APAC Monthly Private Wealth Legal Developments – May 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 changes to position limit regime

The Securities and Futures Commission (SFC) has launched a consultation on proposed changes to the position limit regime for listed futures and options contracts.  Under section 35(1) of the Securities and Futures Ordinance, the SFC may prescribe limits on the number of futures and options contracts a person may (directly or indirectly) hold or control, and require a person holding or controlling a reportable position to notify a recognised exchange company or the SFC of such position.  The statutory prescribed limits and the reportable positions are set out in the Securities and Futures (Contracts Limits and Reportable Positions) Rules (CLRP Rules). The proposed changes include (among others) expanding the list of futures and options contracts which the SFC may authorise a person to hold or control in excess of the prescribed limit, and providing for the application of prescribed position limits and reportable positions in relation to a person holding or controlling futures and options contracts of a unit trust or a sub-fund of an umbrella fund.  Feedback on the proposals is requested by 27 June 2022.

HKMA issues discussion paper on policy and design issues for introducing rCBDC (e-HKD) in Hong Kong and invites feedback

The Hong Kong Monetary Authority (HKMA) has issued a discussion paper to invite views from the public and the industry on key policy and design issues for introducing retail central bank digital currency (rCBDC), ie, e-HKD, in Hong Kong.  The issues that are examined in the discussion paper include: potential benefits and challenges, design considerations (including issuance mechanism, interoperability with large-value and retail payment systems, privacy and data protection, and legal considerations), and use cases.  Members of the public and the industry are invited to submit their feedback by 27 May 2022.

HKMA to launch fresh review of Code of Banking Practice amidst rapid growth of digital banking transactions

The HKMA has launched a fresh review of the Code of Banking Practice with the banking industry, with reference to the global implementation of the High-Level Principles on Financial Consumer Protection (published by G20 and the Organisation for Economic Co-operation and Development) in the realm of digital banking services.  The review aims at enhancing consumer protection in respect of digital banking services, covering areas such as information disclosure, customers’ finance management, and dispute handling.  The HKMA also aims to develop protection measures for some new service models, such as “buy now, pay later”.

Singapore

MAS reports findings from thematic review of AML/CFT name screening practices

The Monetary Authority of Singapore (MAS) has published a report on its thematic inspections on the anti-money laundering and countering the financing of terrorism (AML/CFT) name screening frameworks and processes of selected financial institutions in 2021. The paper sets out MAS’ supervisory expectations and good practices, areas for improvement, and illustrative examples observed from the inspections. MAS explains that it expects financial institutions (FIs) to benchmark themselves against the supervisory expectations and good practices in the paper.

MAS issues Enforcement Report, with new high profile case update section & enforcement priorities 2022/23

MAS has published its latest Enforcement Report, covering the period July 2020 to December 2021, which sets out actions taken against FIs and individuals for breaches of laws and regulations administered by MAS. In response to investor and industry feedback, MAS has introduced a new section in the report providing updates on ongoing high-profile cases and has also embarked on a study on investor recourse for losses due to market misconduct. The report also contains MAS’s enforcement priorities for 2022 and 2023, which are: enhancing effectiveness in pursuing breaches of corporate disclosure requirements, stepping up focus on corporate finance advisory firms and fund management companies that fail to comply with business conduct requirements, studying options for enhancing investors’ recourse for losses due to securities market misconduct, and strengthening focus on holding senior managers accountable for breaches by their FIs or subordinates.

India

SEBI constitutes ESG advisory committee

The Securities and Exchange Board of India (SEBI) has announced the launch of an advisory committee on environmental, social and governance (ESG) matters. The committee will look at the Business Responsibility and Sustainability Report (BRSR), ESG ratings and ESG investing.

RBI – LEI for borrowers

The Reserve Bank of India (RBI) has issued a notification to advise that it has decided to extend the guidelines on legal entity identifiers (LEIs) to Primary (Urban) Co-operative Banks (UCBs) and Non-Banking Financial Institutions (NBFCs). Further, non-individual borrowers enjoying aggregate exposure of ₹5 crore and above from banks and FIs will be required to obtain LEI codes; timelines for this are set out in an annex to the notification.

Malaysia

Joint Statement from BNM and SCM – Accelerating the response to climate risk

Bank Negara Malaysia (BNM) and the Securities Commission of Malaysia (SCM) have issued a joint statement following the seventh meeting of the Joint Committee on Climate Change (JC3) on 26 April 2022.  The statement explains that JC3 discussions centred on the progress of action plans and priorities for 2022, and on the effects of recent global developments on transition efforts and policy responses of countries. JC3 members noted that these developments could increase the prospects of delayed progress to transition efforts, and underscored the need for the financial sector to strengthen its response to climate change.

BNM policy documents – application procedures, prudent and professional conduct

BNM has released two policy documents: Application Procedures to Carry on Financial Advisory Business and Islamic Financial Advisory Business (Application Procedures) and Prudent and Professional Conduct by Financial Advisers (Conduct Guide). The Application Procedures set out the required documents and submission procedures to apply for new approval or renewal of approval to carry on financial advisory business and Islamic financial advisory business. The Conduct Guide sets out the policy requirements and guidance for financial advisers and Islamic financial advisers approved pursuant to section 11 of the Financial Services Act 2013 (FSA) or the Islamic Financial Services Act 2013 (IFSA). The requirements in this policy must be met on an on-going basis by an approved financial adviser and Islamic financial adviser in managing its business and conduct in a fair, impartial and professional manner that instils trust and confidence among financial consumers.

Philippines

BSP hosts signing of MOA establishing SSB in BARMM

The Bangko Sentral ng Pilipinas (BSP) has hosted the signing of the Memorandum of Agreement (MOA) establishing the Shari’ah Supervisory Board (SSB) in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM). The MOA supplements the Joint Circular dated 26 April 2022 issued by the BSP, Department of Finance (DOF), BARMM, and National Commission on Muslim Filipinos (NCMF).  It serves as a comprehensive document detailing the responsibilities of the SSB, whose primary function is to issue Shari’ah opinions on Islamic banking products and services.  The MOA also establishes the key role of the SSB in driving the business model of Islamic banking institutions and the sustainability of Islamic banking products or services that will be made available to all Filipinos.

BSP announces pilot of wholesale CBDC

The BSP has announced that it plans to pilot a wholesale central bank digital currency (CBDC) as part of its efforts to promote the stability of the country’s payment system.  Dubbed Project CBDCPh, the pilot will test the use of CBDCs for large-value financial transactions on a 24/7 basis across a limited number of financial institutions.

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.