of certain regulations; and
  • in the case of violation of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Fourth Amendment) Regulations, 2024 (SECC regulations), it shall be a valid defence for the regulated entity that it has associated with a digital platform which is an SDP; and
  • it is not expected that a regulated entity shall associate only with/through an SDP. It can also associate with/through a digital platform which is not an SDP. However, in that case, it has the responsibility to ensure that the provisions of Regulation 16A of the Intermediaries Regulations, Regulation 44B of the SECC regulations and Regulation 82B of the (Depositories and Participants) (Second Amendment) Regulations, 2024 are complied with.  [4 Dec 2024]

SEBI consults on web-based portal to monitor system audit processes of stockbrokers

SEBI has published a consultation on proposals to create an online monitoring and supervision mechanism (web-based portal) by stock exchanges to monitor the system audit processes of stockbrokers on a concurrent basis.

Responses are requested by 26 December 2024.  [3 Dec 2024]

IFSCA (Informal Guidance) Scheme, 2024

The International Financial Services Centre Authority (IFSCA) has published the IFSCA (Informal Guidance) Scheme, 2024. The scheme is aimed at providing a mechanism for seeking clarity and guidance, inter-alia, on various issues pertaining to a potential business activity and transactions, which are under the regulatory ambit of IFSCA and on other legal issues emanating from the acts administered by IFSCA.  [2 Dec 2024]

IFSCA: Complaint handling and grievance redressal by regulated entities

IFSCA has published a circular, which provides the regulatory framework for the handling of complaints and redress of grievances by regulated entities in the IFSC. The framework provides the requirements, inter alia, in relation to having a policy for complaint handling and grievance redressal, the procedure for complaint handling along with timelines, appeal mechanisms, complaints before IFSCA, maintenance of records, disclosures on websites and in annual reports, and the reporting and maintenance of online systems for complaint handling.

The circular comes into force on 15 January 2025.  [2 Dec 2024]

BSP completes testing for Project Agila

The Bangko Sentral ng Pilipinas (BSP) has announced that, in conjunction with financial institutions (FIs), it has completed the testing for Project Agila, which is a proof-of-concept of the BSP’s central bank digital currency (CBDC) at the wholesale level. The evaluation with FIs covered functional, performance, security, exploratory, end-to-end and programmability testing, and demonstrated that transactions can safely be supported by open-source distributed ledger technology (DLT) through the Oracle Cloud Infrastructure. Project Agila will allow FIs to transfer funds to each other even during off-business hours, including evenings, weekends, and holidays.  [5 Dec 2024] 

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The articles published on this website, current at the dates of publication set out above, are for reference purposes only. They do 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.

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