Global Trustee and Fiduciary Services Bite-Sized Issue 2 2025

11 QUICK LINKS BENCHMARKS REGULATION CRYPTOASSETS DORA EMIR FSB MIFID II/MIFIR MMF SUSTAINABLE FINANCE/ESG T+1 ASIA EUROPE INTERNATIONAL LUXEMBOURG NETHERLANDS NORTH AMERICA UNITED KINGDOM Global Trustee and Fiduciary Services Bite-Sized | Issue 2 | 2025 ASIA HKMA Raises Circular Issued by the SFC on Deficiencies and Substandard Conduct Noted in the Management of Private Funds and Discretionary Accounts On 28 January 2025, the Hong Kong Monetary Authority (HKMA) wrote to the chief executives of all Registered Institutions (RIs) to draw their attention to a Circular issued by the Securities and Futures Commission (SFC) on 9 October 2024, which shared deficiencies and substandard conduct identified in the SFC’s supervision of licensed corporations engaged in managing private funds and discretionary accounts. The HKMA says that the Circular highlighted cases involving breaches of regulatory requirements in areas ranging from conflicts of interest, risk management and investment within mandate, information for investors, to valuation methodologies. The HKMA states that RIs which engage in asset management should have due regard to the SFC Circular and says it will monitor RIs’ asset management activities in the course of its supervision. Link to HKMA Letter here Link to SFC Circular here Link to Appendix of SFC Circular here SFC Concludes Consultation on Proposals to Pave Way for Fully Digitalised Public Offerings On 24 January 2025, the SFC released consultation conclusions on proposed amendments to cease permitting mixed media offers (MMOs) to facilitate a fully electronic subscription process for public offerings. The SFC says that all respondents supported the proposals, which will be adopted by the SFC in full. Once implemented, online channels will serve as the only means to subscribe to public offers of equity securities or interests in collective investment schemes listed or to be listed on the Stock Exchange of Hong Kong Limited (SEHK). Electronic prospectuses will be issued, and printed application forms will no longer be available. The SFC says it will gazette the notice to make the proposed amendments and table it in the Legislative Council for negative vetting as soon as practicable. Link to Consultation Conclusions here SFC Expands Listed Structured Fund Offerings in Hong Kong On 23 January 2025, the SFC set out new regulatory requirements in a circular for product issuers, with a view to broadening the range of listed structured funds that may be offered to the public in Hong Kong, notably adding to their product mix Single Stock Leveraged and Inverse (L&I) Products and Defined Outcome Listed Structured Funds. The SFC says that Single Stock L&I Products and Defined Outcome Listed Structured Funds are listed structured fund products that have become increasingly popular in overseas markets. Against this backdrop, there has been growing interest among product issuers in launching them in Hong Kong, in the light of their distinct appeal to investors. The SFC states that these products would come in handy for investors looking for trading or hedging tools for popular individual stocks listed overseas, as well as for those seeking price discovery tools for overseas exposure during Asian trading hours. They can also provide investors with more customised investment exposures. Also, in balancing the potential benefits and risks associated with Hong Kong investors’ exposure to these complex and novel products, the SFC says it has built into the enhanced regulatory framework additional safeguards and measures. For Single Stock L&I Products, the SFC will only accept those referencing a highly liquid mega-cap stock listed on a major overseas exchange. They should also generally be subject to a maximum leverage factor of 2x to -2x. Link to Circular here