ComplianceOne Newsletter – September 2026
The topics discussed in this monthly newsletter are as follows:
Market News
Enforcement News - Intermediaries
Enforcement News - ListCo
Regulatory Updates
Markets News
1. Record year for investment product sales in Hong Kong with robust demand for FICC-related products: SFC-HKMA joint survey 2025
On 8 September 2026, the Securities and Futures Commission (SFC) and Hong Kong Monetary Authority (HKMA) published their 2025 joint survey showing that sales of non-exchange-traded investment products reached a record high in 2025, supported by higher participation from clients and firms and strong demand for fixed-income, currency and commodity (FICC)-related products.
The number of clients completing at least one transaction and the number of intermediaries selling investment products both increased compared with the prior year, with growth especially pronounced among large firms.
Collective investment schemes overtook structured products as the top-selling product type for the first time since 2020. Money market funds and currency-linked products were prominent in client allocations, while debt securities sales continued to expand, led by sovereign and investment-grade corporate bonds.
The survey also highlighted increasing digitalisation of distribution, with online sales accounting for a material share of aggregate transaction amounts.
Metric | Latest (2025) | YoY Change |
Sales of non-exchange-traded investment products | HKD 9.9 T | +63% |
Clients with ≥1 transaction | >1.6 M | +33% |
Licensed corporations & registered institutions selling investment products | 452 | +9% |
Large firms (selling investment products) | 128 | +27% |
Collective investment schemes (CIS) sales | +85% | |
Structured products sales | +53% | |
Money market funds (share of top 5 CIS sales by large firms) | 88% | |
Currency-linked product sales | HKD 698 B | +50% |
Debt securities sales (vs 2022) | +43% vs 2022 | |
Online sales (share of aggregate transaction amount) | +21% | |
As Mr HUI Kenneth said “The strong growth captured in this year’s survey is a clear testament to investor confidence in Hong Kong’s asset and wealth management industry. The HKMA will continue to adopt a balanced, proportionate regulatory approach, to ensure robust investor protection while fostering a positive customer experience and supporting the industry’s continued growth”.
SIGNIFICANCE:
The survey confirms sustained growth in client participation and product demand, particularly in CIS and FICC-related products. Licensed corporations (LCs) should review product offerings and distribution channels to align with these trends, while ensuring suitability assessments and risk disclosures remain robust as transaction volumes and online sales increase.
2. New synopsis by Julia Leung: Remarks at Media Briefing on SFC’s Strategic Action Plan
On 23 September 2026, the SFC posted a synopsis of CEO Ms Julia LEUNG’s remarks at a media briefing on the SFC’s Strategic Action Plan.
In her remarks, Ms LEUNG outlined the SFC’s strategic priorities to support Hong Kong’s development as an international financial centre, including strengthening market resilience, advancing digital transformation, and deepening regional and international connectivity.
She emphasised the SFC’s focus on maintaining high regulatory standards while fostering innovation and sustainable growth in the asset and wealth management sector.
SIGNIFICANCE:
The synopsis signals the SFC’s strategic direction and regulatory priorities for the coming period. LCs should monitor how these priorities translate into specific policy initiatives, supervisory expectations and licensing requirements, particularly in areas such as digitalisation, cross‑border activities and product innovation.
Enforcement News - Intermediaries
3. SFC bans Mok Cheuk Ling for 42 months
On 11 September 2026, the SFC prohibited Ms MOK Cheuk Ling, a former licensed representative of Sun Hung Kai Investment Services Limited (SHKIS) and Sun Hung Kai Commodities Limited (SHKCOM) (collectively, SHK), from re‑entering the industry for 42 months, from 11 September 2026 to 10 March 2030.
The SFC found that, between 2009 and 2021, Mok traded on a discretionary basis in the accounts of seven clients of SHK without obtaining their written authorisation and without disclosing these arrangements to her firm, contrary to its policy.
Mok also provided false or misleading account information to two clients between 2015 and 2020, and furnished false account statements to three clients in 2021, including inflated balances and fabricated trade details.
The SFC regarded Mok as not fit and proper, noting that her conduct spanned over 12 years, caused client losses of close to HKD 3 million, and that she partially compensated some clients with over HKD 1.2 million of her own funds.
*For details, please refer to the statement of disciplinary action.
SIGNIFICANCE:
The case reinforces the SFC’s focus on written client authorisations for discretionary trading, proper disclosure to firms, and the integrity of account information and statements. LCs should ensure that discretionary arrangements are documented, approved and monitored in line with internal policies, and that client access credentials and account reporting controls are robust. Individuals should note that prolonged misconduct, client losses and falsification of account information can lead to substantial industry bans even where partial compensation is made.
4. SFC reprimands and fines Zheng Da International Financial Holding Limited HKD 7 million and suspends its responsible officer for regulatory breaches
On 29 September 2026, the SFC has reprimanded and fined Zheng Da International Financial Holding Limited (Zheng Da) HKD 7 million for serious AML/CFT and regulatory failures between 01 December 2021 and 30 September 2023, and suspended the licensed of its Responsible Officers, Mr ZHONG Hao, for seven months.
Material Deficiency | Details |
No due diligence on Customer Supplied Systems (CSSs) | 160 clients used automated systems for futures order placement, Zheng Da conducted zero testing or due diligence, exposing itself to unlicensed activity, nominee accounts, unauthorized access and ML risks. |
Inadequate client deposit scrutiny | 8 accounts showed deposit inconsistent with declared financial profiles; despite claiming RO Zhong made enquiries, no records existed, failing to address ML/TF red flags. |
Failed ongoing monitoring | No effective system to detect suspicious trading; 176 instances of identical buy/sell futures orders by the same client within the same second at the same price went undetected. |
Systemic control failures | Overall systems and controls were inadequate to comply with the AMLO, AML Guideline and Code of Conduct. |
SIGNIFICANCE:
This case shows the SFC’s AML regime is now rigorously enforced at both the institutional and individual level, especially where technology-driven trading meets weak oversight. LCs must treat CSS onboarding, deposit monitoring, and trade surveillance as core licensing obligations, not back-office formalities.
Enforcement News - ListCo
5. SFC suspends dealings in Cloudbreak Pharma Inc. shares over suspected IPO rigging
On 10 September 2026, the SFC directed the Stock Exchange of Hong Kong Limited (SEHK) to suspend dealings in the shares of Cloudbreak Pharma Inc. (Cloudbreak) (HK Stock Code: 02592) under section 8(1) of the Securities and Futures (Stock Market Listing) Rules, with effect from 9:00 AM that day.
The SFC stated that it has serious concerns that Cloudbreak’s initial public offering (IPO) may have been rigged to create an artificial impression of demand for the company’s shares.
The suspension was considered necessary or expedient to maintain an orderly and fair market in Cloudbreak’s shares and to protect the interests of the investing public while the SFC’s investigation continues.
The SFC indicated that it will not make further comments while the investigation, commenced under section 182(1) of the Securities and Futures Ordinance, is underway. Cloudbreak has been listed on the Main Board of the SEHK since 03 July 2025.
SIGNIFICANCE:
The suspension underscores the SFC’s willingness to intervene swiftly where there are serious concerns of IPO misconduct that may distort price formation and demand. Market participants, including sponsors, intermediaries and investors, should be mindful that suspected rigging activity can trigger trading suspensions and extended regulatory scrutiny. LCs involved in IPO distribution or market-making should reinforce controls around order allocation, client due diligence and monitoring of unusual subscription or trading patterns.
6. SFC suspends dealings in Silver Grant International Holdings Group Limited shares over suspicious diversion of over HKD 1 billion in loan proceeds to its then-major shareholder and related party
On 25 September 2026, the SFC directed SEHK to suspend trading in Silver Grant International Holdings Group Limited (Silver Grant) (HK Stock Code: 0171) with effect from 9:00 AM that day, citing serious concerns under Section 8(1) of the Securities and Futures (Stock Market Listing) Rules.
The action follows an SFC investigation which found that between March 2021 and December 2023, the company granted approximately HKD 2 billion in unsecured loans, of which over HKD 1 billion, around 63%, was indirectly routed through rapid onward transfers to its then-major shareholder and a related party. The SFC’s investigation further revealed that Silver Grant’s due diligence and credit assessments in relation to these loans were inadequate, and the company was unable to provide any satisfactory commercial explanation for the transactions. Given the significance of these concerns and the failure to address them, the SFC determined that a trading suspension was necessary to protect the investing public and maintain an orderly and fair market. The SFC’s investigation is still ongoing.
SIGNIFICANCE:
The SFC treats connected-party lending and related -party transactions as a serious red-line especially where large unsecured loans are extended to insiders or their associates without proper commercial rationale, the SFC will intervene swiftly, and any LC involved with the issuer (whether as sponsor, financial adviser, asset manager or broker) faces significant reputational and supervisory exposure. Furthermore, with the SFC’s broader 2026 enforcement posture, where disclosures are unconvincing and investor protection is at stake, the SFC will use its suspension powers proactively rather than waiting for a final investigation outcome.
Regulatory Updates
7. SFC enhances guidance for authorised funds with exposure to private market assets
On 03 September 2026, the SFC issued a circular setting out enhanced disclosure requirements for SFC‑authorised funds with exposure to private credit and private equity.
The SFC noted that some funds may obtain indirect exposure to private market assets through layered structures and complex instruments that may lack transparency, while retail investors may have limited familiarity with these assets and their risks.
Fund managers must provide a clear, sufficiently complete and balanced picture of the characteristics, nature and risks of a fund’s private market exposures. The SFC may also subject such funds to enhanced scrutiny and classify them as complex products with heightened distribution requirements where appropriate.
For existing funds with potential private market exposure, fund managers are expected to review and update offering documents as soon as practicable.
Area | Before | After |
Regulatory Focus | Private-market exposure addressed mainly through general rules: 15% NAV limit for unlisted/non-market traded investments, general risk disclosure, and case-by-case SFC review | Explicit, tailored guidance on private credit + private equity, including direct and indirect exposure Business Development Companies (BDCs), Collateralised loan obligation (CLOs), other financial derivative instruments. |
Disclosure in Offering doc | General risk factors: “private assets may be illiquid/ hard to value”. | Enhanced disclosures on: - Extent and means of access - Nature/characteristics of underlying assets - Specific risks and impact on NAV/redemptions/valuation. Key facts statement must reflect this too. |
Complex-product test | No dedicated private-market threshold. Complexity assessed under existing complex product principles. | More than 50% of NAV in aggregate direct + indirect private market assets of the fund’s NAV. Below 50% NAV may still designate as complex based on liquidity, leverage, or opacity. |
Distribution Obligation | Complex-product rules applied if product already met existing complex product definition. | Private-market funds crossing threshold face suitability obligation irrespective of solicitation/ recommendation, stronger distributor competency expectations, target-market alignment. |
SIGNIFICANCE:
The circular tightens disclosure expectations for retail funds with private market exposure. Fund managers should review portfolio holdings and offering documents to ensure exposures and risks are clearly and accurately described. Where total direct and indirect exposure reaches or exceeds 50% of NAV, funds may be classified as complex products, triggering enhanced suitability and distribution obligations.
8. SFC and AFRC extend regulatory cooperation to financial reporting of licensed firms and funds under new MoU
On 28 September 2026, the SFC and the Accounting and Financial Reporting Council (AFRC) signed a revised MoU replacing the 24 February 2021 version. The new MoU extends regulatory cooperation beyond listed-entity financial reporting to cover the financial and compliance reporting of SFC-LCs, SFC-licensed virtual asset service providers (VASPs), SFC-authorized collective investment schemes, and registered open-ended fund companies (OFCs), plus the audit/assurance work done for these entities.
Under the MoU, the two regulators formalize:
· Case referrals between SFC and AFRC on auditor conduct, licensed-firm reporting failures, fund/OFC reporting issues;
· Information sharing subject to statutory confidentiality;
· Coordinated Investigations/Inspections via a task force for significant cases;
· Prior consultation/notice where AFRC investigates auditors serving Licensed Person, licensed VASP, Authorized CIS or Registered OFC; and
· Capacity building/joint training on accounting, audit and compliance-reporting standards.
As Ms LEUNG Julia, CEO, said, “This MoU strengthens regulatory backing for our collaboration with the AFRC, ensuring our supervision evolves with market dynamics. Deepening our regulatory cooperation across financial sub-sectors is essential to upholding the quality of financial reporting and bolstering the confidence of global investors in Hong Kong’s regulatory system”.
For details of Dr WONG Kelvin’s speech, please click here.
SIGNIFICANCE:
Since the MoU provides for coordinated investigations and no unnecessary double action principles, a LC under SFC review may simultaneously face scrutiny of its auditor. LCs should expect a tighter documentary demands, joint interviews, and aligned messaging requirements.
9. Circular to Intermediaries Roadmap for Implementing the Hong Kong Investor Identification Regime for the Exchange-traded Derivatives Market
On 30 September 2026, the SFC issued a circular setting out the implementation for the Hong Kong Investor Identification Regime – Derivatives Market (HKIDR-DM). It requires LCs and registered institutions that provide derivatives brokerage or conduct proprietary trading, collectively as Relevant Regulated Intermediaries (RRIs) to collect Client Identification Data (CID) for every relevant trading exchange-traded derivatives and map it to the Broker Client Account Number (BCAN). It extends the existing securities-market investor ID model to exchange-traded derivatives-futures options and stock options traded via the Hong Kong Futures Exchange Limited (HKFE) and HKEX.
Core Obligations of RRIs as per Code of Conduct Paragraph 5.6A | |
1 | Assign a BCAN to each relevant client |
2 | Collect CID of each relevant client |
3 | Submit BCAN-CID Mapping files to HKEX’s central repository |
4 | Tag the BCAN on every exchange-traded derivatives order. |
5 | Obtain express client consent from individual clients for collection/ transfer of personal data; corporate clients do not need privacy consent. |
6 | Apply data-privacy and security controls; participate in testing/ market rehearsals. |
Standard Requirement for CID | |
Individuals | Full Name, ID-issuing jurisdiction, ID type, ID number |
Corporates | Full Name, Jurisdiction, ID Type (BR Certificate), ID number |
Trusts/ funds | Trustee CID or asset manager/ fund CID |
Joint Accounts | CID for all named holders under the same BCAN. |
RRIs must obtain express client consent for personal-data use covering SFC-specified purposes, submit BCAN-CID mapping files via HKEX’s Electronic Communication Platform, tag orders with BCAN, and join end-to-end testing/ market rehearsals before go-live which sets to be on Q2 of 2028.
SIGNIFICANCE:
The SFC’s road map of the HKIDR-DM is less a policy surprise and more an inevitability. Hong Kong is simply extending the transparency model already used in the securities market into futures, options and stock options. The SFC want order-level visibility, and intermediaries are the data pipeline.
10. SFC, Securities Commission Malaysia announce Single Submission Arrangement to streamline simultaneous listings in Malaysia and Hong Kong
On 30 September 2026, the SFC and the Securities Commission Malaysia (SC) have launched the Single Submission Arrangement implementing the July 2026 MoU on a simplified dual-IPO framework. A company seeking a primary listing on either the Main Board of SEHK or Bursa Malaysia MAIN Market, with a simultaneous secondary listing on the other market, now needs only:
· One listing application submission, and
· One listing document accepted across both markets.
The arrangement adds dedicated dual-listing review teams, a single coordinated communication channel through the primary-listing regulator, and aligned regulatory review timelines. Its purpose is to cut duplication and compliance costs at the IPO stage while preserving each jurisdiction’s listing, disclosure, and investor-protection standards.
SIGNIFICANCE:
This arrangement makes Hong Kong-Malaysia dual listing more practical and is expected to reduce duplication and compliance costs at IPO application stage. However, LCs must still carry full conduct, due diligence, and regulatory-standard obligations. It is important to note that this arrangement is NOT a waiver of substantive requirements for LCs involved in capital markets, IPOs, sponsorship, corporate finance advisory, underwriting, legal/compliance, and cross border fundraising. Hong Kong and Malaysia eligibility, prospectus/disclosure, and core shareholder-protection standards still apply.
[End of ComplianceOne Newsletter – September 2026]
For more details, please click on the title of the topic above.
=================================
~ Make It Right Today, Better Tomorrow ~
=================================
The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice.
For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607.
Unit 1605, 16/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central,
Sheung Wan, Hong Kong
Tel: (852) 39550277 www.complianceone.hk