ComplianceOne Newsletter – January 2026
The topics discussed in this monthly newsletter are as follows:
Regulatory Updates
Market News
In Memory of David Webb – a corporate governance activist
Forum of Speech
Writing the Next Chapter for Hong Kong’s REIT Market- New speech by Alexandra Yeong on HK REITS
Cross Agency Steering Group announces Strategic Priorities for 2026-2028
Enforcement News - Intermediaries
Regulatory Updates
1. SFC and HKMA jointly consult on standard calculation periods under OTC derivative Clearing Rules
The SFC and HKMA issued a joint consultation on standardizing the calculation periods for each year under the Clearing Rules for over-the-counter (“OTC”) derivative regulatory regime.
Current Approach to accommodate additional Calculation Periods
Since 2016, implementation of the mandatory clearing introduced four Calculation Periods (“CPD”) within the Clearing Rules at consistent six-month intervals with aims to:
ensure timely identification of new dealers entering the OTC derivative market, or any prescribed persons (e.g. a licensed corporation under the SFC) which have met the Clearing Threshold;
mitigate the risk of market participants manipulating their positions during the specific CPDs to avoid clearing obligation;
following the consultations in 2018 and 2021, sixteen additional CPDs were incorporated in the Schedule 2.
Proposed Approach to accommodate additional Calculation Periods beyond 2026
In assessing the need to adjust the three key elements related to CPDs, namely, (i) the three-month duration, (ii) the frequency of CPDs per calendar year, and (iii) the Prescribed Day (which occurs seven months after the end of each CPD); it is indicated in the observations that two CPDs per calendar year with three-month duration prove to be effective; while maintaining the Clearing Thresholds at USD20 billion.
A Summary of the Proposed Approach to the Schedule 2 of the Clearing Rule
Calculation Period | Clearing Threshold | Prescribed Day |
From 1 March 2027 onwards, 1 March to 31 May in a year | USD20 billion | 1 January in the following year |
From 1 March 2027 onwards, 1 September to 30 November in a year | USD20 billion | 1 July in the following year |
SIGNIFICANCE:
This formulaic approach would provides prescribed persons with certainty that future Calculation Periods can be determined based on the established methodology, without reliance on adding new calculation periods to Schedule 2 to the Clearing Rules from time to time; and will not incur any operational changes the prescribed person have to comply relating to Clearing Rules.
2. SFC directs IPO sponsors to promptly conduct internal reviews to rectify serious deficiencies in the preparation of new listing documents
The SFC set forth a circular highlighting the issues related to deficiencies in the preparation of listing documents, potential misconduct and significant mismanagement of resources of over-engagement in new listing applications.
Some key takeaways of the deficiencies found:
in reviewing recent listing applications, the SFC and SEHK found that some sponsors did not have a thorough understanding of their listing applicants, implying due diligence works on the applicants were not sufficient;
strained resources status of the sponsors with over-reliance on external professional parties, while the sponsor principals are not capable of supervising their transaction teams, and
the staff team involved is not equipped with requisite knowledge, and experience in IPOs arrangement;
In the light of the findings, the SFC and SEHK have come up with the following rectification measures:
joint letters were sent to 13 sponsors, requiring them to complete comprehensive reviews within three months on the deficiencies identified as well as the resources status to discharge their sponsor work;
requiring all sponsors to submit the followings:
- within two weeks, the names and number of appointed Principals and the number of active listing engagements; in order to ensure if the sponsors have adequate resources to carry out the duties;
- within one week, a list of individuals engaged in IPO sponsor work and also those who have not yet passed the HKSI LE Paper 16 within three years or within six months after their first engagement in such work;
onsite thematic inspections are expected on those concerned principals and sponsors;
sponsors providing materially incomplete or unsatisfactory responses to the regulators, the vetting process may be suspended;
engaged individuals who do not meet the eligibility criteria are now subject to tightened examination requirements;
SIGNIFICANCE:
The deficiencies findings reveal the facts that licensed corporations are thinning out their resources and straining personnel competence for undertaking business which they are not so well-acquainted or financial capable to handle.
In the eyes of the regulators, as Ms. Julia Leung has said, “The gatekeeping role of sponsors in the listing process is critical to maintaining the quality of Hong Kong’s capital market and sustaining investor confidence in new listings that will hold up through all market cycles. That role may have been eroded in their eager pursuit of
deal volume.”
3. Reminder of statutory obligations during SFC inspections to comply with section 180 of the Securities and Futures Ordinance
The SFC found in its routine inspections that some licensed corporations (“LC”) engaged in unsatisfactory practices and behaviours which appeared to stem from a misunderstanding of the SFO or a lack of awareness regarding the LCs’ statutory obligations. According to the section 180 of the SFO “Supervision of intermediaries and their associated entities”, it empowers the SFC to supervise licensed intermediaries and their associated entities by entering premises, inspecting records, and making inquiries to ensure compliance with financial and conduct requirements like onsite inspections.
What are the malpractices of the findings by SFC?
obstructing inspection arrangements: e.g. intending to postpone and delay;
disputing the inspection without good reason: arguing over the areas and scope of samples
evading responses: delaying in responses and providing misleading information;
submitting false/distorted information: providing information which is ambiguous, inaccurate;
actively disrupting the inspection process: intentionally disrupting the inspection process;
unprofessional conduct toward inspectors: adopting an uncooperative attitude to take the inquiries seriously.
Expected Standards & Statutory Obligations of LCs toward the SFC
access to information & answers: LC should provide access to records / documents as required under section 180 of the SFO;
maintenance & retrieval of records: maintain proper business records at all times for ready retrieval to SFC as required under Securities and Futures (Keeping of Records) Rules;
availability of Responsible Officers (ROs): ensuring two ROs for each regulated activities and their availability during SFC visits;
fitness & properness of LCs: adhering to the General Principles stated in the Code of Conduct for licensed persons;
engagement of external representative: the LCs should realize their ultimate accountability and responsibilities to SFC for any information provided by outsourced external representatives on their behalf.
Consequence of failure to cooperate or non-compliance
The SFC takes any breaches of section 180 of the SFO seriously, and will not hesitate to exercise its powers under the SFO to take appropriate regulatory actions, such as:
Supervisory interventions, which may include, but not limited to:
imposing conditions on the LC to limit its business of regulated activities, e.g. no onboarding of new clients;
fully evaluating the fitness and properness of the LC and its management personnel
Enforcement actions, which may include, but not limited to:
initiating criminal proceedings for contravention of the stipulated requirements;
taking appropriate disciplinary actions;
SIGNIFICANCE:
As a licensed corporation, together with its licensed persons like Responsible Officers, licensed representatives, should bear in mind and get acquainted with not only the codes and guidelines which governing their behaviours to certain expected standards, a cooperative attitude in collaboration with the SFC upon any requests or inquiries should be ascertained to express their competence and fitness to remain licensed.
Market News
4. In Memory of David Webb – a corporate governance activist
David Webb was a renowned Hong Kong-based corporate governance activist, and an investor, who contributed his long-devoted efforts in advocating transparency in the stocks market, with his valuable research work and findings.
David’s Key Roles and Contributions
l As an activist investor and market watchdog: the most well-known contribution was his publication of a list of "50 Hong Kong stocks not to own" on 15 May 2026, within which he highlighted some bubble stocks subject to SFC concentration risk warnings, and aroused alerts to investors to stay away from these troubled stocks.
l His devoted efforts to advocate for greater transparency and improved corporate/economic governance; always known as one of Hong Kong's most vocal activist investors, and his investigations into corporate misconducts triggered regulatory concerns. He always stood out with brave to safeguard the interests of retail investors at large against non-performing managements of the listed stocks.
l As Founder of Webb-site.com: David moved to Hong Kong in 1991 as an investment banker, taking advantage of his professional insights, he founded the Webb-site.com which was a free online platform providing stock market news, data, and analyses for market participants. Appraises to this data base is considered as “second to none”!
Later Years and Legacy
Diagnosed with metastatic prostate cancer in 2020, David scaled down his research work. He passed away peacefully on January 13, 2026, at age 60 in Hong Kong, survived by his wife and two children. And in February 2026, the closure of Webb-site.com was announced and public release of its database, putting an end to David’s legend.
RIP:
David's enduring impact lies in his fearless market oversight through Webb-site.com, persistence in upholding the transparency in Hong Kong's financial markets; and most praised for his endeavour to speak for the retail investors!
Forum of Speech
5. SFC and UAE’s Capital Market Authority sign milestone MoU to strengthen cross-border digital asset collaboration
The SFC has entered into a landmark Memorandum of Understanding (MoU), with and the Capital Market Authority (“CMA”) of the United Arab Emirates (UAE), earmarking a further commitment to promoting international cooperation under its ASPIRes Roadmap.
Key takeaways of the comments on the MOU from senior executives in the forum
l an unprecedented collaboration with overseas regulator with mutual consultation, information exchange to enhance cross-border regulatory cooperation on digital asset-related matters;
l an industry roundtable on digital asset innovation between the SFC and the CMA senior executives from the digital asset industry to discuss on the digital asset ecosystem;
l upholding a shared objective to enable responsible innovation while upholding market integrity and strong investor protection;
l the MoU provides support for responsible financial innovation for HK and UAE in fostering sustainable growth of HK’s vibrant and secure digital asset ecosystem;
SIGNIFICANCE:
This MoU marks an emblem in transnational financial collaboration, positioning Hong Kong and the UAE as progressive, well-regulated digital asset hubs. It demonstrates a mutual commitment to responsible innovation, enhanced supervisory coordination, and the establishment of global standards that underscore transparency, integrity, and investor confidence in the digital asset ecosystem.
6. Writing the Next Chapter for Hong Kong’s REIT Market- New speech by Alexandra Yeong on HK REITS
In as speech delivered in a luncheon by Ms. Alexandra Yeong, Interim Head, Investment Products, at the Hong Kong REITS Association (“HKREITA”) provides a comprehensive overview of the future trajectory of Hong Kong’s REIT market, and the roles of the regulator in navigating the development.
Some key takeaways for the readers
Enhancing market competitiveness and regulation
l a wide range of new measures have been launched to attract new REIT listings, enhance market liquidity, broaden investor base and facilitate secondary offering with an ultimate aim to fostering the growth of REIT market in HK, including:
Ø Grant scheme and stamp duty waiver
(i) extend the grant scheme for REITs for three years to MAY 2027
(ii) to waive the stamp duty for the transfer of REIT units since DEC 2024
Ø REIT Connect
(i) REIT Connect is expected to significantly increase our REIT market liquidity and broaden investor base, and a number of local and overseas REIT issuers have already expressed interests in launching their REITs in Hong Kong upon the launch of REIT Connect.
(ii) Rapid growth and diversification in the China Mainland REIT (“C‑REIT”) market, including an international-sponsored retail C‑REIT; this signified a key milestone in the internationalization and diversification of the C-REIT market and offered a model for greater offshore participation in the massive market.
(iii) The SFC further assured that early implementation of this major initiative remains a top priority.
Ø New REIT Channel and streamlined measures
(i) A dedicated “REIT Channel” be launched in October allowing new REIT applicants to consult the SFC confidentially on listing applications,
(ii) The SFC has also streamlined its authorization process so that, under normal circumstances, new REIT applications can be approved within four weeks from take-up.
(iii) For secondary offerings, documentary requirements have been streamlined so that documents focus on offer-specific information, without the need for any updated portfolio valuations or accountants’ reports on condition that ongoing disclosure and reporting requirements are already in place, thus shortening preparation time and enhancing time-to-market.
Ø Facilitating corporate activities and privatization
(i) Following an October 2024 consultation, the proposal of the Government and SFC to introduce a statutory scheme of arrangement and compulsory acquisition mechanism for REITs; with an aim to facilitate Hong Kong REITs to expand through mergers and acquisitions and to conduct privatization and corporate restructuring in a clear and orderly manner, while strengthening investor protection.
Strengthening global partnerships and international collaboration
l Beyond REIT Connect, the SFC has also been engaging with other international markets like Saudi Arabia to explore more potential collaboration opportunities, there were also bilateral meeting on exchanging views on dual listing of investment products such as ETFs and REITS.
SIGNIFICANCE:
As a concluding remark, Ms. Alexandra Yeong reinstated that “the SFC will continue to work closely with the Government, industry participants and all stakeholders to foster the growth of the Hong Kong REIT market, and reinforce its position as a trusted platform for capital formation and long-term value creation.”
7. Cross Agency Steering Group announces Strategic Priorities for 2026-2028
In the 12th meeting in Jan 2026, the Green and Sustainable Finance Cross‑Agency Steering Group (“Steering Group”) set out its strategic priorities for 2026-2028 to further strengthen Hong Kong’s role as a competitive and future‑ready sustainable
finance centre.
Built on the solid foundation of the 2023-2025 plan, the Steering Group’s strategic priorities for the next three years are anchored around two key pillars:
1) Consolidate and strengthen efforts to solidify Hong Kong as a sustainable finance centre through:
l strengthening the sustainability disclosure ecosystem, and the effective use of technology;
l expanding and deepening sustainable finance markets;
l strengthening external engagement;
l supporting talent development with capacity building initiatives
2) Develop Hong Kong’s strengths in emerging areas
l scaling transition finance with practical guidance, using tools and reference to case studies; while encouraging wider industry adoption of transition planning;
l supporting adaptation finance by building market readiness, identifying capability gaps, and supporting product innovation and development, while strengthening physical risk assessment capabilities.
SIGNIFICANCE:
Comments from the CEO of SFC, Ms. Julia Leung, and Chief Executive of the HKMA, Mr. Eddie Yue highlighted the significance of these updated 2026-2028 priorities:
l underscore the ongoing commitment to ensuring Hong Kong remains globally aligned, forward‑looking, and responsive to market needs.
l reinforce the groundwork for building a robust sustainable finance ecosystem, while positioning Hong Kong to capture the emerging opportunities in Asia’s transition to a low-carbon and climate-resilient economy
Enforcement News - Intermediaries
8. SFC Reprimands and Fines Saxo Capital Markets HK Limited $4 Million for Failures in Distributing Unauthorised VA-Related Products
On 6 January 2026, the SFC reprimanded and fined Saxo Capital Markets HK Limited (CE: AVD061) (“SCMHK”) $4 million for significant regulatory breaches related to the distribution of virtual asset (“VA”) funds not authorised by the SFC and VA-related products (collectively “VA Products”) on its online trading platform (the “Online Platform”).
SCMHK ceased carrying on regulated activities on 28 February 2025*
Relevant Period and Key Breaches (1 November 2018 to 25 November 2022):
During this over four-year period, SCMHK permitted retail clients to trade 32 VA Products on the Online Platform, executing 1,446 transactions involving six individual professional investors (“PIs”) and 130 retail clients. All products were complex, including 21 exchange-traded derivative VA Products.
These VA Products should only have been offered to PIs per the SFC's 2018 Circular ("Distribution of virtual asset funds") and 2022 Joint Circular ("Joint circular on intermediaries’ virtual asset-related activities").
SCMHK failed to:
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For more details of the background, please refer to the Statement of Disciplinary Action.
SIGNIFICANCE:
In determining the sanction, the SFC considered mitigating factors, including the prolonged nature of the failures (over four years), SCMHK's self-reporting of misconduct, voluntary client compensation for losses from VA Product trading, cessation of regulated activities, full cooperation with the SFC (accepting findings and facilitating early resolution), and its otherwise clean disciplinary record.
This action represents a landmark enforcement in Hong Kong's regulation of virtual assets, marking one of the first major fines against a licensed intermediary for breaches in VA Product distribution. It underscores the SFC's strict expectations for robust due diligence, suitability assessments, client knowledge checks, and platform supervision in handling complex and high-risk VA Products, particularly in online environments. Even with remediation and cooperation, the substantial fine highlights zero tolerance for prolonged failures that expose retail investors to unauthorised products, reinforcing the need for intermediaries to align controls with evolving SFC guidance on virtual assets to protect investors and maintain market integrity.
9. SFC Suspends WONG Chi Fai for 27 Months and CHOI Sau Wai for 7 Months Over Undisclosed Personal Trading in Suspected Ramp-and-Dump Case
On 26 January 2026, the SFC announced disciplinary actions against two licensed representatives involved in serious breaches related to undisclosed personal securities trading. The cases are interconnected, arising from an SFC investigation into a suspected Ramp-And-Dump Scheme (唱高散貨).
Participants of the Case
(Principal Offender) | Mr WONG Chi Fai ("WONG"), a former licensed representative for Type 1 and Type 2 regulated activities, suspended for 27 months from 23 January 2026 to 22 April 2028.
WONG’s actions circumvented staff dealing policies, prevented effective monitoring of frequent day trading and short-term margin trading, and demonstrated wilful and dishonest conduct. |
(Facilitator) | Ms CHOI Sau Wai ("CHOI"), a former licensed representative for Type 1 and Type 2 regulated activities, suspended for seven months from 23 January 2026 to 22 August 2026.
CHOI’s conduct exposed the client to risks from WONG’s personal trading, exposed GSSL to potential liability if the client disputed the trades, and hindered the firm’s compliance obligations. |
Key Breaches
Name | Timeline | Key Breach Remarks |
WONG Chi Fai | July 2019 to January 2022 | At Fulbright Securities Limited and Fulbright Futures Limited:
Conducted approximately 1,300 securities transactions worth $670 million in a securities account held in the name of his relative at Glory Sun Securities Limited (“GSSL”, formerly China Goldjoy Securities Limited), without disclosure or approval. Repeatedly falsely declared to Fulbright that he had no beneficial interest in external securities accounts. |
January 2015 to December 2018;
with concealment from May 2011 | At Open Securities Limited (OSL, formerly TC Concord Securities Limited):
Executed approximately 10,000 personal trades worth $2.8 billion through another relative-held account without required approval, making false declarations to conceal his financial interest and control. | |
CHOI Sau Wai | October 2019 to January 2022
| Knowingly allowed and facilitated WONG to operate and execute personal trades in a client’s securities account at GSSL without the client’s written authorisation or written consent from WONG’s employer (“Fulbright”).
This enabled the 1,300 transactions worth $670 million over more than two years, breaching GSSL’s internal policies and the Code of Conduct for Persons Licensed by or Registered with the SFC. |
For more details of the background, please refer to the:
· Statement of Disciplinary Action - WONG Chi Fai; and
· Statement of Disciplinary Action - CHOI Sau Wai.
SIGNIFICANCE:
These linked enforcement actions underscore the SFC’s strong commitment to addressing undisclosed personal trading and unauthorised account access, especially when such conduct may facilitate market manipulation schemes like ramp-and-dump. WONG’s multi-firm, long-term misconduct and CHOI’s knowing facilitation in a client account highlight critical lapses in staff dealing controls, disclosure obligations, and intermediary supervision.
The differentiated suspension periods, longer for the primary actor and shorter for the facilitator, reflect a proportionate yet firm response, reinforcing that licensed persons must strictly comply with authorisation requirements, accurate declarations, and employer policies. This serves as a clear deterrent to dishonest behaviour that jeopardises client protection, firm compliance, and overall market integrity.
[End of ComplianceOne Newsletter – December 2025]
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