ComplianceOne Newsletter – July 2025
The topics discussed in this monthly newsletter are as follows:
REGULATORY UPDATES
Itinerant Professional are allowed to stay longer each calendar year
SFC will amend the FRR to foster market developments for OTC derivatives and other products
MARKET NEWS
Latest SFC Report shows growing AUM and net fund inflow to Hong Kong
SFC hosts meeting to promote industry collaboration in Hong Kong’s digital asset sector
HKEX launched Order Routing Service on its Integrated Fund Platform
ENFORCEMENT NEWS
SFC and ICAC Launch Joint Operation "Leverage" Against Suspected Market Manipulation Syndicate
MMT Rules Former Dan Form Company Secretary and Associate Guilty of Insider Dealing
Regulatory Updates
1. Implementation of regulatory regime for stablecoin issuers
The Hong Kong Monetary Authority (“HKMA”) announced the implementation of the regulatory regime for stablecoin issuers which has come into effect on 1 August 2025 (the commencement date).
A bundle of documentations has been published as below:
Consultation conclusions on the Guideline on Supervision of Licensed Stablecoin Issuers and the finalized Guideline on Supervision of Licensed Stablecoin Issuers ;
Consultation conclusions on the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Licensed Stablecoin Issuers) and the finalized Guideline on AML & CFT (For Licensed Stablecoin Issuers);
Explanatory Note on Licensing of Stablecoin Issuers on various aspects of the licensing regime and application process;
Explanatory Note on Transitional Provisions for Pre-existing Stablecoin Issuers
As we are just on the inception stage of the stablecoin licensing regime, and no license has been granted yet, we will focus more on the initial transitional period where interested parties:
are encouraged to contact the HKMA before 31 August 2025, showing their intention to apply for a license; and the HKMA will communicate with the applicants, conveying to them the regulatory expectations and provide feedbacks as appropriate;
which consider themselves sufficiently ready and wish to be considered early should submit an application to HKMA by 30 September 2025.
Key takeaways of the “Explanatory Note on transitional provisions for pre-existing Stablecoin Issuers” (“Note”):
The Stablecoin Ordinance (SO) effective 1 August 2025 defines Regulated Stablecoin Activities (RSA), including issuing specified stablecoins in Hong Kong or those pegged to the Hong Kong Dollar from outside. Transitional provisions under Schedule 7 of the SO, detailed in this Explanatory Note, apply specifically to Pre-existing Issuers (PEIs). PEIs are entities that substantively carried on RSA in Hong Kong before 1 August 2025; mere "shell" operations do not qualify. These provisions give PEIs time to either apply for a license or wind down their operations.
PEIs wishing to continue must submit a formal license application, a written declaration of prior RSA activity, and a written undertaking to comply with regulations to the HKMA by 31 October 2025. Meeting this deadline grants "Application Submitted and Acknowledged" (APSA) status, allowing continued RSA operation until 31 January 2026. During this period, the HKMA assesses APSA entities and may grant a Provisional License, a Full License, issue a Rejection Notice, or refuse the application. PEIs that miss the 31 October deadline, or whose application is rejected, refused, or withdrawn, must enter a closing down period. These entities have one month from the trigger event (e.g., rejection date or 1 November 2025 for non-applicants) to cease RSA activities, operating only to effect an orderly shutdown.
SIGNIFICANCE:
The RSA licensing process of the HKMA looks alike to that of the VA licensing regime adopted by the SFC, starting with transitional period, provisional license, mutual and interactive communication with the applicants by the regulatory body, with assessment and final determination of license approval. It demonstrates the effectiveness of such pragmatic approach with interactive adjustment through bilateral communication and feedback, and the applicants are given the entire roadmap whether to go or to quit!
2. Itinerant Professional are allowed to stay longer each calendar year
The SFC is joining regulators across the globe to curb activities of unlawful financial influencers (“finfluencers”) who are putting millions of social media users at risk by touting financial products or services illegally. To achieve this aim, the SFC and the other members of the International Organization of Securities Commissions (“IOSCO”) are participating in the “Global Week of Action Against Unlawful Finfluencers” during the week of 2 June 20The SFC post a circular in July 2025 which enhanced measure to facilitate visiting professionals to conduct regulated activities or provide virtual asset service (VA service) in Hong Kong.
Current arrangement
visiting professionals from an overseas group company of a licensed corporation or licensed provider can choose to apply for a representative licence to be an itinerant professional (“ITP”) for providing services in Hong Kong for a short period of time each year to (a) conduct regulated activities on behalf of the licensed corporation; or (b) provide VA service on behalf of a licensed provider, under company of a licensed person at all times;
the ITPs are only allowed to stay not more than 30 days each calendar year, and the license is imposed with a condition to this effect (existing ITP condition).
Revised measure
to facilitate and provide more flexibility to visiting professionals to conduct these activities in Hong Kong, the SFC is now extending the period to 45 days each calendar year;
it should be noted that the application process, and any exemptions for ITPs remain unchanged;
the new condition of extended period is applicable to all existing licensed ITPs, and the SFC will replace their existing ITP condition with a 45-day period accordingly.
3. SFC will amend the FRR to foster market developments for OTC derivatives and other products
The SFC launched a public consultation on draft amendments to the Securities and Futures (Financial Resources) Rules (FRR) and related guidelines for implementing a set of internationally comparable capital requirements for licensed corporations (LCs) engaging in over-the-counter derivative activities (“OTCD capital requirements”)
Under the current proposal, and after a couple of consultations papers & conclusions in 2015 and 2017 respectively before, the OTCD capital requirements previously proposed have been fine-tuned with reference to recent changes to Hong Kong’s Banking (Capital) Rules and the Basel Framework.
Some key takeaways from the public consultation (please refer to original for details)
the capital requirements for inter-dealer brokers will also be significantly lowered, and the introduction of OTCD in various licenses as below with substantial reduction in capital requirements (reference to APPENDIX 2 regarding details of the proposed minimum capital requirements):
(i) LCs conducting OTCD dealing under Type 1, 2, 3 or 11 regulated activity;
(ii) LCs conducting OTCD clearing under Type 12 regulated activity;
(iii) LCs operating OTCD platform under Type 7 regulated activity;
(iv) LCs conducting OTCD advising under Type 4, 5 or 11 regulated activity;
(v) LCs conducting OTCD asset management under Type 9 regulated activity
Some major incidental and technical changes with respect to:
(i) minimum capital requirements
(ii) market risk
(iii) counterparty credit risk
(iv) sundry requirements
some substantial amendments to the Securities and Futures (Financial Resources) Rules as compared with the previous 2017 version
proposed exemption of capital requirements for centrally-cleared repurchase transactions (repos) to promote central clearing in Hong Kong and the development of the city’s inter-dealer repo market
SIGNIFICANCE:
As Dr. Eric Yip, the SFC’s Executive Director of Intermediaries, has said, “To reinforce Hong Kong’s status as an international financial centre, it is crucial to align our OTCD capital requirements with global standard.” Licensed corporations which are keen to engage in OTCD business are strongly advised to take a look and assess if they can fulfil the capital and regulatory requirements with the facilitations proposed.
4. Anti-Scam Consumer Protection Charter 3.0
The Hong Kong Monetary Authority (“HKMA”), the Securities and Futures Commission (“SFC”), the Insurance Authority (“IA”) and the Mandatory Provident Fund Schemes Authority (“MPFA”) together announced the launch of the Anti-Scam Consumer Protection Charter 3.0 (the Charter 3.0) which is fully supported by the Consumer Council, the Hong Kong Association of Banks, the Hong Kong Police Force, and the Office of the Communications Authority.
Leveraged with success of previous versions, the Charter 3.0 is enhanced in anti-scam actions by collaboration with the financial regulators, technology firms and telecommunications firms in combatting financial scams.
Six principles focused of the Anti-Scam Consumer Protection Charter 3.0 are:
(1) Reporting Functions for Users.
(2) Reporting Channels for Financial Regulators.
(3) Checking of Advertisers.
(4) Internal Monitoring Processes.
(5) Enforcement of Terms of Service,
(6) Collaboration on Public Awareness.
During the launch event, executives from various sectors engaged in productive discussion on the latest trends of financial frauds/scams and their collaborative efforts for the common purpose of combatting such frauds and scams.
SIGNIFICANCE:
Mr Eddie Yue, Chief Executive of the HKMA, said, “The fight against financial frauds and scams and to protect the public requires a united front, …. The Charter 3.0 represents a significant milestone in this endeavour, harnessing the collective strength of the financial, technology, and telecommunications industries to better safeguard the public.”
Ms Julia Leung, Chief Executive Officer of the SFC, added, “This initiative not only echoes global governments and regulators’ call to action but also positions Hong Kong as a leader in safeguarding the financial world’s digital future. Together, we are building a safer, more responsible online landscape that prioritises vigilance, collaboration, and public trust.”
And Mr Clement Cheung, Chief Executive Officer of the IA, said, “The IA will leverage on this platform to strengthen public education and empower policy holders so that they can safeguard effectively against the increasingly sophisticated plots concocted by swindlers.”
Finally, Mr Cheng Yan-chee, Managing Director of the MPFA, said, “We urge the working population to stay vigilant and join hands with us by proactively reporting suspected scams to safeguard their MPF interests.”
Though the executives represent interests in their own fields, the Charter 3.0 really achieves concerted efforts by spearheading towards a common goal of combating frauds and scams.
Market News
5. Latest SFC Report shows growing AUM and net fund inflow to Hong Kong
A growth in Hong Kong's asset and wealth management sector, as revealed in the SFC 2024 Asset and Wealth Management Activities Survey. Released on 16 July 2025, the report underscores Hong Kong's rising prominence on the global stage amid evolving market dynamics.
Hong Kong continues to solidify its position as a leading international asset and wealth management center, with assets under management (“AUM”) climbing 13% year-on-year to HK$35.1 trillion (US$4.53 trillion) by the end of 2024. This surge was fuelled by net fund inflows of HK$705 billion (US$91 billion), marking an 81% increase from the previous year.
Noteworthy Developments
Private Banking and Wealth Management Growth |
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SFC-Authorized Funds Shine |
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Fund Inflows Surge |
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Open-Ended Fund Companies (OFCs) |
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Mainland-Related Firms Thrive |
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Licensed Firms Expansion |
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Asset managers in Hong Kong are increasingly diversifying their portfolios, allocating 59% of assets outside Mainland China and Hong Kong. Non-equity investments have grown by 13 percentage points over the past five years, now comprising 59% of holdings, as firms adapt to global shifts.
These findings align with the Boston Consulting Group's (BCG) Global Wealth Report 2025, which ranks Hong Kong alongside Switzerland as one of the world's top two cross-border wealth centers. In 2024, Hong Kong achieved the highest absolute growth in cross-border wealth at US$231 billion, with a 9.6% year-on-year increase outpacing the global average. It is on track to surpass Switzerland as the leading global hub for offshore asset management by 2028.
SIGNIFICANCE:
Ms. Christina Choi, SFC's Executive Director of Investment Products, commented: "Hong Kong is gaining more clout than ever as a leading international hub for asset and wealth management, propelled by strong fund inflows, financial innovation, and a growing talent pool. The SFC is committed to supporting Hong Kong’s continued advancement as a full-service international financial centre and a leading offshore renminbi hub through fixed income and currency market developments."
The survey, which included 1,237 participating firms, covers asset management, fund advisory, private banking, private wealth management, SFC-authorized real estate investment trusts, and assets under trusts. Note that it excludes entities like single family offices, sovereign wealth funds, and government direct investments.
6. SFC hosts meeting to promote industry collaboration in Hong Kong’s digital asset sector
On 7 July 2025, the SFC held the second meeting of the Digital Asset Consultative Panel (“DACP”), highlighting progress in regulatory innovation and industry collaboration. The SFC convened the meeting with licensed virtual asset trading platforms (“VATPs”), fostering dialogue on key market and regulatory advancements in Hong Kong's digital asset sector.
Discussions centered on initiatives under Pillars A (Access) and P (Products) of the SFC’s ASPIRe roadmap, including proposals for new regulatory frameworks for virtual asset dealing and custodian providers, as well as enhancements in market accessibility and product offerings.
This engagement underscores the SFC's commitment to building a sustainable, competitive digital asset environment while prioritizing investor protection.
Pillar A (Access) | Streamline market entry through regulatory clarity |
Pillar S (Safeguards) | Optimising compliance burdens without compromising security |
Pillar P (Products) | Expand product offerings and services based on investor categorisation |
Pillar I (Infrastructure) | Modernise reporting, surveillance and cross-agency collaboration |
Pillar Re (Relationships) | Empower investors and industry through education, engagement and transparency |
SIGNIFICANCE:
Dr Eric Yip, the SFC’s Executive Director of Intermediaries and chair of the DACP, stated: “Today’s DACP meeting is constructive and insightful, underscoring the importance of engagement with licensed VATPs in nurturing a sustainable and competitive digital asset ecosystem. The SFC remains committed to maintaining global competitiveness while ensuring robust investor protection and local safeguards within the digital asset sector.”
7. HKEX launched Order Routing Service on its Integrated Fund Platform
On 3 July 2025, the SFC welcomed the rollout of HKEX's Order Routing Service on the Integrated Fund Platform (“IFP”), marking a pivotal step in enhancing Hong Kong's retail funds ecosystem. This service streamlines communication among market participants, fostering greater collaboration within the fund distribution network.
What is the Integrated Fund Platform (IFP)?
IFP is a business-to-business fund services platform developed with the support of the Hong Kong Special Administrative Region (HKSAR) Government and the SFC.
Key features and services include:
Fund Repository: An online database featuring all SFC-authorized fund products, providing transparency and helping investors make informed decisions. Launched in 13 December 2024.
Order Routing Service: Connects distributors, fund houses, and transfer agents to facilitate subscriptions and redemptions, improving operational efficiency.
Upcoming Services: Platform and Nominee Services are expected to be rolled out subject to regulatory approvals.
SIGNIFICANCE:
Ms Christina Choi, the SFC’s Executive Director of Investment Products, remarked: “By enhancing the connectivity between various market participants, the Order Routing Service can help significantly improve the efficiencies of the fund distribution ecosystem. This is expected to contribute to cost optimisation in the fund sales chain, which will also strengthen the overall competitiveness of the Hong Kong retail funds market.”
The SFC expressed gratitude for industry support and pledged ongoing collaboration with HKEX and stakeholders to ensure the IFP's full implementation.
Enforcement News
8. SFC and ICAC Launch Joint Operation "Leverage" Against Suspected Market Manipulation Syndicate
On 25 July 2025, the SFC and Independent Commission Against Corruption (“ICAC”) announced the results of a joint operation conducted on July 23, codenamed "Leverage" targeting a sophisticated syndicate accused of manipulating shares of a listed company and engaging in corrupt practices. The operation involved searches at 14 locations, including the listed company's offices and SFC-licensed brokers.
Key details from the investigation include:
Arrests: The ICAC arrested a former chairman and a former executive director of the listed company under the Prevention of Bribery Ordinance.
Alleged Scheme: The syndicate is suspected of using false documents, such as internal records and public announcements, to fabricate a share subscription agreement and joint venture with a Mainland company worth over HK$20 million. They allegedly created a false market appearance through nominee accounts.
Additional Misconduct: The former executive director, who was also a responsible officer and director of a broker, is accused of accepting advantages from the former chairman and misappropriating client shares valued at approximately HK$9 million.
Detection and Collaboration: The SFC initially identified suspicious trading, referring corruption aspects to the ICAC while handling market misconduct under the Securities and Futures Ordinance (“SFO”). The operation follows the Memorandum of Understanding between the SFC and ICAC.
SIGNIFICANCE:
The listed company's shares have been suspended since March 2025 due to a court-ordered liquidation. Suspected offenses include bribery, using false documents, handling proceeds of crime under the Organized and Serious Crimes Ordinance, and market manipulation under the SFO.
9. The court-appointed administrator distributed $19 million in assets to clients of Hong Kong Wan Kiu Investment
On 23 July 2025, the SFC reported that court-appointed administrators have distributed around $19 million worth of assets as compensation to impacted clients of Hong Kong Wan Kiu Investment Company Limited (“HKWK”), a corporation licensed by the SFC for Type 1 regulated activity. This distribution, completed this month, follows the Court of First Instance's approval in January 2025 and stems from final court orders granted in November 2022 under section 213 of the Securities and Futures Ordinance (SFO).
HKWK investigation Case Recap
The SFC's actions originated from an investigation uncovering financial irregularities at HKWK. Findings revealed that HKWK and its sole director and shareholder, Connie Sham Khi Rose, had unauthorizedly sold client securities, misappropriated proceeds totalling about $58 million between 2011 and 2019, and falsified statements to hide the activities. The case was referred to the Police, leading to criminal prosecution by the Department of Justice.
In the High Court, Sham, aged 88, pleaded guilty and was sentenced on 3 July 2025, to 160 hours of community service, considering her remorse and personal compensation efforts via family and friends.
The court orders included a restoration directive for clients and the appointment of administrators—Mr Fok Hei Yu and Mr Chow Wai Shing Daniel of FTI Consulting (Hong Kong) Limited—to recover and manage HKWK's assets. HKWK's license for Type 1 regulated activity (dealing in securities) was revoked in March 2024.
SIGNIFICANCE:
Prior steps included a restriction notice in November 2019 prohibiting HKWK's operations and asset dealings, followed by an interim injunction in February 2020 to freeze assets.
Mr Christopher Wilson, SFC’s Executive Director of Enforcement, stated: “The SFC is firmly committed to safeguarding market integrity and protecting investors. The actions taken by the SFC in this case highlights the SFC’s strong stance against dishonest practices by intermediaries and its dedication to maintaining public trust in the financial markets.”
10. MMT Rules Former Dan Form Company Secretary and Associate Guilty of Insider Dealing
On 17 July 2025, the Market Misconduct Tribunal (“MMT”) determined that Ms Cynthia Chen Si Ying, ex-company secretary of Dan Form (now Asiasec Properties Limited) (HKEX: 00271), and her Mainland associate, Mr Wen Lide, engaged in insider dealing related to the company's shares. The tribunal ordered them to disgorge over $1 million in illicit profits and imposed additional sanctions.
Case Recap:
The case revolves around inside information about the sale of Dan Form's controlling stake. On 22 September 2016, Dan Form, Tian An China Investments Company Limited, and its subsidiary Autobest Holdings Limited announced a conditional agreement for Autobest to acquire 36.45% of Dan Form’s shares from then-chairman Mr Dai Xiaoming at $2.75 per share.
Key findings:
Chen possessed the inside information by 2 September 2016, and disclosed it to Wen, knowing he might use it for trading.
Wen, aware of the information, purchased 1,250,000 Dan Form shares between September 5 and 19, 2016, via his Shenwan Hongyuan Securities account, plus 250,000 shares on September 6 and 50,000 on September 12 through his and his wife's accounts at Grand Investment (Securities) Limited.
Chen had an interest in Wen’s dealings through the Shenwan Hongyuan account.
The MMT deemed Chen’s actions particularly grave due to her role as company secretary, her managerial responsibilities entrusted by Dai, her encouragement of Wen’s trades, and efforts to obscure profits via layered accounts.
Sanctions imposed:
Chen and Wen to jointly disgorge $794,347; Wen to disgorge an additional $206,067, plus compound interest from October 26, 2016.
Four-year disqualification for Chen from managing Asiasec or any listed Hong Kong corporation without court approval; recommendation for disciplinary action by the Hong Kong Chartered Governance Institute.
Four-year cold shoulder orders banning both from dealing in Hong Kong securities, futures, leveraged forex, or collective schemes.
Cease and desist orders against future market misconduct.
Payment of government and SFC costs.
For prior context, see SFC press releases from 23 April 2024, and 21 January 2025.
[End of ComplianceOne Newsletter – July 2025]
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