證監會對期貨經紀行的新風險管理指引即將於2024年2月25日起生效，我們準備了以下快速指南以方便期貨經紀行能快速理解是次指引的重點及待辦事項。 適用於從事期貨合約交易持牌人的風險管理指引 (快速指南) [Feb 2024] A. 引言 1. 證券及期貨事務監察委員會（證監會）根據《證券及期貨條例》第 399 條於2023年8月25日發表了《適用於從事期貨合約交易的持牌人的風險管理指引》（下文簡稱“ 指引 ”）的諮詢總結，其旨在對適用於從事期貨合約交易的持牌人的現行監控規定作出補充。 2. 指引應與適用於期貨經紀行 [ 第 2 類受規管活動（期貨合約交易）持牌人] 的所有相關法律、法例、守則、規例或其他指引一併閱讀，並在不損害該等法律、法例、守則、規例或其他指引的原則下應用。 3. 指引於 2024年2月25日起生效 ，而 其後起計 12 個月的期間內為 過渡期的安排 。 過渡期的安排主是要給予期貨經紀行額外時間去完成相關系統的開發，例如： (a) 將客戶風險限額納入其風險管理系統、交易指示管理系統或交易平台之內，以識別或防止任何風險限額被突破；及 (b) 採用的假設的壓力情境應包括該行或其客戶交易的期貨合約出現極端但可能發生的價格變動或波幅變化的情境等。 如期貨經紀行未能於 2024年2月25日前 完成相關系統的開發便應採取其他臨時補償措施 (可參考以下列表的“參考 / 補償措施”一欄），這些措施可包括以人手方式監察風險限額的遵守情況，及使用審慎的簡化壓力情境來進行壓力測試以符合以上(a)或(b)所述的規定的風險管理目的等等。 我們準備了以下清單列表以方便期貨經紀行能快速理解是次指引的重點及待辦事項，建議期貨經紀行可根據以下清單去檢查是否已完成證監會最新的風險管理指引要求。我們以 藍色及底線標示的為是次證監會新指引中的重要項目及重點 ，需要特別關注。若期貨經紀尚未完成相關的待辦事項，便應從速處理並落實執行。 另外，由於指引較為繁複，且某些詞匯的定義亦必須參考回指引，我們亦建議客戶細閱指引原稿以作更深入的了解。 4. 我們準備了以下清單列表以方便期貨經紀行能快速理解是次指引的重點及待辦事項，建議期貨經紀行可根據以下清單去檢查是否已完成證監會最新的風險管理指引要求。我們以 藍色及底線標示的為是次證監會新指引中的重要項目及重點 ，需要特別關注。若期貨經紀尚未完成相關的待辦事項，便應從速處理並落實執行。 另外，由於指引較為繁複，且某些詞匯的定義亦必須參考回指引，我們亦建議客戶細閱指引原稿以作更深入的了解。 B. 定義 “指引” 指證監會於2023年8月發出的 《適用於從事期貨合約交易的持牌人的風險管理指引》。 “關連客戶組別” 根據 指引 中第20段註釋1的(a)至(f)的定義。 “聯屬客戶” 指與該期貨經紀行屬同一公司集團之內的任何公司。 “優惠保證金待遇” 指期貨經紀行與客戶之間就期貨合約作出的一種安排， 如客戶符合執行或結算有關期貨合約的交易所或結算所的規則所訂明的資格準則，則客戶無須遵守該等規則所訂明的預繳抵押品規定。 “資金流動性風險” 指期貨經紀行在某期貨合約到期時未能履行其在該合約下的財務責任的風險。 “保證金短欠＂ 指當客戶帳戶的權益淨額結餘低於期貨經紀行就有關帳戶內的未平倉持倉而設定的保證金規定時，便產生“保證金短欠＂。 “權益淨額結餘” 指在該帳戶內持有的抵押品、在該帳戶內的未平倉持倉的浮動利潤及記入該帳戶內的收入的總和，減去在該帳戶內的未平倉持倉的浮動虧損及從該帳戶扣除的費用、佣金、徵費及其他收費。 “貫徹符合保證金規定” 指有關客戶在下列期間: (a) （如有關帳戶開立達一年或以上）最近至少一年的期間內; 或 (b) （如有關帳戶開立少於一年）自帳戶開立日期起計，並至少三個月的期間內; 並無不符合保證金規定、被強制平倉或遭退回支票的紀錄。 “客戶保證金短欠數額” 指客戶分類帳內該帳戶的期貨合約買賣所須的保證金金額中，超出該帳戶內權益淨額結餘的數額。 “速動資金盈餘” 指根據《財政資源規則》，其速動資金減去規定速動資金後的數額。 “客戶分類帳” 指就“期交所交易”及“非期交所交易＂設有獨立分類帳的規定 “可用資金” 指由該行實益擁有的沒有產權負擔現金與其分配作期貨合約交易用途的未提取銀行信貸額的總和。 “ 量化基準 ” 設定為該行的速動資金盈餘與可用資金中較高者的 50% “超蝕款項” 指一個客戶帳戶的交易虧損超逾該帳戶的權益淨額結餘的任何金額。 “預計超蝕款項” 就某客戶帳戶而言，指任何預計虧損超逾該帳戶的權益淨額結餘的金額。 C. 清單列表 類別 指引下期貨經紀行應具備的政策/ 待辦事項清單 Checkbox 備註 參考 / 補償措施 1. 自營買賣及客戶買賣期貨合約所產生的風險管理 (1) 應建立有效的風險管治框架，以管理其本身及其客戶所承擔的風險，應將風險管理責任授予具備經驗及專業知識且擁有足夠權限以 實施政策及程序 的高級管理層。 ☐ 應確保其風險胃納及風險限額與其策略目標相符並與其財政及管理能力相稱。 (2) 就(1)的政策及程序實施持續風險監察、監控和匯報。 ☐ 須要制定風險限額及偏離 (deviation policy)的政策和匯報程序。 (3) 就(1)的政策及程序進行壓力測試及實施應變計劃。 ☐ 須要考慮如何建立/設計切實並可行的壓力測試場境及相關條件。 2. 市場價格水平或波幅出現不利變動而招致損失的風險（ 只適用於有參與自營買賣的期貨經紀行 ） (1) 確保期貨合約的自營買賣持倉均應以實時方式按市值計算。 ☐ 自營買賣持倉的日終重新估值應以獨立於前線部門的來源取得或經獨立核實的資料來源。 (2) 應定期將估計的自營買賣持倉的 實際及假設回報進行比較 。 ☐ 當發現估值誤差時須要進行調查及檢討 。 (3) 釐定與其財政及管理能力相稱且審慎的市場風險限額。 ☐ 採用的市場風險限額必須獲得其高級管理層及董事會妥為批准，出現違反限額的情況時應予及時上報。 3. 商品期貨買賣風險 (1) 備存獲得其高級管理層批准的一份＂ 其可 交易的商品期貨清單 ＂。 ☐ 當交易的商品期貨須要以實物交收時，須先制定／計劃清楚所附帶的運送，存倉及交付安排。 4. 客戶信貸風險 (1) 以單一客戶而言 ，為每名客戶制定審慎的交易限額及持倉限額； (2) 以每個關連客戶組別而言 ，從整體角度顧及該組別內所有客戶而設的合計基準風險限額，期貨經紀行可參考指引中第21段(c)的風險項目。 ☐ 言 ，為每名客戶制定審慎的交易限額及持交易限額及持 ☐ 設定(1)、(2)條件的目的在於防止任何違反適用的法定或監管持倉限額（如結算代理人或交易所的持倉限額）。 (3) 需設有識別關連客戶組別的措施，及評估相關組別的財務及信貸資料， 特別是如何識別相關帳戶的實益擁有人。 ☐ 為確定兩名或以上屬自然人（配偶除外）的客戶是否屬某個關連客戶組別， 期貨經紀行無須主動查核該等客戶的帳戶的實益擁有人 ，但當有跡象顯示某客戶並非為其本身行事時，便應作出適當查詢。 (1) 以聯屬客戶而言 ，須要考慮的風險項目與(1)、(2)類別大致相同，詳情可參考指引中的第22段(c) 。 ☐ 定期檢視該聯屬客戶及時向該期貨經紀行履行交收責任的能力，包括其交易模式，風險胃納給管理政策，財務狀況及分配作期貨合約交易用途的資金資源等。 5. 收取客戶基本保證金 (1) 除非客戶已提供充足的抵押品以符合其保證金規定，否則不應為該客戶買賣期貨合約。 (2) 對客戶施加保證金規定（可能包括開倉保證金規定及維持保證金規定） 不得低於其對手方所設定的金額 ， 不應向任何客戶授出任何信貸融通 或貸款或作出任何其他安排，以便任何客戶得以符合保證金規定。(例如，期貨經紀行不應向其聯繫公司提供財政支持，以便後者向該行的客戶授出信貸融通的安排。) ☐ 已提供充足的抵押品以符合其保證金規定，否則不應為該客戶買賣期則不應為該客 ☐ 施加保證金規定（可能包括開倉保證金規定及維持保證金規定） 不得低於其對手方所設定的金額 ， 不應向任何客戶授出任何信貸融通 或貸款或作出任何其他安排，以便任何客戶得以符合保證金規定。(例如，期貨經紀行不應向其聯繫公司提供財政支持，以便後者向該行的客戶授出信貸融通的安排。) i. 享有優惠保證金的客戶除外； ii. 期貨經紀行經考慮客戶及其自身的情況後，可向客戶施加較其對手方 (或交易所) 所設定的金額為高的保證金規定。 (3) 制定特殊保證金安排 ，以紓減因市場波動及公眾假期情況而可能引致的客戶信貸及資金流動性風險。 ☐ 可不時按市場情況暫時調高保證金規定或在公眾假期前席收取額外保證金。 6. 客戶出現保證金短欠 (1) 就以香港為基地的客戶而言，在發出追繳保證金通知起計 一個營業日內 向客戶收取任何到期應付的保證金數額； (2) 向每名客戶發出的追繳保證金通知備存詳細的紀錄，當中包括每項追繳保證金通知涉及的金額及發出的時間； (3) 嚴格執行其保證金和強制平倉的政策及程序。 ☐ 客戶而言，在發出追繳保證金通知起計 一個營業日內 向客戶收取任何到期應付的保到期應付的保到期應付的 ☐ 追繳保證金通知備存詳細的紀錄，當中包括每項追繳保證金通知涉及的金額及發出的金額及發出的金額及發 ☐ i. 須保存記錄關於客戶的回應和清繳詳情，以及就未清繳追繳保證金所採取的任何跟進行動。 ii. 評估在上一次向其客戶發出追繳保證金通知和下一次發出追繳保證金通知 之間的期間內的風險承擔 。 根據證監會諮詢總結第13段， 期貨經紀行要求在授出寬免方面享有較大的靈活性，證監會已修改了《指引》， 將焦點集中於所授出的寬免是否適當之上。 (4) 高級管理層須具有適當的充分理由，包括批准人 合理地信納有關偏離或寬免不會影響期貨經紀行的財務穩健性( 例如，在《財政資源規則》下的速動資金規定)，否則不應授予批准。 ☐ 當出現以下情況須取得高級管理層的批核 -偏離該政策的情況； -對追繳保證金或強制平倉的寬免。 具體而言，對於偏離或寬免期貨經紀行的保證金及強制平倉政策的情況，除非高級管理層具有適當的充分理由， 否則不應授予批准。 7. 給予優惠保證金待遇予客戶 (1) 如符合下列要求，期貨經紀行可就某客戶在期貨市場進行的買賣給予優惠保證金待遇 ： i. 該客戶有 貫徹符合保證金規定的紀錄 ，並維持著穩健的財務狀況，以及符合相關交易所或結算所的規則下就優惠保證金待遇所訂明的資格準則； ii. 期貨經紀行嚴格遵守該交易所或結算所規則中的所有要求； iii. 期貨經紀行具備充足的流動資金及財政能力， 以符合其對手方就所有獲得優惠保證金待遇的客戶的期貨合約買賣所施加的保證金規定。 備註: “ 貫徹符合保證金規定 ”指有關客戶在最近至少一年的期間內；或自帳戶開立日期起計， 並至少三個月的期間內，並無不符合保證金規定、被強制平倉或遭退回支票的紀錄。 (1) 如符合下列要求，期貨經紀行可就某客戶在期貨市場進行的買賣給予優惠保證金待遇惠保證金 ☐ 如符合下列要求，期貨經紀行可就某客戶在期貨市場進行的買賣給予優惠保證金待遇惠保證金 如符合 下列要求，期貨經紀行可就貨經紀行可紀行可就貨經紀 ☐ 當市況出現大波動， 享有優惠保證金優惠的 優惠的客戶出 ☐ 當市況出現大波動， 享有優惠保證金優惠的客戶出現追加保證金時的處理方案。 (2) 以個別客戶而言， 為每名獲得優惠保證金待遇的客戶訂立一個審慎的交易限額 。期貨經紀行應充分考慮其財政能力及該客戶的具體情況， 並避免訂立過高的交易限額 。 ☐ 定期檢視獲得優惠保證金待遇的客戶的財務狀況、清繳紀錄、投資目標、風險胃納和交易模式或策略; 以釐定相稱的交易限額。 (3) 當 客戶分類帳 內出現“客戶保證金短欠數額”須要計算時， 可參照以下其中一項： i. 存放於其對手方的保證金總額；或 ii. 客戶須存放於該經紀行的保證金總額。 ☐ 如期貨市場的某個交易時段的 交易時間跨越該交易日的午夜 ，期貨經紀行便無須將在該交易時段內的期貨合約買賣計算在內。 (4) 期貨經紀行應計算截至每個交易日結束時所有獲得優惠保證金待遇的客戶的分類帳內的客戶保證金短欠數額的總額，及將該總額與量化基準 （ 設定為該行的速動資金盈餘與可用資金中較高者的50%）進行比較。當發現超出量化基準時， 應確保不會出現過度風險承擔及採取及時及適當的行動，並在下一個交易日及時向證監會作出匯報。 ☐ 期貨經紀行應具備充足的速動資金盈餘與可用資金，並衡量其可承受的風險，及其對財政能力的影響。可使用 i. 其最近期的速動資金盈餘或可用資金的金額；或 ii. 其在向證監會提交的最近期的財務申報表中所匯報的速動資金盈餘或可用資金的金額，以進行(4)的比較。 跟據證監會諮詢總結第15段， 證監會不會強制規定超逾該限額的期貨經紀行須在下一個交易日糾正有關情況，但它們仍須及時向證監會作出匯報。 8. 資金流動性風險 (1) 應實施相應措施審慎管理現金流，及確保其持有的客戶款項或抵押品具備充足的流動性，以代表客戶為期貨合約買賣符合其對手方的保證金規定。 ☐ 具備可行的壓力測試環境； 在某些情況下，期貨經紀行或許未能在限期前履行其對手方就有關期貨合約發出的追繳保證金通知，原因可能是相關客戶沒有及時履行該行的追繳保證金通知 (例如本地農歷新年假期間)，以及該行並無充足資金代該客戶清繳該追繳保證金。 (2) 應定期評估其在承受影響全個市場的壓力或影響特殊情況的壓力時的流動資金需要，及 制定適當的緊急融資方案 。 ☐ (3) 在緊急情況下如何可獲取足夠的新資金，應 避免依賴單一資金來源 。 ☐ 9. 委聘執行或結算代理人為客戶執行或結算期貨合約 (1) 制定書面政策及程序，以確保該行及其客戶對該代理人的風險承擔獲得妥善管理； ☐ 有關建議沒有規定期貨經紀行必須與後備代理人訂立正式協議或開立帳戶， 與該候選代理人就後備安排確立和維持相互諒解便已足夠。 就客戶保證金溢差(client margin excess)的建議限額及分隔規定(segragation requirements)所識別出的實際問題 (2) 在該代理人並非持牌法團、註冊機構、認可交易所的交易所參與者或認可結算所的結算所參與者的情況下，須定期對該代理人進行盡職審查覆核並評估該代理人的能力； ☐ 期貨經紀行可以設下一個特定時段（例如一個月以25個交易天為樣本），估算主要活躍客戶在這個時段內的平均交易量和平均持倉量的保證金要求，並以此作為參考標記。 (3) 實施適當的安排和後備措施，物色至少一名後備執行或結算代理人的候選人 ，並盡可能就後備安排與該候選人確立和維持相互諒解或正式協議。 ☐ 並根據此參考標記的成交量和持倉量的波動情況，設定上下120%-80%的緩衝區。 當存放於結算代理人的客戶保證金超出參考標記的120%時，期貨經紀行向結算代理人執行提取超額的保證金。如果保證金低於 80%時，則可向結算代理人存入額外保證金以維持至 100% 的平均水平（參考標記），以方便客戶隨時建立任何新倉的保證金要求。 10. 因委聘執行或結算代理人而產生保障客戶資產風險 (1) 應確保在其於對手方開立的帳戶內，客戶的期貨合約持倉及該等持倉的相關保證金是與期貨經紀行自營買賣持倉及該等持倉的相關 保證金分開記帳的; ☐ 自營資金與客戶資金必須完全分隔。 (2) 不應使用屬於某客戶的資產為另一客戶的交易提供保證或進行交收; ☐ 某客戶帳戶的資產 不能被用於抵銷 或清繳另一客戶帳戶的“超蝕款”。 (3) 當期貨經紀行在於某對手方（代理人）開立的綜合帳戶內持有客戶持倉及資產，便應採取合理步驟， 防止屬於某客戶帳戶的資產被用於抵銷或清繳另一客戶帳戶的“超蝕款項” 。 ☐ (4) 若出現以上(3)的情況，應盡快將其收到用來清繳出現超蝕款項的客戶帳戶的追繳保證金的任何資產， 以及一筆數額相等於上述追繳保證金尚未獲清繳的金額的自身現金 ，存入該綜合帳戶或指定的信託銀行帳戶或獨立帳戶內， 以彌補因該抵銷而令其他客戶帳戶的資產出現的短欠。 ☐ 使用自身資金時， 須要計算速動資金盈餘或可用資金的金額。 11. 進行壓力測試環境下所產生的潛在虧損風險 (1) 制定妥善的壓力測試政策及程序，清楚地列明壓力測試的方法和頻密程度，以及檢討和匯報機制。這些政策及程序應獲高級管理層批准。 (2) 自行進行壓力測試應至少每周及在市況波動時進行壓力測試 。 特別安排： (3) 若客戶屬i. 持牌法團，ii. 註冊機構；或iii. 在香港以外地方的期貨交易商，其帳戶內的持倉是由該金融機構代其客戶持有的， 可將該帳戶內的任何持倉排除在根據本“指引”進行的壓力測試的範圍之外。 ☐ 的壓力測試政策及程序，清楚地列明壓力測試的方法和頻密程度，以及檢討和匯報機制。這些政策及程序應獲高級管理層批 准。 獲高級管理層批 ☐ 行壓力測試應至少每周及在市況波動時進行壓力測試 。 波動時進行壓力動時進行壓力 ☐ i. 應採用與其自營或其客戶買賣的產品的風險特性相稱的適當壓力測試方法。 ii. 預計 每個客戶帳戶 在 該壓力測試假設的壓力情境（假設的壓力情境）下可能產生的虧損金額（預計虧損）， 並估計 客戶帳戶的大額 預計超蝕款項 對期貨經紀行的速動資金盈餘及可用資金造成的影響。 iii. 預計期貨經紀行的 自營買賣持倉 在該假設的壓力情境下可能引致的交易虧損及追繳保證金金額， 並估計該等預計交易虧損及追繳保證金的總額 對其速動資金盈餘及可用資金造成的影響。 當擬備本“指引”時， 壓力測試中採用的假設的壓力情境在期交所買賣的指數期權的相關價格變動 被假設為±20%。 (4) 在其 壓力測試中採用的假設的壓力情境 應包括該行或其客戶交易的期貨合約 出現極端但可能發生的價格變動或波幅變化(期權合約的持倉)的情境， 並應參考或基於下列因素來釐定有關情境： i. 過去的期貨市場受壓事件；及 ii. 其對潛在且令期貨合約的價格或波幅產生重大影響的風險所作出的評估。 (4) 在其 壓力測試中採用的假設的壓力情境 應包括該行或其客戶交易的期貨合約 出現極端但可能發生的價格變動或波幅變化(期權合約的持倉)的情境， 並應參考或基於下列因素來釐定下列因素來 ☐ 去的期貨市場受貨市壓事件；及 ☐ 若期貨經紀行為某交易所或結算所的會員或參與者 ， 便應確保為在該交易所或結算所買賣或結算的期貨合約持倉進行的壓力測試所採用的 假設的壓力情境， 至少與該交易所或結算所為其會員或參與者指明或建議的假設的壓力情境同等嚴謹。 期貨經紀行在預計虧損應出現極端但可能發生的價格變動或波幅變化的假設來進行估算，或以 “替代方案”假設為相等於期貨經紀行的對手方所設定的保證金規定的 200%。 (5) 在 集團層面集中進行的壓力測試 : i. 已考慮到該期貨經紀行的風險承擔及財務狀況，並適當地預計壓力情境對該行的速動資金盈餘及可用資金造成的影響； ii. 採用的方式與自行進行壓力測試所載列的規定大致上一致或在嚴謹程度上高於該等規定； iii. 在證監會提出要求時，向該會提交有關其集團層面壓力測試的報告。 (5) 在 集團層面集中 (5) 在 ☐ 考慮到該期貨經紀行的風險承擔及財務狀況，並適當地預計壓力情境對該行的速動資金盈餘及可用資金 ☐ 用的方式與自行進行壓力測試所載列的規定大致上一致或在嚴謹程度上高一致或在嚴謹程 ☐ (6) 及時和勤勉盡責地評估壓力測試結果，以識別任何對其財政穩健性構成的潛在威脅 ，以及採取及時的跟進行動。進行評估的最低要求： a. 將客戶帳戶的預計虧損總額及自營帳戶的預計交易虧損總額 與過往的壓力測試結果進行比較 ， 並識別： i. 預計超蝕款項超逾該行的速動資金盈餘或可用資金的30% 的任何客戶或關連客戶組別； ii. 該行認為 使其承擔過高風險 的任何其他客戶或關連客戶組別； b. 評估該行的速動資金盈餘或可用資金是否足以承受帳戶內有著最大金額的預計超蝕款項的兩個客戶或關連客戶組別的預計超蝕款項造成的綜合影響。 特別安排： 根據以上(6)的條件， 具有貫徹符合保證金規定的紀錄或維持著相對其投資組合及交易規模而言屬穩健的財務狀況的客戶或關連客戶組別 可被排除在外。 (6) 及時和勤勉盡責地評估壓力測試結果，以識別任何對其財政穩健性構成的潛在威脅 ，以及採取及 以及採取及 及 以及採取及 及 以及採 ☐ 戶帳戶的預計虧損總額及自營帳戶的預計交易虧損總額 與過往的壓力測試結果進行比較 ， 並識結果進行比 ☐ 計超蝕款項超逾該行的速動資金盈餘或可用資金的30% 的任何客戶或關任何客戶或關 ☐ 行認為使其承擔過高風險的任何其他客戶或關其他客戶或關 ☐ (7) 當在壓力測試下可能出現威脅時的應變措施: i. 採取及時和有效的跟進行動，例如調整其風險管理措施； ii. 擬備詳細的應變計劃，以免在市場受壓的情況下出現交收失敗、無力償債；或 iii. 避免違反《財政資源規則》下的最低速動資金規定的情況 。 (7) 當在壓力測試下可能出現威脅時的出現威脅時的 ☐ 取及時和有效的跟進行動，例如調整其風險管理措 ☐ 備詳細的應變計劃，以免在市場受壓的情況下出現交收壓的情況下出現交收 ☐ 免違反《財政資源規則》下的最低速動資金規定的情況 。 應確保應變計劃採用的假設能切合付諸實行。 (8) 壓力測試的文檔記錄包括： i. 所進行的每個壓力測試的詳情，包括該壓力測試所採用的方法、數據來源、數據紀錄、假設和假設的壓力情境； ii. 每個壓力測試的結果，包括但不限於每個客戶帳戶的預計虧損金額及預計超蝕款項，及其每個自營帳戶的預計交易虧損； iii. 就壓力測試結果進行的評估的結果；及 iv. 就評估結果採取的任何跟進行動。 (8) 壓力測試的文 (8) 壓力測試的文 ☐ 進行的每個壓力測試的詳情，包括該壓力測試所採用的方法、數據來源、數據紀錄、假設和假據紀錄、假設和假 ☐ 個壓力測試的結果，包括但不限於每個客戶帳戶的預計虧損金額及預計超蝕款項，及其每個自營帳戶的計交易易 ☐ 壓力測試結果壓力測試結果壓力測 ☐ 評估結果採取的任何跟進行動。 12. 風險披露及聲明 期貨經紀行應在客戶協議內披露以下重要事項： (1) 期貨經紀行 就其代理人之綜合帳戶內持有的客戶資產 而向有關客戶負上法律責任的範圍，及客戶在綜合帳戶內的資產的權利； (2) 客戶享有其對持有在期貨經紀行於 某結算所開立的綜合帳戶 內的資產的權利； (3) 為客戶提供在香港以外地方的期貨市場買賣或結算服務時， 其海外對手方及該期貨市場不受證監會所規管及可能受到有別於《證券及期貨條例》及據此訂立的規則和規例的法律及規例所規管，而因此 客戶在海外進行交易所存放款項可能無法享有在香港期貨市場進行交易所獲賦予的相同保障。 期貨經紀行應在客戶協議內披露以下重要披露以下重要 ☐ 貨經紀行 就其代理人之綜合帳戶內持有的客戶資產 而向有關客戶負上法律責任的範圍，及客戶在戶負上法律責任的範圍 ☐ 戶享有其對持有在期貨經紀行於 某結算所開立的綜合帳戶 內的資產的權 ☐ 客戶提供在香港以外地方的期貨市場買賣或結算服務時， 其海外對手方及該期貨市場不受證監會所規管及可能受到有別於《證券及期貨條例》及據此訂立的規則和規例的法律及規例所規管，而因此 客戶在海外進行交易所存放款項可能無法享有在香港期貨市場進行交易所獲賦予的相同保障。 13. 通知規定 (1) 當察覺到任何以下事宜起的 一個營業日內給予證監會書面通知 ： i. 每個交易日結束時所有獲得 優惠保證金待遇 的客戶的分類帳內的 客戶保證金短欠 數額的總額， 超逾量化基準 （設定為該行的速動資金盈餘與可用資金中較高者的50%）; ii. 在期貨經紀行及時和勤勉盡責地評估壓力測試結果時，所識別“超逾該行的速動資金盈餘或可用資金的30%”的任何客戶或關連客戶組別可能無法清繳其預計超蝕款項； iii. 該行的速動資金盈餘或可用資金將不足以承受最大金額的預計超蝕款項的兩個客戶或關連客戶組別的預計超蝕款項，及該行自營帳戶的預計交易虧損； iv. 該行無法或將無法履行任何對手方發出的任何追繳保證金通知。 (1) 當察覺到任何以下事宜起的 一個營業日內給予證監會書日內給予證監 ☐ 個交易日結束時所有獲得 優惠保證金待遇 的客戶的分類帳內的 客戶保證金短欠 數額的總額， 超逾量化基準 （設定為該行的速動資金盈餘與可用資金中較高可用資金中較高 ☐ 期貨經紀行及時和勤勉盡責地評估壓力測試結果時，所識別“超逾該行的速動資金盈餘或可用資金的30%”的任何客戶或關連客戶組別可可用資金中較高可用資金中較高 ☐ 行的速動資金盈餘或可用資金將不足以承受最大金額的預計超蝕款項的兩個客戶或關連客戶組別的預計超蝕款項，及該行自營帳戶的預計可用資金中較高 ☐ 行無法或將無法履行任何對手方發出的任何追繳保證金通知。 (2) 當出現以上(1)的情況向證監會提交通知時， 須要列明有關事宜的全部詳情， 包括: i. 超逾基準的原因及就享有優惠保證金待遇的客戶持倉而承擔的風險； ii. 根據以上(1)情況的相關壓力測試結果，及該等客戶或關連客戶組別在出現該等預計超蝕款項時是否有能力清繳該等虧損進行的相關評估結果；及 iii. 已採取、正採取或將採取的任何風險紓減措施，以減低就享有優惠保證金待遇的客戶持倉而承擔的任何過高風險； iv. 已採取、正採取或將採取的任何跟進行動，以防止出現交收失敗或違反《財政資源規則》下最低速動資金規定的情況； v. 無法或將無法履行任何對手方發出的任何追繳保證金通知的理由， 以及其為糾正或防止有關無法履行有關追繳保證金通知的情況而已採取、正採取或將採取的任何措施。 (2) 當出現以上(1)的情況向證監會提交通知時， 須要列明有關事宜的全部詳 可用資金中較高 ☐ 逾基準的原因及就享有優惠保證金可用資金中較高可用資金中較高 ☐ 據以上(1)情況的相關壓力測試結果，及該等客戶或關連客戶組別在出現該等預計超蝕款項時是否有能力清繳該等虧損進行的相關評估結損進行的相關 ☐ 採取、正採取或將採取的任何風險紓減措施，以減低就享有優惠保證金待遇的客戶持倉而承擔的可用資金中較高 ☐ 中較高可用資金中較高可用資金中較高可用資金中較高可用資金中較高可用資金中較高可用資金中較高用資金中較 ☐ 法或將無法履行任何對手方發出的任何追繳保證金通知的理由， 以及其為糾正或防止有關無法履行有關追繳保證金通知的情況而已採取、正採取或將採取的任何措施。

天匯合規的聯營公司 億東金融科技有限公司 本年已正式推出東查查反洗錢客戶管理系統 (Screen-X AML/CRM Solutions)。 ComplianceOne Fintech Solutions - Screen-X AML/CRM Solutions 天匯合規金融科技解決方案 – 東查查反洗錢/客戶管理系統 天匯合規的聯營公司 億東金融科技有限公司 本年已正式推出東查查反洗錢/客戶管理系統 (Screen-X AML/CRM Solutions)。 憑藉 天匯合規 在監管合規和資訊科技領域的豐富經驗，我們透徹地了解香港、大灣區、以至全球金融監管的框架，專注為受監管的金融機構和企業提供合規科技解決方案，深入了解監管政策和行業痛點，因此，我們研發了 東查查 ，務求為金融機構提供 全自動化的反洗錢系統 ，以符合監管機構的要求，並協助金融機構 在營運上減低合規風險及提升營運的效率 。 東查查反洗錢/客戶管理系統集 認識你的客戶及客戶盡職審查 、 風險評估 、 持續監察 、 備存紀錄 等功能於一身，為您的合規工作護航，以下會詳細說明。 1. 認識你的客戶及客戶盡職審查 東查查可快速完成客戶身份驗證，包括個人和法人（公司）客戶。系統支持多種身份證件驗證，如身份證、護照、營業執照等，並可自動與國內外公開資料庫進行比對，有效降低KYC過程中的人工核查成本。 2. 客戶風險評估 東查查配備風險評估功能，根據客戶背景、行為、交易等多維度數據，自動計算客戶風險，並針對不同風險級別設定持續監察頻率，幫助您更好地管控合規風險。 3. 持續監察 東查查可設定持續監控客戶的交易活動，實時捕捉可疑交易。同時也能定期審查客戶資料，確保與實際活動保持一致。若客戶的交易模式突然變化或與其聲稱的業務模式不符，會建議進行進一步調查。 4. 備存紀錄 東查查提供客戶管理功能，能協助用戶備存必要的記錄和文件，以便日後監管審查和調查。我們採用嚴格加密及系統安全措施，例如︰數據儲存於阿里雲﹑對數據庫的數據進行加密﹑登錄加密﹑每天備份﹑接口加密，以保護極度敏感的客戶數據免受未經授權的訪問，及確保信息的機密性和完整性。 客戶反饋例 資產管理公司 東查查能準確識別高風險客戶，提供的分析報告也清楚易明，減省了大量人工審查的時間，令同事的工作變得更高效，提升了工作效能。 信託或公司服務提供者（TCSP） 公司一直非常重視反洗錢合規管理，但隨著業務快速增長，傳統的人工盡職調查已難以滿足需求。東查查的價格相宜，可以在網上自行完成購買和使用，操作非常簡便快捷。系統的客戶盡職審查和風險評估功能，大幅提升了我們的工作效率，同時又能確保合規風險的有效管控。 東查查的數據庫供應商介紹 Acuris 自2015年的收購提供了獨特的合規數據集和全球運力 作為擁有專屬的政治公眾人物 (PEPs)、制裁和負面新聞的數據提供者 由全球擁有超過200名懂多種語言的分析師組成的專屬研究團隊 獲得ISO 27001認證 擁有ACAMS認證的研究團隊 立即試用 如有任何查詢，歡迎以下列方式聯絡我們，謝謝！ If you have any questions about this order, please feel free to contact us. Thank you! https://edon.asia/ info@edon.asia (852) 3543 9099 (852) 9690 0882 https://www.youtube.com/watch?v=29FJ23T0ODc

The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Newsletter – August 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES IPO and securities trading growth powers Hong Kong ahead as global financial hub: SFC Quarterly Report Latest updates on Stablecoin-related Development MARKET NEWS SFC and HKMA to co-organise Hong Kong Fixed Income and Currency Forum 2025 ENFORCEMENT NEWS SFC Fines HSBC $4.2 Million for Disclosure Failures in Research Reports SFC Fines Deutsche Bank $23.8 Million for Various Regulatory Breaches during 2020 to 2023 Regulatory Action Against Nerico Brothers Limited involving Misappropriation of Client Assets SFC Revokes Amber Hill Capital’s License and Bans Senior Management for Life Due to Misappropriation of Client Funds and Dishonest Fund Management Practices SFC Seeks Court Order to Freeze $62.5 Million in Assets for Investor Compensation in Eggriculture Ramp-and-Dump Case SFC and HKEX Take First-Ever Joint Action Against Former TOMO Directors for Non-Cooperation SFC Bans Zhu Hong for 12 Months and Fines Her $400,000 for Fund Management Failures Regulatory Updates 1. IPO and securities trading growth powers Hong Kong ahead as global financial hub: SFC Quarterly Report The SFC published its second Quarterly Report (April to June 2025) in August with promising figure. Below are key takeaways of the achievements : Hong Kong solidified its global leadership in IPO , with 51 IPOs and total funds raised surging over 60% year-over-year (“yoy”) to HKD128 billion; The securities market demonstrated with resilience against the extreme volatility in April to restore orderly and normal operations; the HSI rebounded and reached 3-year high with average daily turnover up 85% to HKD243.7 billion in the first seven months; The number of license applications increased 16% yoy for the second quarter; For the asset management sector, the HK-domiciled funds recorded with a growth of 39% in AUM, and the number of open-ended fund (OFC) was up 56%; For virtual asset (“VA”) , the number of SFC-authorized VA spot ETF increased from six to nine, with further steps forward for approval of three VA spot ETF to engage in staking service with investor safeguards; and the number of SFC-licensed VATP increased to 11 together with 57 licensed corporations approved to provide VA dealing service; SIGNIFICANCE: The SFC plays a proactive role as a regulatory institution to provide full-fledged obligations in monitoring and revitalizing the regulatory regime in Hong Kong, balancing the drive for innovation and the indispensable mission of investor protection. 2. Latest updates on Stablecoin-related Development Reminder from Regulatory Institutions in the joint statement Regulatory bodies like SFC and the HKMA issues a joint statement on the recent market movements in relation to stablecoins. Investors are advised to pay attention to the following reminders in making an informed investment decision when encountered with a corporation/ entity which: demonstrates its intention to explore the feasibility of stablecoin issuance; indicates an interest to apply for stablecoin license; claims to have any ongoing communication with the HKMA; Investors should remain cautious that the above procedures are merely part of the licensing process, and the granting of license will be determined by the fulfilment of the licensing requirements of the entity where uncertainties of the final outcome remain. The SFC and HKMA further urge the public to exercise caution and refrain from making irrational investment decision based on the recent euphoria over movements in the market. Recent Updates Since the Stablecoin Ordinance came into effect on 1 st August 2025, all issuers of stablecoin are required to obtain licenses from the Hong Kong Monetary Authority (“HKMA”) in accordance with the “Explanatory Note on Licensing of Stablecoin Issuers”. This regulatory requirement poses a hurdle for the OTC (Over-the-Counter) crypto shops which would find it difficult to comply; yet transactions through the OTC play a significant role as well, particular in providing liquidity of stablecoins like USDT and USDC. There is a common belief that OTC crypto shops are not allowed to “offer” stablecoins, either to retail or professional investors. And the meaning of offering stablecoin is also subject to ambiguities in interpretation. According to the Ordinance, between two individuals, person A communicates with person B and presents sufficient information on all of the following matters enabling person B to acquire the stablecoins; namely: the stablecoins to be offered; the terms on which the stablecoin will be offered; the channels through which the stablecoin will be offered; then the action of person A will be constituted as “ making an offer ” (“要約提供”) to person B. To avoid the action of “making an offer”, some OTC shops do not explicitly display the quotes of the stablecoins, whereas the making of offer is initiated by the clients; it is still considered as a “breach” for reason that the Ordinance does not specify whether person A is the services provider or the client. Ambiguities in comprehending the ordinance pose more uncertainties to market participants. Conditions where the requirement for a stablecoin license is triggered Engaging in “regulated stablecoin activity” means: issuing a specified stablecoin in HK in the course of business; issuing a specified stablecoin in a place outside HK and the specified stablecoin derive its value with reference to HK dollars ; holding out itself as carrying a regulated stablecoin activity, including marketing to HK public, either in or outside HK. Please be noted that only specified stablecoins issued by stablecoin licensees can be offered to retail investors. And a licensee can engage a “ permitted offeror ” to offer specified stablecoins, currently, a permitted offeror can be: (i) a licensee itself; (ii) an authorized institution; (iii) an SFC type 1 licensed corporation (iv) a licensed virtual asset trading platform (“VATP”); (v) a Stored Value Facilities licensee (“SVF”) SIGNIFICANCE: Alike the virtual asset regime, development and evolution of the stablecoin regime is no exception, more mutual communication and interaction at inception stage is indispensable while regulations and guidelines are being finetuned to navigate and rectify any deviations throughout the process. Market News 3. SFC and HKMA to co-organise Hong Kong Fixed Income and Currency Forum 2025 The Hong Kong Fixed Income and Currency (“FIC”) Forum 2025, jointly organised by the Securities and Futures Commission (“SFC”) and the Hong Kong Monetary Authority (HKMA), will take place on 25 September 2025. As a leading Asian international bond issuance hub and the 4 th largest global foreign exchange market, Hong Kong is actively exploring ways to solidify and advance its position in the FIC markets. Many FIC market participants, senior executives from financial institutions, senior government official and regulators are invited to join this dynamic and multilateral forum, with the intention to facilitate sharing of strategic insights and vision for development of the FIC markets in HK. Details of the event programme and other relevant information can be accessed via our dedicated webpage and the Event Progromme webpage . Enforcement News 4. SFC Fines HSBC $4.2 Million for Disclosure Failures in Research Reports On 26 Aug 2025, the SFC in collaboration with the HKMA, has reprimanded and fined the Hongkong and Shanghai Banking Corporation Limited (“HSBC”) $4.2 million for failing to comply with disclosure requirements in research reports on Hong Kong-listed securities. The breaches, spanning from 2013 to 2021, highlight significant lapses in HSBC’s data systems and controls. Key Details of the Case Nature of the Breach: Following a self-report by HSBC, an investigation by the SFC and HKMA revealed that HSBC failed to disclose, or made incorrect disclosures about, its investment banking relationships with companies featured in over 4,200 research reports . These reports, published between 2013 and 2021 , covered Hong Kong-listed securities. The issues stemmed from deficiencies in HSBC’s data recording and mapping systems. Regulatory Violation: The breaches violated Paragraph 16.5(d) of the Code of Conduct for Persons Licensed by or Registered with the SFC, which mandates that firms disclose any investment banking relationships with issuers or new listing applicants in their research reports. The SFC found that HSBC did not exercise due skill and care or implement effective systems to ensure compliance and accuracy in these disclosures. Disciplinary Action: The SFC imposed a $4.2 million fine and a reprimand, reflecting HSBC’s failure to meet regulatory standards. For more details of the case, please refer to the Statement of Disciplinary Action . SIGNIFICANCE: In determining the penalty, the SFC considered: No evidence of client losses resulting from the disclosure failures. HSBC’s proactive reviews to identify the root causes and scope of the breaches. Steps taken by HSBC to enhance its systems and controls to prevent future issues. HSBC’s cooperation with the SFC and HKMA during the investigation. This case underscores the importance of robust systems and controls in ensuring accurate disclosures, which are critical for maintaining transparency and investor trust in financial markets. The SFC’s action serves as a reminder to financial institutions to prioritize compliance with regulatory standards to avoid similar penalties. 5. SFC Fines Deutsche Bank $23.8 Million for Various Regulatory Breaches during 2020 to 2023 On 28 Aug 2025, the SFC reprimanded and fined Deutsche Bank Aktiengesellschaft (“ DB ”) $23.8 million for multiple regulatory violations spanning several years. The breaches include overcharging clients on fees, incorrect valuations of debt instruments and funds, failure to disclose investment banking relationships in research reports and incorrect assignment of product risk ratings. These issues, identified through DB’s self-reports between December 2020 and December 2023, highlight significant lapses in compliance and internal controls. Key Details of the Case Between November 2015 and November 2023, DB’s operational shortcomings led to significant overcharges totalling approximately $39 million: Overcharging management fees in Discretionary Portfolio Management accounts: In 39 Discretionary Portfolios managed by DB, the clients were overcharged with management fees due to DB’s failure to apply agreed discounted rates, caused by flawed processes and implementation. Incorrect valuations of floating rate debt instruments: 392 floating rate debt instruments were incorrectly valued using “fixed” interest rates, inflating portfolio valuations and leading to overcharged custodian and management fees for 92 clients. Incorrect valuation of funds: Valuations of 16 private equity funds and three real estate funds were misstated in monthly statements to 233 clients due to an external vendor’s oversight and DB’s lack of controls, resulting in overcharged custodian fees for 32 clients. Failure to disclose investment banking relationships in research reports: Failed to disclose investment banking relationships in 261 single stock company reports and 1,590 industry reports on Hong Kong-listed companies. This was due to deficiencies in DB’s research disclosure system, which did not account for certain investment banking mandates. Incorrect assignment of Product Risk Ratings: From August 2012 to December 2020, DB assigned incorrect lower risk ratings to 40 exchange-traded funds (“ETFs”), affecting 93 clients and 265 transactions. After correcting the ratings, 10 transactions were found to have risk levels exceeding clients’ risk tolerance. For more details of the case, please refer to the Statement of Disciplinary Action . SIGNIFICANCE: The SFC concluded that DB failed to: Act with due skill, care, and diligence in the best interests of clients and market integrity. Ensure accurate and non-misleading representations to clients. Comply with disclosure requirements for research reports. Adhere to regulatory requirements to promote clients’ best interests. The SFC imposed a $23.8 million fine and a reprimand, taking into account: DB’s reviews to identify the root causes and extent of the breaches. Remediation efforts, including strengthened internal controls and systems. Full refunds of overcharged fees to affected clients. The inadvertent nature of the breaches, with no evidence of deliberate misconduct. DB’s cooperation with the SFC and acceptance of the findings and disciplinary action. This case emphasizes the SFC’s commitment to enforcing compliance with regulatory standards, particularly in ensuring accurate client information and transparent disclosures. Financial institutions must prioritize robust systems to prevent similar lapses, which can undermine investor trust and market integrity. 6. Regulatory Action Against Nerico Brothers Limited involving Misappropriation of Client Assets On 28 August 2025, the SFC revoked the licence of Nerico Brothers Limited (“ NBL ”) due to severe misconduct involving the misappropriation of client assets and the provision of false or misleading information. Additionally, the SFC imposed a lifetime ban on NBL’s director, Jerff Lee Cheuk Fung (“Jerff Lee”), prohibiting him from engaging in any regulated activities. Key Details of the Case: Misuse of Client Funds Between June 2020 and January 2021, NBL allegedly misused over US$68 million from a client's account on six occasions. These funds were used to subscribe for shares in two segregated portfolios of a Cayman-incorporated fund for NBL's own benefit. The firm retained profits from these subscriptions and only returned the principal amounts by June 2021—all without the client's knowledge, authorization, or consent, violating the client agreement. Facilitation of Misappropriation NBL is accused of aiding a scheme led by Neo Ng Yu (“Neo Ng”) and his associates, resulting in the misappropriation of approximately US$154 million from the same client's funds starting in January 2021. From January to August 2021, NBL transferred nearly all the client's assets to a sub-fund for the supposed purchase of "liquidity provider units." However, no such units were issued or held by the sub-fund. Instead, a large portion of the funds was diverted to Neo Ng and his entities. To cover this up, NBL used fabricated transaction documents and account statements. False Information to Regulators During the SFC's inquiry, NBL provided two conflicting explanations about the funds' usage, supported by fabricated documents. Both narratives were proven false, confirming that the funds were misappropriated rather than invested as claimed. Senior Management Accountability The SFC attributes NBL's misconduct directly to Jerff Lee, who was the key figure orchestrating these actions and had close ties to Neo Ng. Lee also personally violated the SFO by providing false or misleading information in SFC interviews. The firm was wound up by the Hong Kong High Court on 3 May 2022. Although Jerff Lee was not personally licensed during the period, he qualifies as a "regulated person" due to his management role. For more details of the case, please refer to the Statement of Disciplinary Action . SIGNIFICANCE: Neo Ng became a substantial shareholder in the client's holding company in December 2020 and briefly served as a director from July 2021 to January 2022. NBL claimed clients needed "liquidity provider units" from a fund to trade currencies, but this was part of the deceptive scheme. This case highlights the SFC's zero-tolerance approach to asset misuse and fraud in the financial sector. It also connects to related actions against Amber Hill Capital Limited and its former executives, Neo Ng and Simon Ng She Chun (see SFC press release dated 28 August 2025 , for details).” 7. SFC Revokes Amber Hill Capital’s License and Bans Senior Management for Life Due to Misappropriation of Client Funds and Dishonest Fund Management Practices On 28 Aug 2025, the SFC took a decisive action against Amber Hill Capital Limited (“ AHCL ”), revoking its license and imposing lifetime bans on its former senior management, Neo Ng Yu and Simon Ng She Chun, for facilitating the misappropriation of funds and engaging in dishonest practices. These measures address serious misconduct that undermined market integrity and caused significant investor losses. Key Details of the Case License Revocation and Bans: The SFC revoked AHCL’s license for its role in facilitating the misappropriation of approximately US$154 million from a client of Nerico Brothers Limited (“ NBL ”) through a Cayman-incorporated fund’s segregated portfolio (Sub-fund), managed by AHCL from October 2017 to September 2021. Neo Ng and Simon Ng, key figures in AHCL’s management, have been permanently banned from all regulated activities due to their direct involvement. Misappropriation Scheme: The SFC investigation revealed that Neo Ng orchestrated a scheme to misappropriate funds through the Sub-fund. Between January and August 2021, NBL transferred client funds to the Sub-fund for the purported purchase of “liquidity provider units,” which did not exist. AHCL accepted these funds and directed the Sub-fund to transfer a significant portion to a corporate vehicle owned by Neo Ng, with most of the remaining proceeds used for the Sub-fund’s own purposes. False Information and Fabricated Documents: AHCL misrepresented to the Sub-fund’s auditors and administrators that NBL was a broker for the Sub-fund and that most of its cash assets were held in an NBL account. Additionally, AHCL claimed Neo Ng subscribed US$297 million for Sub-fund shares via his corporate vehicle, with proceeds held in the non-existent NBL account. These claims inflated the Sub-fund’s cash position by up to US$451 million between November 2019 and May 2021. AHCL also provided fabricated auditors’ reports and documents to mislead investors and prospective investors during this period. For more details of the case, please refer to the Statement of Disciplinary Action . SIGNIFICANCE: Neo Ng, a director and sole shareholder of AHCL, masterminded the scheme and personally benefited from the misappropriated funds and inflated Sub-fund valuations. Simon Ng, his brother and a senior manager, facilitated the scheme by processing the funds, authorizing their transfer to Neo Ng’s vehicle, and providing false information. Their actions were deemed profoundly dishonest, falling far below the standards expected of licensed corporation management. The SFC’s sanctions reflect: The egregious nature of the misconduct, damaging investor and public confidence in market integrity. Significant losses to NBL’s client. The clean prior disciplinary records of AHCL, Neo Ng, and Simon Ng. This case is linked to the SFC’s actions against NBL and its director, Jerff Lee Cheuk Fung, announced on the same date (see SFC press release, 28 Aug 2025 ). The SFC’s actions underscore its commitment to rooting out dishonest practices in the financial sector. The lifetime bans and license revocation send a strong message about accountability, particularly for senior management, in safeguarding investor interests and market integrity. 8. SFC Seeks Court Order to Freeze $62.5 Million in Assets for Investor Compensation in Eggriculture Ramp-and-Dump Case On 29 Aug 2025, the SFC took decisive action to protect investors by applying for a court order to freeze assets up to $62.5 million. This move aims to secure funds for compensating investors affected by a sophisticated ramp-and-dump scheme involving Eggriculture Foods Limited (8609.HK) (“ Eggriculture ”). Key Details of the Case: Asset Freeze Application: On 29 August 2025, the SFC filed an application with the Court of First Instance to restrain the disposal of assets belonging to one of the suspected ringleaders. The assets, valued up to $62,566,773, represent the estimated losses suffered by investors due to alleged market manipulation of Eggriculture shares between August and November 2018. Market Manipulation Allegations: The SFC's legal action targets six individuals, including suspected ringleaders, accused of manipulating Eggriculture Foods Limited’s shares. Eggriculture was listed on the Growth Enterprise Market (“ GEM ”) of the Stock Exchange of Hong Kong Limited on 7 September 2018. The manipulation allegedly occurred shortly after the listing, exploiting the market to the detriment of investors. Court Proceedings: The Court of First Instance held its first hearing on the SFC’s application, issuing directions and adjourning the substantive hearing to a later date to be determined. This ensures a thorough review of the application to freeze assets for investor compensation. Parallel Criminal Trial: In a related development, a criminal trial is scheduled to begin on 13 July 2026, at the District Court. Five of the six individuals involved in the SFC’s civil proceedings face charges of conspiracy to defraud and conspiracy to employ a scheme with intent to defraud or deceive in securities transactions. SIGNIFICANCE: As the legal proceedings are active, the SFC has stated it will refrain from further comments to maintain the integrity of the judicial process. This case underscores the SFC’s commitment to combating market misconduct and ensuring investor protection. By seeking to freeze assets, the SFC aims to secure potential compensation for affected investors, reinforcing trust in Hong Kong’s financial markets. The parallel civil and criminal proceedings highlight the multifaceted approach to addressing sophisticated financial crimes. 9. SFC and HKEX Take First-Ever Joint Action Against Former TOMO Directors for Non-Cooperation In a landmark enforcement action, the SFC and HKEX have collaborated to discipline two former directors of TOMO Holdings Limited (6928.HK) (“ TOMO ”) for failing to cooperate with regulatory investigations. This marks the first time the Exchange has taken disciplinary action against directors for non-cooperation, highlighting the strength of the SFC-HKEX partnership in upholding market integrity. Key Details of the Case Disciplinary Action On 12 August 2025, the Exchange publicly censured Ms. Ma Xiaoqiu, a former executive director, and Mr. Jin Lailin, a former independent non-executive director of TOMO, declaring them unsuitable to serve as directors or in senior management roles at TOMO or its subsidiaries. This action addresses their failure to cooperate with investigations by both the SFC and the Exchange’s Listing Division. Investigation Context The SFC investigated potential violations under the SFO involving TOMO and related parties, issuing notices under section 183 to Ma and Jin for relevant information and documents. Simultaneously, the Exchange’s Listing Division probed whether the directors fulfilled their obligations under the Listing Rules. Both Ma and Jin failed to respond to either investigation. Regulatory Breach The Listing Rules mandate that directors of listed issuers cooperate with SFC and Exchange investigations, an obligation that persists post-tenure. The Exchange’s Listing Committee found that Ma and Jin’s non-cooperation constituted a serious breach of these rules. The SFC’s investigation into TOMO-related matters continues, with further details pending. For more details of the case, please refer to the Disciplinary Action . SIGNIFICANCE: Christopher Wilson, SFC Executive Director of Enforcement , emphasized that non-cooperation undermines regulatory oversight and investor protection, highlighting the SFC’s commitment to robust enforcement through its partnership with the Exchange to ensure accountability. Catherine Yien, HKEX Head of Listing Regulation and Enforcement emphasized that collaboration plays a critical role in maintaining a fair and informed securities market, and underscored the HKEX's zero-tolerance stance on such misconduct and its commitment to market quality. This unprecedented joint action demonstrates the SFC and HKEX’s coordinated approach to tackling regulatory non-compliance. By leveraging the Exchange’s disciplinary powers under the Listing Rules, the regulators are sending a clear message: directors who fail to cooperate face severe consequences, including reputational and operational sanctions. 10. SFC Bans Zhu Hong for 12 Months and Fines Her $400,000 for Fund Management Failures On 18 Aug 2025, the SFC imposed a 12-month ban and a $400,000 fine on Ms. Zhu Hong, a substantial shareholder, director, and former manager-in-charge (“ MIC ”) of Kylin International (HK) Co., Limited (“ Kylin ”). The disciplinary action, effective from 16 August 2025, to 15 August 2026, addresses Zhu’s failures in managing private funds and ensuring compliance with anti-money laundering and counter-terrorist financing (“ AML/CTF ”) obligations. Key Details of the Case The SFC banned Zhu from engaging in any regulated activities and fined her $400,000 for lapses in her duties as a director and MIC at Kylin. Between August 2018 and July 2021, Kylin served as the investment manager and/or consultant for sub-funds of a Cayman-incorporated fund. Zhu was responsible for approving borrowing agreements and implementing AML/CTF internal controls but failed to discharge her duties as a director of Kylin and MIC for the AML/CTF in managing the funds. Kylin was licensed under SFO for Type 9 (asset management) activities from 4 April 2014, until its license was revoked on 22 January 2025, following its cessation of regulated activities on 31 December 2023. From 30 April 2019 to 22 January 2025: Zhu, while not a licensed person, qualifies as a “regulated person” under section 194(7) of the SFO due to her management roles: i. MIC of AML/CTF; ii. MIC of Risk Management; and iii. MIC of Finance and Accounting SIGNIFICANCE: The SFC considered Zhu’s acceptance of liability, her expressed remorse, and her clean disciplinary record in determining the sanctions. The disciplinary action against Zhu is linked to an ongoing SFC investigation into another related entity concerning the same funds, with further details to be released upon its conclusion. This case highlights the SFC’s commitment to holding individuals accountable for failures in fund management and compliance, particularly in critical areas like AML/CTF. It serves as a reminder to financial professionals of the importance of robust oversight and adherence to regulatory standards to protect investors and maintain market integrity. [End of ComplianceOne Newsletter – August2025] 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 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Insurance Newsletter – May 2025 The topics discussed in this monthly newsletter are as follows: 1. Two Insurers will re-domicile to Hong Kong pursuant to the HKSAR Government's New Company Re-domiciliation Regime 2. IA Hosted Conference to Foster Market Understanding on ILS 3 . Insurance Agent Sentenced to 51 Months for $1.6M Fraud in Hong Kong Market News 1. Two Insurers will re-domicile to Hong Kong pursuant to the HKSAR Government's New Company Re-domiciliation Regime On 14 May 2025, Insurance Authority (“ IA ”) celebrated the passage of the Companies (Amendment) (No. 2) Bill 2024 (the “Amendment Bill”), a landmark piece of legislation that introduces a framework for overseas companies to re-domicile to Hong Kong. Among Two of the major insurers in Hong Kong, Manulife (International) Limited (“ Manulife ”) and AXA Hong Kong and Macau (“ AXA ”) , Manulife and AXA have both announced that they will officially re-domicile from Bermuda to Hong Kong pursuant to the HKSAR government's new company re-domiciliation regime, subject to relevant regulatory approvals. For more details of the two insurers re-domiciliation announcement, please visit: Manulife: Re-domiciliation Notice - 6 June 2025 AXA: Re-domiciliation Notice - 23 May 2025 Re-domiciliation process will not affect the Insurer’s legal entity continuity, organizational structure, or daily operations. Therefore, the Insurer’s existing rights and obligations to policyholders, distributors or business partners will remain unchanged, and all current agreements and commitments will continue to be in force. Details of the Companies (Amendment) (No. 2) Bill 2024 AND 2025 The Companies (Amendment) (No. 2) Ordinance 2025 was gazetted and came into effect on 23 May 2025 (see HKGov Press ) the introduction of the re-domiciliation regime is expected to have several positive impacts on Hong Kong’s insurance sector:. Increased Market Presence: By enabling overseas insurers to establish Hong Kong as their corporate base, the regime is likely to increase the number of insurers operating locally, potentially leading to greater competition and innovation. Economic Benefits: The relocation of insurers could boost Hong Kong’s economy through job creation, increased tax revenue, and enhanced financial activity within the Greater Bay Area. Consumer Benefits: A larger pool of insurers may result in more diverse and competitive insurance products, benefiting consumers, including Mainland China visitors who have shown strong demand for Hong Kong’s insurance offerings. SIGNIFICANCE: Hong Kong has long been a hub for international finance, bolstered by its strategic location and connectivity within the Guangdong-Hong Kong-Macao Greater Bay Area. According to IA provisional statistics for 2024 - insurance sector has seen significant interest from Mainland China visitors, with new business premiums reaching HK$62.8 billion, marking a 6.5% increase from the previous year. However, until now, the absence of a re-domiciliation regime has posed challenges for overseas insurers with a strong local presence looking to fully establish Hong Kong as their home base. The new legislation addresses this gap, aligning Hong Kong with other financial hubs like Singapore, which implemented a similar regime in 2017 ( Singapore Re-domiciliation ). 2. IA Hosted Conference to Foster Market Understanding on ILS On 30 May 2025, the IA successfully hosted its second Insurance-linked Securities (“ ILS ”) Conference, attracting participants from across the globe, including insurance practitioners, institutional investors, and professional service providers. The conference aimed to deepen market understanding of ILS as both an alternative risk transfer tool and an attractive investment product, fostering a robust ecosystem to support its growth. The ILS Conference featured a comprehensive program designed to engage stakeholders in the evolving ILS landscape. What is a Captive Insurer? A captive insurer is a specialized insurance company created by a parent corporation to provide coverage for its own risks. Unlike traditional insurers, captives are designed to meet the unique needs of large businesses, particularly those with operations spanning multiple regions. They enable companies to: Current Landscape and Developments : This panel explored the evolving ILS ecosystem, highlighting recent advancements and challenges in the field. Trends and Strategies in ILS Investment : This discussion focused on emerging trends and strategic approaches to ILS as an investment class, offering insights for institutional investors. By fostering a vibrant ecosystem that includes key players across the ILS value chain, Hong Kong is poised to play a pivotal role in addressing global protection gaps and offering innovative risk management solutions. SIGNIFICANCE: According to the IA, ILS are risk management tools allowing insurers and reinsurers to seek alternative capital by offloading insured risks to the capital markets through securitization.According to the IA, ILS are risk management tools innovative financial instruments allowing insurers and reinsurers to seek alternative capital by offloading insured risks (e.g. associated with natural disasters) to the capital markets through securitizationthat enable insurers and reinsurers to transfer risks, such as those associated with natural catastrophes, to capital markets. This mechanism provides alternative capital for risk management while offering investors opportunities for diversification and attractive returns. Hong Kong, with its robust insurance industry and vibrant capital markets, is uniquely positioned to become a leading ILS hub in Asia. The IA has implemented a bespoke regulatory framework for Special Purpose Insurers (“ SPIs ”), which are entities specifically formed to issue ILS in Hong Kong. This framework, detailed in Guideline - GL33 , ensures a streamlined and efficient process for ILS issuance. Additionally, the Hong Kong government has supported these efforts through the Pilot ILS Grant Scheme, which subsidizes up to 100% of upfront costs for eligible ILS issuances, with a cap of HK$3 million for renewals or repeated issuances. The scheme, extended until 2028 as announced in the 2025-26 Budget, underscores the government’s commitment to fostering a thriving ILS ecosystem. For more details - please visit the IA website . Enforcement News 3. Insurance Agent Sentenced to 51 Months for $1.6M Fraud in Hong Kong On 27 May 2025, the Hong Kong District Court sentenced Yuki FAN Ting-yan (“ FAN ”), a former financial consultant at AXA China Region Insurance Company Limited, to 51 months in prison for orchestrating a fraud scheme that defrauded the insurer of over $1.6 million in commissions and bonuses. This high-profile case, investigated by the Independent Commission Against Corruption (“ ICAC ”), underscores the ongoing challenges of insurance fraud in Hong Kong and the importance of maintaining trust and integrity in the industry. Details of the Fraud Between November 2014 and September 2016, FAN submitted 12 fraudulent insurance policy applications, falsely claiming that six clients had purchased various insurance products. As a financial consultant at AXA, FAN earned first-year commissions for new policies and renewal commissions for continued policies, along with bonuses for meeting sales targets. The fraudulent applications led AXA to approve the policies and pay out commissions and bonuses totaling over $1.6 million. However, an ICAC investigation, prompted by a corruption complaint, revealed that the six clients had neither applied for nor paid premiums for these policies. The policies eventually lapsed due to non-payment of subsequent premiums. Legal Proceedings and Outcome AN was charged with 12 counts of fraud under section 16A of the Theft Ordinance. Following a trial, she was found guilty on all counts. During sentencing on 27 May 2025, FAN’s refusal to plead guilty meant she received no reduction in her sentence, resulting in a 51-month imprisonment term. Case Number: DCCC 283/2023 SIGNIFICANCE: This case underscores the critical need for robust internal controls within insurance companies to prevent fraudulent activities. FAN’s ability to submit false applications over an extended period suggests potential gaps in oversight that allowed the fraud to go undetected until the ICAC’s intervention. Insurance companies are encouraged to strengthen their verification processes and adopt advanced anti-fraud technologies to protect their operations and policyholders. [End of ComplianceOne Insurance Newsletter – May 2025] 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 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter - July 2023 The topics discussed in this monthly newsletter are as follows: SFC launched Type 13 regulated activity for applications from depositaries of public funds Ensuring compliance when Streamlined Approach (“SLA”) is applied to Sophisticated Professional Investors (“SPIs”) SFC welcomes IOSCO endorsement of new sustainability disclosure standards HashKey partnered with Longbridge Whales and Quam Securities to launch First VA Online Trading Solution SFC and AFRC joined forces to combat misconduct by listed issuers Court convicted and fined cases for unlicensed activity SFC banned RaffAello Capital Limited’s former responsible officer over IPO sponsor failures SFC fined Changjiang Asset Management (HK) Limited $3.4 million for internal control failures MARKET NEWS 1. SFC launched Type 13 regulated activity for applications from depositaries of public funds The SFC started accepting applications for carrying on Type 13 regulated activity (RA 13) under a new regime on 27 July 2023 which will bring depositaries of SFC-authorised collective investment schemes under the SFC’s direct supervision. The new regime will take effect on 2 October 2024. Depositaries operating in Hong Kong need to submit RA 13 applications through WINGS, the SFC’s online submission platform, on or before 30 November 2023 . SIGNIFICANCE: For reason that starting from 2 October 2024, trustees and custodians (i.e., depositaries) of SFC-authorised collective investment schemes (CISs), unless exempted, will be required to be licensed by or registered with the SFC for Type 13 regulated activity (RA 13) under the SFO. Existing market practitioners are advised to seek guidelines from another Circular posted the same date for details of “ who needs to be licensed or registered ?” 2. Ensuring compliance when Streamlined Approach is applied to sophisticated professional investors A joint circular was published on 28 July 2023 by the HKMA and the SFC concerning the introduction of a new category of sophisticated professional investors (“SPI”) who possess higher levels of net worth and knowledge or experience, particularly in relation to the suitability assessment and product disclosure processes applied. Suitability assessment is a risk-based process that involves intermediaries matching of investment products with the personal circumstances and risk tolerance of their clients. Bearing in mind to clarify the expected standards on how the suitability assessment could be conducted and how product information could be explained and disclosed, intermediaries could tailor point-of-sale procedures to the personal circumstances of SPIs. Detailed guidelines are available from the Annex 1 and Annex 2 of the Circular to facilitate the application of a Streamlined Approach (“SLA”) . In essence, under the Streamlined Approach, the intermediary is not required at a transaction level to match the SPI’s risk tolerance level, investment objectives and investment horizon, or to assess the SPI’s knowledge, experience and concentration risk. Despite of this, intermediaries can also provide any explanation of product characteristics, nature and extent of risks to the SPI beforehand. SIGNIFICANCE: Under the new SPI regime with the application of Streamlined Approach, the intermediaries have to ensure the followings are in place with the SPI as a matter of compliance : (1) The SPI has to specifiy the Product Category within which investment transactions can be executed under the SLA, namely, the Eligible Investment Transactions ; (2) Product Category Information Statement : made available to the SPI explaining the terms and features, characteristics, nature and extent of risks of investment products within the Product Category as defined above; (3) Streamlined Threshold : the SPI has to specify a maximum threshold of investment, as an absolute amount or a percentage relative to the SPI’s assets under management (“AUM”) with the intermediary; (4) The intermediaries have to devise designated accounts (or sub-accounts) to consolidate Eligible Investment Transactions of the SPI executed under the SLA, and ensure that the Streamlined Thresholds are strictly observed. 3. SFC welcomes IOSCO endorsement of new sustainability disclosure standards SFC greeted the endorsement by the International Organization of Securities Commissions (IOSCO) of the IFRS Sustainability Disclosure Standards published by the International Sustainability Standards Board (ISSB). The SFC will work with relevant government bureaux, other financial regulators and the SEHK to develop a comprehensive roadmap for adoption of the ISSB standards in Hong Kong. SEHK has a proposed disclosure requirements for listed companies, making reference to the ISSB’s draft for climate-related disclosures. The final SEHK requirements will take account of the consultation responses and the final ISSB standards. SIGNIFICANCE: These deliberate arrangements are actually in line with what the SFC has been working on the climate-related risk disclosure requirement applicable to the licensed corporations since November last year. 4. HashKey partnered with Longbridge Whales and Quam Securities to launch First VA Online Trading Solution HashKey Group’s SFC-licensed subsidiary, Hash Blockchain Limited, has announced its strategic partnership agreement with Quam Securities and Longbridge Whale to provide virtual asset online trading services to securities firms and their clients through omnibus account and FIX API connection with HashKey’s exchange business HashKey PRO. Brokers and the clients can then seamlessly connect to this liquidity pool and market data to trade VAs anytime and anywhere around the clock! SIGNIFICANCE: At the "Far Beyond" Longbridge Whale new product launch event in Hong Kong, the first virtual asset online trade for securities firms had been successfully demonstrated and completed at the event, marking a new chapter for the adoption of virtual assets by local and global brokers. Long Bridge Whale is the first broker which serves as a BSS Vendor for VA dealing, and Quan Securities is the first client broker which provides VA brokerage, the new partnership of the three marks the benchmark for commencement of a new VA dealing environment more accessible to the general public. Leveraged up with collaboration from the private sector, the momentum to evolve as a virtual asset financial hub as advocated by the HKSAR government has got started off! 5. SFC and AFRC joined forces to combat misconduct by listed issuers The SFC and the Accounting and Financial Reporting Council (AFRC) issued the first joint statement on 13 July 2023 as part of their enhanced collaboration in the regulation of the securities and futures markets in Hong Kong. The joint statement addressed the observable increase in cases of listed issuers channelling a company’s funds to third parties in dubious circumstances under the pretext of loans which were granted without sufficient commercial rationale, and in some cases without adequate risk assessment or due diligence. The listed issuers suffered significant losses when loans were not repaid. In the light of thes findings, the joint statement set out the conduct standards and practices that listed issuers, their directors, audit committees and auditors should adhere to in relation to loans and similar arrangements. SIGNIFICANCE: As Ms Julia Leung, Chief Executive Officer of the SFC had said, “ The joint statement demonstrates the commitment of the SFC and the AFRC to promoting good corporate governance and maintaining the integrity of the capital market, as well as underscores our collective efforts to establish a more effective regulatory framework to uphold Hong Kong’s reputation as an international financial centre .” ENFORCEMENT NEWS 6. Court convicted and fined cases for unlicensed activity The Eastern Magistrates’ Court had convicted Mr Ben Ngai Ping Kuen (on 5 July 2023) and Mr Cheung Wing Hung (on 27 July 2023) separately for holding themselve out as performing a regulated function in relation to dealing in securities as an agent of entities not licensed by the SFC. It was found that between April 2016 and June 2017, both Ngai and Cheung had enticed three retail investors to invest in so-called “US-listed” shares issued by First Asia Holdings Limited (FAH) and/or First Asia Capital Limited (FAC), and to finance FAH and/or FAC in their preparation for the purported secondary listing of FAH shares in Hong Kong. The investors were mistakenly represented that if the the secondary listing in Hong Kong was successful, the value of their investment in FAH shares would increase by 100% and that if they intended to realise their investment return, they would have to swap their FAH shares for the shares in a Hong Kong-listed corporation, namely PF Group Holdings Limited (PF). By the time the investors received their PF shares, the price of the PF shares had fallen substantially. Both of Ngai and Cheung pleaded guilty to the offence and each of them were fined HKD6,000, and paid the SFC for the investigation costs. 7. SFC banned RaffAello Capital Limited’s former responsible officer over IPO sponsor failures It was published on 11 July 2023 by the SFC that Mr Tsang Kwong Fai, a former responsible officer (RO) and sponsor principal of RaffAello Capital Limited (RaffAello), was prohibited from re-entering the industry for two years from 11 July 2023 to 10 July 2025 for breaching the SFC’s Code of Conduct. The SFC had found that Tsang failed to discharge his duties as a sponsor principal, RO and member of the senior management of RaffAello to exercise due diligence in handling the listing applications, to supervise his subordinates in carrying out the sponsor work, and ensure appropriate standards of conduct were maintained. SIGNIFICANCE: Taking a look of the enforcement news published, it is not hard to find repeated cases of the SFC imposing severe pecuniary penalties on licensed corporations acting as sponsors on their failure to discharge their obligatory and regulatory duties in due course as expected of the SFC. The reason is pretty obvious that IPO is a concern of the investing public at large, protection of investors and maintenance of integrity of the market are of top priority to the SFC. 8. SFC fined Changjiang Asset Management (HK) Limited $3.4 million for internal control failures On 13 July 2023, the SFC had reprimanded and fined Changjiang Asset Management (HK) Limited (CJAM) $3.4 million for regulatory breaches and internal control failings in relation to segregation of client money and provision of statements of accounts to clients. The SFC found that between May 2015 and August 2017, CJAM had: (1) under-segregated client money to the extent of $300 to $1.05 million on multiple occasions; (2) failed to segregate client money it had received in amounts ranging from $651,518 to $8.5 million within the prescribed time limit on three occasions; and; (3) failed to immediately notify the SFC after it became aware of its under-segregation of client money. Furthermore, it was also found that CJAM had breached the Securities and Futures (Contract Notes, Statements of Account and Receipts) Rules and the Code of Conduct in issuing inaccurate statements of accounts as well as failing to provide statements of accounts to four clients. 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 call us at (852) 39550277 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk To unsubscribe, please simply reply with “ I don’t like to know more about Compliance ”.

The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Insurance Newsletter – September 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES Latest 'Conduct In Focus' Edition Highlights Key Regulatory Insights and Industry Trends MARKET NEWS Captive Insurance Highlighted as Risk Tool at Belt and Road Summit Hong Kong Green Week Spotlights Insurance's Vital Role in Climate Resilience ENFORCEMENT NEWS IA Imposes 50-Month Ban on Insurance Intermediary for Misconduct ENFORCEMENT NEWS New TV Drama 'IA Files' Spotlights IA's Regulatory and Enforcement Role Regulatory News 1. Latest 'Conduct In Focus' Edition Highlights Key Regulatory Insights and Industry Trends On 30 September 2025, the IA has released the newest edition of Conduct In Focus , a valuable resource for insurance practitioners and policyholders alike. This publication delivers the latest complaints statistics alongside in-depth regulatory insights and observations on conduct-related matters, aimed at fostering a more transparent and ethical insurance landscape. Key Highlights: Additional Topics Explored The publication also addresses several emerging issues: Run-Off Portfolios Management: Regulatory considerations for insurance agencies specializing in managing run-off portfolios, highlighting opportunities and compliance requirements in this growing niche. Broker Disclosures for Offshore Products: The essential role of brokers in transparently disclosing risks and limitations when sourcing offshore insurance solutions for clients, to safeguard informed decision-making. Impact of MPF Telemarketing Cessation: Implications for cold-calling practices within the insurance sector following the recent halt of Mandatory Provident Fund (MPF)-related telemarketing, urging a review of sales strategies. SIGNIFICANCE: This edition of Conduct In Focus serves as a timely guide for navigating regulatory expectations and adopting best practices. Insurance professionals are encouraged to review the full publication for actionable insights that can strengthen their operations and client relationships. Market News 2. Captive Insurance Highlighted as Risk Tool at Belt and Road Summit On 10 September 2025, the IA took center stage today at the prestigious Belt and Road Summit , hosting a dedicated breakout session on the pivotal role of captive insurance in bolstering risk management for enterprises engaging in Belt and Road Initiative (“ BRI ”) projects. This session underscored Hong Kong's emerging status as a premier captive domicile, equipped to support participants in tackling the multifaceted challenges of international expansion. Key Highlights from the Session The discussion, moderated by Mr. Clement Lau, Executive Director of Policy and Legislation at the IA, emphasized the need for innovative risk strategies amid the BRI's vast scope. "The extensive scale of the Belt and Road Initiative entails a wide range of complex and diverse risks, requiring participants to adopt innovative and comprehensive risk management strategies where captives can be a valuable option," Mr. Lau remarked. He further highlighted Hong Kong's commitment: "By fostering a vibrant captive ecosystem in Hong Kong, we stand ready to support Belt and Road participants in venturing abroad and exploring new markets." Panelists included CEOs from two Hong Kong-domiciled captive insurers, one established by a Mainland enterprise and another by a multinational conglomerate. They shared how these captives have empowered their parent companies to effectively manage intricate risk landscapes and emerging threats. Experienced professional service providers also contributed, detailing the comprehensive support they provide for establishing and operating captives, from regulatory navigation to ongoing management. SIGNIFICANCE: The session delved into Hong Kong's unique advantages as a captive insurance center, including its strategic location, robust regulatory framework, and facilitative measures introduced by the IA. Attendees gained insights into the future trajectory of the Hong Kong captive market, positioning it as a leading global hub for BRI participants seeking tailored risk solutions. This event aligns with the broader goals of the Belt and Road Summit, highlighted how captive insurance offers enterprises a customized approach to risk transfer, cost efficiency, and enhanced control over insurance programs, essential for the high-stakes, cross-border nature of BRI projects. 3. Hong Kong Green Week Spotlights Insurance's Vital Role in Climate Resilience On 12 September 2025, the IA and the Hong Kong Federation of Insurers (“ HKFI ”) joined forces today to co-host a landmark event as part of the Hong Kong Green Week . Themed "Bridging Finance and Future: The Insurance Industry as a Pillar of Climate Resilience," this featured seminar brought together over 180 insurance practitioners and stakeholders both in-person and online to explore how the insurance sector can drive climate adaptation and sustainability. The event featured expert speakers from the insurance industry, government, academia, and the commercial sector, fostering discussions on navigating climate risks and identifying opportunities for innovation. Spotlight on the Climate Modelling Project A key highlight was an overview of the Climate Modelling Project, a collaborative effort led by the IA in partnership with the HKFI's Task Force on Green Insurance and the Hong Kong University of Science and Technology (“ HKUST ”). Representatives including Mr. Clement Lau, Executive Director of Policy and Legislation at the IA; Mr. Eric Hui, Chairman of the HKFI Task Force on Green Insurance; and Professor Alexis Lau from HKUST shared how this initiative leverages insurers' claims data to enhance underwriting capabilities, spur product innovation, and improve climate risk assessments aligned with sustainability objectives. This regulator-industry-academia collaboration aims to translate advanced research into practical tools for the sector, empowering insurers to better support Hong Kong's green transition. SIGNIFICANCE: As part of the broader Hong Kong Green Week initiative, this event underscores the city's commitment to sustainable development. Mr. Stephen Yiu, Chairman of the IA, stressed the urgency of multi-stakeholder engagement in addressing climate challenges. "Given the scale and complexity of climate-related risks, it is incumbent upon regulators and policymakers to engage proactively with the insurance industry, to strengthen our city’s climate resilience through robust risk assessment, improved risk management frameworks underpinned by a deeper understanding of the social value of insurance," he said. Enforcement News 4. IA Imposes 50-Month Ban on Insurance Intermediary for Misconduct On 25 September 2025, the IA has taken decisive action by banning Ms. SO Yuen Wa (Licence number: IG3140) (“ Mr. SO ”) from acting as an insurance intermediary for a period of 50 months. This enforcement measure underscores the IA's commitment to upholding ethical standards and safeguarding policyholders' interests in the industry. Details of the Case Ms. SO engaged in deceptive practices by providing misleading advice to two clients, falsely claiming that her appointing insurer would acquire their existing policies. This inducement led the clients to surrender three critical illness and long-term savings policies in favor of purchasing eight new ones through her. Key violations included: Failing to disclose that the transactions constituted de facto policy replacements. Impersonating one client to inquire about her policies. Pocketing the surrender value instead of applying it to the new policies. Although Ms. SO later repaid nearly all the funds involved, the harm to the clients was significant. They were left without the protection of their original policies and lost the chance to reinstate them, highlighting the irreversible consequences of such actions. SIGNIFICANCE: Policy replacement is a critical decision with profound effects on policyholders' financial security and coverage. The IA emphasizes that deceptive or unethical practices in this area will not be tolerated and will result in severe penalties. The public is strongly advised to exercise caution when considering surrendering existing policies. Insurance intermediaries are reminded to adhere strictly to ethical guidelines to avoid similar repercussions. Miscellaneous 5. New TV Drama 'IA Files' Spotlights IA's Regulatory and Enforcement Role On 23 September 2025 , the IA and Radio Television Hong Kong (“ RTHK ”) are set to launch "IA Files" (“保監有道” in Chinese), a compelling four-episode TV drama series premiering on RTHK TV31 on 27 September 2025. Drawing from real-life cases, the series aims to illuminate the IA's regulatory, investigative, and enforcement activities while delivering essential educational messages on insurance practices. Alan Wu, Acting Head of Conduct Supervision at the IA, elaborated on the content: "The stories in the drama series are based on real-life complaints and investigation cases, covering issues such as failure to explain key policy features to customers, inducement of policy replacements, unlicensed selling, and misappropriation of premiums. The IA places strong emphasis on the industry’s adherence to the principle of ‘treating customers fairly’, and it is vital for intermediaries to act in the best interests of their clients in their dealings." Broadcast Details IA Files will air on Saturdays at 7pm for four weeks starting from 27 September on RTHK TV31. The episodes will also be streamed simultaneously on the RTHK website and “RTHK TV” mobile app. The programme will later be available for viewing on the IA’s YouTube channel. Please see the series synopsis in the annex (Chinese only). [End of ComplianceOne Insurance Newsletter – September 2025] 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

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter – Jan 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES 1. SFC extends swift licensing process to new VATP applicants 2. Onshore RMB bonds accepted as margin collateral in OTC Clearing Hong Kong Limited 3. SFC expands listed structured fund offerings in Hong Kong MARKET NEWS 4. InvestHK brought a record-breaking number of new companies to Hong Kong in 2024 5. Enhancing sponsors’ expertise to drive GEM advancement 6. HashKey Exchange's Trading Volume Increased by 85% in 2024 7. Hong Kong joins LME global warehouse network ENFORCEMENT NEWS 8. Hang Seng Bank Limited is fined $66.4 million for misconduct in selling investment products 9. Associate Director of SFC charged by ICAC with conspiracy to pervert course of justice 10. The first solicitor convicted of breaching secrecy provision by the SFC 11. Enforcement action against FingerTango Inc. and its former directors by concerted effort of SFC and HKEX 12. MMT sanctions chauffeur and wife for insider dealing before a takeover announcement Regulatory Updates 1. SFC extends swift licensing process to new VATP applicants ON 16 January 2025, the SFC announced that all new virtual asset trading platform (“ VATP ”) applicants can now seek licences under its swift licensing process. This new licensing approach requires VATP applicants to implement their policies, procedures, systems and controls before conducting an external assessment on these measures. The SFC will become a party to the engagement to supervise the overall external assessment process. This extension is made in light of the effectiveness of the SFC’s direct engagement and communication with deemed-to-be-licensed VATP applicants on the regulatory standards during its risk-based on-site inspections of all such applicants. It should be noted that all VATP applicant submitting license applications after 18 December 2024 should refer to the new Circular (dated 16 January 2025) for the updated swift licensing process. Key takeaways of the revamped swift licensing process are as follows: the SFC continues to adopt its engagement and communication with the VATP applicants through the process as before; the new VATP applicant has to submit its licensing application bundle to the SFC for assessment through WINGS, and to engage an external assessor (“ EA ”) to perform an external assessment; after an initial assessment by the SFC of the key personnels of the applicant, and upon acceptance of the license application, the applicant will proceed to deploy its relevant systems and controls; while the applicant is ready for an external assessment, a tripartite agreemen t with the SFC and the EA should be entered; the SFC will scrutinize and be assured that the policies, procedure and system controls (“ P&P ”) of the applicants are suitably designed and implemented; in case of any findings or exceptions, these should be resolved during the external assessment process; upon completion of the external assessment and all other outstanding matters such as capital injection, the SFC will grant a licence to the VATP applicant if it is satisfied that the applicant is then fit and proper to be licensed. What to know about the revamped external assessment? it is expected that there will be substantial changes to P&P of the VATP applicant from its conventional operational routines; as such it would be important to conduct external assessment only after the VATP deploys its systems and controls and evaluate itself if it fully adapts its P&P to ensure that they can operate as intended/ designed; it is also important for the EA to assess if the P&P are suitably designed and implemented by the VATP applicant even though the P&P can operate as intended; the SFC requires opinion from the EA that VATP applicant’s P&P are suitably designed and implemented to comply with the Guidelines specified for VATPs; the SFC, the EA and the VATP applicant should agree on the terms and scope before commencing the assessment. SIGNIFICANCE: The SFC has just granted licences to four deemed-to-be-licensed VATPs in December last year under the newly introduced swift licensing process, the determination of the Commission to give a greenlight in the licensing process to the new applicants is quite obvious. Subject to the new circular in January 2025, new VATP applicants are only required to conduct one external assessment throughout the streamlined licensing application process. 2. Onshore RMB bonds accepted as margin collateral in OTC Clearing Hong Kong Limited Effective 13 January 2025, the OTC Clearing Hong Kong Limited (“ OTC Clear ”) started accepting the Ministry of Finance and Mainland policy banks onshore bonds held under Northbound Bond Connect (“ CGB ”s) by offshore investors as margin collateral for Northbound Swap Connect (“ NBSC ”) transactions. Under the arrangement, the SFC, the People’s Bank of China (“ PBoC ”) and the Hong Kong Monetary Authority (“ HKMA ”) reached a consensus that offshore investors can use CGBs as margin collateral for all other eligible derivative transactions cleared in OTC Clear. In the Circular posted by HKEX dated 16 December 2024, the new eligible collateral can be used to cover initial margin requirements of NBSC , providing greater flexibility to international investors and enhancing their capital efficiency. Ever since its launch in May 2023, the Swap Connect has evolved with smooth operations and steady growth in trading volume, adding vibrancy to the region’s financial markets. SIGNIFICANCE: As Mr Rico Leung, the SFC’s Executive Director of Supervision Markets, has said, “ Global institutional investors can benefit from further reduction in liquidity cost with more efficient use of their onshore RMB bonds as non-cash collateral when clearing with OTC Clear. ” He further added that the new measures strengthen HK’s position as a leading global offshore RMB hub and advancing development of its fixed income market. 3. SFC expands listed structured fund offerings in Hong Kong On 23 January 2025, the SFC sets out new regulatory requirements 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 (“ P&F ”). There has been growing interest among the product issuers in launching the P&F in HK amid their appeal to investors. The P&F offer investors who are looking for trading and hedging tools for popular individual stocks listed overseas, as well as for seeking price discovery tools for overseas exposure during Asian trading hours. One distinctive feature of the P&F is that they provide investors with a more customised investment exposure than the prevailing conventional products. In balancing the potential benefits and risks associated with exposure to these complex and novel products, the SFC has in place enhanced regulatory framework with additional safeguards and measure for protecting HK investors. For example, with respect to Single Stock L&I Products, only those referencing a highly liquid mega-cap stock listed on a major overseas exchange is accepted by the SFC, and is subject to a maximum leverage factor of 2X to -2X only. SIGNIFICANCE: With the protective constraints on Single Stock L&I Products imposed by the SFC, it excludes overseas listed stocks which may be dually listed in Hong Kong and stocks listed on any Mainland exchange which are not overseas exchanges; while only a lower leverage factor is accepted aiming to reduce exposure to any single stock volatility. For details of additional requirements, reference can be made to the circular post the same day. Market News 4. InvestHK brought a record-breaking number of new companies to Hong Kong in 2024 On 20 January 2025, the Invest Hong Kong (“ InvestHK ”), a government department of Hong Kong Special Administrative Region (HKSAR) which aims to strengthen Hong Kong’s status as the leading international business location in Asia, announced that the department achieved a record-breaking year of foreign direct investment (“ FDI ”) in 2024, assisting 539 overseas and Mainland companies to set up their business in Hong Kong, which represents a 41% increase compared with 2023, further reflecting the appeal of HK as a leading business hub in the region. The strong FDI performance was driven by investment in diversified and high-valued industries which is estimated to bring to HK over HKD67.7 billion, a record high of near 10 % increase over 2023’ around 6,864 job opportunities are expected to be created during the first year of operation. Taking a look at the figures, the top five locations of origins of these new companies ranked in order are Mainland China, United States, France, The United Kingdom and Singapore; the results reflect full confidence in HK from these enterprises in selecting the city as their base to capture the unique opportunities brought by HK as a “super connector” and a “super value-adder” . Furthermore, more than 800 applications were received through the New Capital Investment Entrant Scheme (“ New CIES ”) by the end of 2024 since its launch last March, bringing around HKD24 billion of investments to the city. SIGNIFICANCE: As Ms Alpha Lau, Director-General of Investment Promotion, has said, “ It demonstrates HK's resilience and adaptability and businesses' strong confidence in the city as the preferred base to expand in the region. ” 5. Enhancing sponsors’ expertise to drive GEM advancement At the seminar “ Hong Kong Capital Market – The Future of GEM ” organised by theAssociation of Hong Kong Capital Market Practitioners, Dr Kelvin Wong, Chairman of the SFC, delivered a keynote speech entitled Enhancing Sponsors’ Value Proposition to Drive GEM Advancement . He emphasised the importance of GEM to small and medium enterprises (SMEs) and Hong Kong’s listing market development. He also discussed how the sponsors of initial public offerings (IPOs) should enhance their value proposition by leveraging their unique roles to strengthen the corporate governance and resilience of companies for their longer-term success. The key points of the speech are as follows: Importance of a robust GEM to SMEs and listing market the secondary board of GEM has served as a source of long-term capital for SMEs to pursue innovation, value creation and business growth, testifying hundreds of both local and Mainland SMEs. SMEs are the backbone of the HK economy and accounted for 98% of the total number of businesses, and employing around 44% of the workforce. GEM enhancements in 2024 there were three GEM lPOs in 2024 raising a total of HK$235 million with a total initial market capitalisation of HK$720 million at listing; under the new streamlined transfer mechanism, three GEM issuers’ applications to transfer to the Main Board had been received by the HKEX; the average sponsor fees increased to HK$6.8 million in 2024, up by 25% compared to 2020. Enhancing sponsors’ value proposition the roles of sponsors and corporate financial advisors are essential in helping their clients ensure regulatory compliance and navigate the complexities of the IPO journey, and in conducting due diligence on the listing applicant’s business to ensure fulfilment of the SFC’s stringent standards, their recommendations are conducive to the sustainable development of companies long after their IPO; sponsors should also critically assess the commercial viability of a company’s business model and ensure the disclosure of accurate and sufficient information to investors. Facilitating corporate sustainability and governance beyond the IPO sponsors can help shape a culture of good corporate governance by discussing the internal control inadequacies with the listing applicant’s board of directors and recommending remedies; finding of research indicates that strong value proposition of reputable sponsors can always bring smaller under-pricing at IPO and lower price volatility post IPO; sponsors can conduct a range of investor relation initiatives and ensuring continuous equity coverage by research analysts, exposing the newly listed companies to persistent scrutiny by public eye through which is then transformed into a driving force for the companies to improve their operations, accountability, disclosure standards, corporate governance, as well as shareholder returns post IPO. Importance of governance to long-term corporate success it must be emphasised corporate governance is crucial to the long-term success of corporates post IPO. Research findings also indicated a high correlation between corporate governance and a company’s profitability and sustainability, a competent board of directors, robust internal controls and management systems as well as effective risk management are indispensable elements for success. Sponsor failures and good practices since sponsor’s rigor of due diligence is pivotal in sustaining HK’s reputation as an international fund-raising hub, the SFC is committed to combating sponsor misconduct with zero tolerance; always alert that any weakening in investors’ confidence would increase difficulties and costs for companies to raise capital. 6. HashKey Exchange's trading volume increased by 85% in 2024 As investors’ interests in virtual assets remain keen, the HashKey Exchange, one of the licensed VATPs in Hong Kong, continues to records with robust growth with its trading volume exceeding HKD 600 billion last year, marking an 85% year-on-year increase. As commented by Mr. Xiao Feng, Chairman and CEO of the parent company HashKey Group, the company is expected to reach breakeven by 2025. Currently, HashKey Exchange offers four cryptocurrencies for retail investors: Bitcoin (BTC), Ethereum (ETH), Avalanche (AVAX), and Chainlink (LINK). Its Chief Risk Officer Mr. Ru Haiyang anticipates more cryptocurrencies will be made available to cope with increasing interests at retail level. The introduction of derivative contracts, options or leveraged trading are still under communication with the regulatory bodies. SIGNIFICANCE: As HaskKey Exchange remains bullish on Bitcoin, the most popular and actively traded crypto to retail investors, trading volume is expected to grow sustainably in 2025. 7. Hong Kong joins LME global warehouse network The London Metal Exchange (“ LME ”) has confirmed, on 20 January 2025, its approval of HK as an LME warehouse location, HK will now join the LME’s existing network of 32 locations over the USA, Europe and Asia. Matthew Chamberlain, LME CEO, said, “The addition of Hong Kong to our global warehousing network is an exciting development, providing warehouse facilities closer to the metals hubs of Mainland China than ever before. The driving factors for such approval are: (i) Hong Kong provides the natural hub for connectivity to the Chinese market which is the world’s largest consumer of metal; (ii) there are keen interests from warehouse, landlords and metal owners in seeing HK as a metal delivery point; (iii) China is a largest net consumption area which is in vicinity to HK; (iv) established local fiscal and regulatory system and access to good transport network are in place in HK. SIGNIFICANCE: At the initial stage, HK is permitted to store LME-registered aluminium alloy, primary aluminium, copper, lead, nickel, tin, and zinc, and it will become an active warehouse location three months after the approval of the first warehouse company. This approval marks another cornerstone in the development of metal trading industry in HK since the HKEX acquired the LME in 2012 for USD2.2 billion. Enforcement News 8. Hang Seng Bank Limited is fined $66.4 million for misconduct in selling investment products The SFC reprimanded and fined Hang Seng Bank Limited (“ HSB ”) $66.4 million for serious regulatory failures in relation to the bank’ s sale of collective investment schemes (“ CIS ”) and derivative products and overcharging its clients and making inadequate disclosure of monetary benefits to them during various periods over the course of nine years between February 2014 and May 2023. A snapshot of the findings: (1) Sales practices in relation to CIS 111 client accounts were found to have executed 100 or more CIS transactions during the material period from 1 June 2016 to 30 November 2017; 46 clients were solicited into conducting excessively frequent transactions which contradicted to their investment perspectives/ horizon; HSB’s internal controls were deficient in monitoring the sales of CIS by their relationship managers. (2) Sales and distribution of derivative products from 17 February 2014 to 19 December 2018, it was found that 388 clients with no knowledge of the nature and risk of derivative products had purchased derivative funds in 629 transactions; while some products were of higher risk levels than the client’s tolerance levels. (3) Overcharging and inadequate disclosure of monetary benefits retained monetary benefits from client transactions in breach of regulatory standards; charged higher transaction fees from clients; failed to adequately disclose trailer fee arrangements to clients; HSB received at least HKD22.4 million in excess benefits/ fees from these transactions from the clients. SIGNIFICANCE: The SFC is of the view that the misconduct of HSB was serious and systemic, and its failure to act with due care and diligence, further aggravated by the lack of proper monitoring of sales distributions and compliance with disclosure requirements, all amounted to the adverse influence on the best interests of its clients. 9. Associate Director of SFC charged by ICAC with conspiracy to pervert course of justice The ICAC announced on 9 January 2025 that Deng Yingxia (“ DENG ”), a then Associate Director of the SFC, was charged by the ICAC with conspiracy to pervert the course of public justice by allegedly providing advice to subjects of an SFC investigation into suspected market manipulation in relation to a listed company on how to conduct themselves in the probe, including destroying potential evidence. The ICAC investigation stemmed from a corruption complaint. After investigation, the ICAC arrested DENG in an operation jointly carried out with the SFC in April 2024. It was alleged that between July 15 and 27, 2022, DENG had conspired with a subject of a Market Manipulation Investigation (relating to China Gas Industry Investment Holdings Company Limited ( 01940.HK )), she met with that person and other subjects of the investigation, and advised them how to answer possible questions posed by the SFC as well as advising them to destroy potential evidence. SIGNIFICANCE: The SFC was committed to render full assistance to the ICAC during investigation of the case. The ICAC, which stands itself out as emblem of upholding the integrity of HK’s financial market, shares the same mission of the SFC; their concerted effort to combat misconduct in the case is a good example to testify to the public that HK remains as a hub of justice and integrity. 10. The first solicitor convicted of breaching secrecy provision by the SFC A Hong Kong practicing solicitor, Mr Tse Yin Fung (“ TSE ”), was convicted today at the Eastern Magistrates’ Courts for violating the secrecy provision under the Securities and Futures Ordinance (“ SFO ”) following a prosecution brought by the SFC, and was fined HKD25,000 together with the payment for investigation costs of the SFC. In the case, TSE, acting as the legal representative of an individual, received confidential information regarding a restriction notice that the SFC had disclosed to that individual, which was subject to the secrecy provision under the SFO. After receiving the confidential information, TSE disclosed the information to two other individuals on 9 February 2021. SIGNIFICANCE: This case marks the first occasion in which a Hong Kong practicing solicitor has been convicted of an offence for contravening the secrecy provision under the SFO. No matter what intention or reason TSE had, as a legal professional, he should maintain the highest standard of professional conduct amid conducting his entrusted duty for his client. 11. Enforcement action against FingerTango Inc. and its former directors by concerted efforts of SFC and HKEX On 16 January 2025, the SFC and the Stock Exchange of Hong Kong Limited (“ Exchange ”) have joined hands in an enforcement action that resulted in the Exchange’s disciplinary actions against a Mainboard-listed FingerTango Inc. (“ Finger ”) ( 06860.HK ) and its eight former directors for misconduct and breach of their duties towards the company and its subsidiaries. Meanwhile, the SFC also sought disqualification and compensation orders from the Court of First Instance (“ CFI ”) for the same alleged misconduct. Snapshot of the legal action: the investigation was concerned with the directors’ misconduct in relation to problematic investments and loans to external parties; at the time of listing, all then directors, including independent non-executive directors, resolved to adopt a policy that would allow certain investment decisions to bypass board approval ; since then, Finger used the proceeds from its IPO to: (i) invest HKD450 million in a fund without knowledge of the board; (ii) partially redeemed the fund and invested another HKD250 million in loan notes (“2019 Loan Notes”); which later turned to be default with a loss of HKD258.75 million; (iii) between May 2020 and March 2021, another 20 loan agreements were entered by Finger and its two subsidiaries with 15 borrowers, totalling HKD500 million (the “2020-21 Loans”), which turned out later with a loss of HKD424 million in default; in the light of the above findings, the SFC expanded the scope of misconduct to include the 2020-21 Loans, with focus on the former directors’ failure to carry out proper procedures and due diligence before entering into loan agreements; SFC is of the view that the losses resulting from the 2019 Loan Notes and 2020-21 Loans were attributable to breaches of the duties of the former directors of Finger, rendering them liable to the compensate the company and its subsidiaries for the incurred losses. SIGNIFICANCE: As SFC’s Executive Director of Enforcement, Mr Christopher Wilson, had commented that corporate directors have the obligations to oversee the activities of management and ensure adequate internal control policies and procedures operate effectively. A lax policy adopted by the directors cannot be considered as an excuse to alleviate their responsibilities. It also conveys the message to the directors and audit committees that they should be mindful of their duties to prevent loss or misuse of listed corporations’ assets. 12. MMT sanctions chauffeur and wife for insider dealing before a takeover announcement The Market Misconduct Tribunal (“ MMT ”) had ordered Ms Choi Ban Yee (“ CHOI ”), the wife of a chauffeur, Mr Sit Yuk Yin (“ SIT ”), who worked for the family of the chairman of Tian An China Investments Company Limited at the material time, to disgorge illicit profit gained from insider dealing in the shares of Asiasec Properties Limited, formerly known as Dan Form Holdings Company Limited (“ Dan Form ”) ( 00271.HK ), before a takeover involving the companies was announced. The MMT was satisfied that SIT was in possession of inside information about the takeover by 13 September 2016 before the announcement was made on 22 September 2016, and he procured his wife to trade the Dan Form shares for a profit of HKD106,968. As a result of the judgement, the MMT imposed against CHOI and SIT cold shoulder orders for 16 months, cease and desist orders and to pay the costs incurred by the government and the SFC. [End of ComplianceOne Newsletter –January 2025] 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 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter – July 2022 ComplianceOne Newsletter – July 2022 The topics discussed in this monthly newsletter are as follows: 1. Publication of the latest Hong Kong’ Money Laundering and Terrorist Financing (“ML/TF”) Risk Assessment Report by the HKSAR Government (“the Report”) 2. Joint Announcement of the People’s Bank of China (“PBC”), the Hong Kong Securities and Futures Commission (“SFC”) and the Hong Kong Monetary Authority (“HKMA”) with regard to SWAP CONNECT 3. Hong Kong’s asset and wealth management business remained resilient in 2021 4. SFC reprimands and fines RBC Investment Services (Asia) Limited $7.7 million for mishandling client assets 5. SFC reprimands and fines Rifa Futures Limited $9 million for regulatory breaches 6. SFC reprimands and fines KTF Capital Management Limited $400,000 for breaching Financial Resources Rules MARKET NEWS 1. Publication of the ML/TF Risk Assessment Report The Hong Kong Government published the Report in July 2022 which examines the ML/TF threats and vulnerability facing various sectors in Hong Kong as well as the risk of proliferation financing in the city. The assessment concludes the ML risk of the securities sector remains at medium level , taking into account the ML threat and vulnerability levels for the securities sector which are both assessed to remain at medium level. It is noted that securities sector continues to be exposed to transnational, cross-border as well as domestic ML threats, in particular with the overflow of social media investment scams recently. In the light of this, the SFC has strengthened its risk-based AML/CFT supervision which enables the monitoring of a licensed corporation’s AML/CFT compliance in a more risk-sensitive and effective manner. Significance: The increased risk in ML/TF is obvious as exemplified by the increase in enforcement news of licensed corporations being sanctioned for failure to comply with the KYC , AML/CFT lately. On the contrary, licensed corporations are also confronted with the difficulties in identifying and certifying the sources of funds and nature of business of their clients, especially those originated across the border. 2. Joint Announcement between PBC, SFC and HKMA with regard to SWAP CONNECT To promote the development of financial derivatives markets in both Mainland China and Hong Kong, a joint announcement has been made that both will collaborate to develop mutual access between the Hong Kong and Mainland interest rate swap markets (Swap Connect). Details are as follows: (1) Swap Connect refers to an arrangement which will enable investors to participate in the financial derivatives markets in the Mainland and Hong Kong through a connection between Infrastructure Institutions in both places. At the initial stage, Northbound Trading will commence first. (2) Swap Connect is another important measure of the Central Government to support the development of Hong Kong and enhance Mainland-Hong Kong cooperation. (3) Swap Connect is subject to the relevant laws and regulations of both markets. (4) The regulators of the financial derivatives markets agreed to establish effective mechanisms under Swap Connect to handle any misconduct in a timely manner for the purpose of investor protection on both sides. (5) Hong Kong and Mainland Infrastructure Institutions should actively take forward the development work for Swap Connect in an orderly manner and with prudent risk management (6) The official launch of Swap Connect will take place after six months from the date of this announcement in July 2022 Significance: The SWAP Connect , together with the ETF Connect, demonstrate the determination of the Mainland Government to open up China’s interest rates derivative market to overseas investors; with the interest rate swap (“IRS”) accessible to foreign investors, it provides a hedging tool to the bond markets in Mainland China amid the anticipation of interest rate hikes in the global markets, and further helps increase the attractiveness of the bonds actively traded in China. To conclude, the new mutual access mechanism will argument the role of Hong Kong as an international financial hub and as a bridge between China and the outside world. 3. Hong Kong’s asset and wealth management business remained resilient in 2021 A survey published today by the SFC found that the asset and wealth management business in Hong Kong recorded a 2% year-on-year increase in assets under management (AUM) to $35,546 billion (US$4,558 billion) at the end of 2021 with net fund inflows reaching $2,152 billion (US$277 billion), up 6% from 2020. The AUM of the asset management and fund advisory business conducted by licensed corporations and registered institutions increased 8% to $25,888 billion (US$3,320 billion). “The survey findings underscore the core strengths of the asset and wealth management industry in the fast-changing, challenging environment; and the SFC will continue to support the development of Hong Kong as a premier global asset and wealth management center and preferred fund domicile”, as said by Ms. Christina Choi, the SFC Executive Director of Investment Products. Significance: There are also other highlights of the survey which include: i Assets held under trusts increased 5% to $4,719 billion (US$605 billion). ii The AUM of the private banking and private wealth management business decreased 6% to HKD10,583 billion (USHKD1,357 billion). iii Non-Hong Kong investors remained a major source of funding for the asset and wealth management business, accounting for 65% of AUM. iv The total number of staff in the asset and wealth management business increased 12% to 54,003. ENFORCEMENT NEWS 4. SFC reprimands and fines RBC Investment Services (Asia) Limited The RBC Investment Services (Asia) Limited (RBC) was fined by the SFC an amount of $7.7 million for regulatory breaches relating to mishandling of client assets. It was found in an investigation that between January 2018 and August 2020, RBC had failed to segregate client money as required under the Securities and Futures (Client Money) Rules (Client Money Rules) on 86 occasions; and further that between 3 December 2012 and 26 March 2020, RBC had breached the Rules again by transferring securities from 65 client accounts held by non-professional investor clients to SEHK Options Clearing House Limited as collateral without valid standing authority. Significance: It expressly demonstrates the prior importance of upholding the segregation of client money and the indispensable necessity to obtain standing authority from the clients whenever the licensed corporations are executing any kind of transfer of client money where protection of it is of paramount importance in the eyes of SFC. 5. SFC reprimands and fines Rifa Futures Limited $9 million for AML/CFT breaches The Securities and Futures Commission (SFC) has reprimanded and fined Rifa Futures Limited (Rifa) $9 million for failures in complying with know-your-client, anti-money laundering and counter-terrorist financing (AML/CFT) and other regulatory requirements between May 2016 and October 2018. The SFC’s investigation found that Rifa, which permitted 310 clients to use client supplied systems (CSSs) for placing orders, had failed to conduct adequate due diligence on the CSSs. Also, Rifa had failed to implement two-factor authentication (2FA) for clients to login to their internet trading accounts via CSSs It was further found that Rifa failed to conduct adequate ongoing monitoring of clients’ fund movements to ensure they were consistent with the clients’ nature of business, risk profile and source of fund. The SFC is of the view that Rifa’s conduct was in breach of the AML/CFT Ordinance. Significance: A couple of licensed corporations ("LC") had been fined by the SFC before for the same reasons of allowing their clients to use the CSS where the LCs had no effective measures to monitor, and thus provide loopholes for the possibilities of breaching the AML/CFT ordinance. 6. SFC reprimands and fines KTF Capital Management Limited $400,000 for breaching Financial Resources Rules The SFC has reprimanded and fined KTF Capital Management Limited (KTFCM) $400,000 for failures to comply with the Securities and Futures (Financial Resources) Rules (FRR). The SFC found that KTFCM failed to:- ii maintain its required liquid capital of approximately $2.8 million between 13 and 18 December 2018, and iii notify the SFC when it became aware of its inability to comply with the financial resources requirements; iv anticipate its proprietary trading in shares would trigger adverse implications to its liquid capital calculation under the FRR. The SFC is of the view that KTFCM’s conduct was in breach of the Code of Conduct. Significance: As a licensed corporation ("LC"), the maintenance of liquid capital at all times should always be in the mind of the responsible officers and the key finance personnel who serve as safeguard to uphold this benchmark. The deployment of competent personnel to take on various functions is also "second to none" in ensuring a certain level of compliance for a LC

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter – Mar 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES 1. The SFC issues additional guidance for high-multiplier IPO subscription 2. SFC proposes enhancements to targeted tools to address corporate misconduct MARKET NEWS 3. Hong Kong capital markets ended with high achievements in 2024 4. HKEX and Exchange Fund collaborate on development of fixed-income and currency (FIC) ecosystem 5. Hong Kong’s securities industry posted broad-based growth in 2024 6. Hashkey Capital was granted type 1 license by the SFC ENFORCEMENT NEWS 7. SFC obtains disqualification order against former financial controller of Anxin-China Holdings Limited 8. SFC seeks disqualification and compensation orders against entire former board of 3DG Holdings (International) Limited 9. SFC obtains disqualification orders against former executive directors of Tech Pro Technology Development Limited 10. SFC suspends a Finfluencer for 16 months for unlicensed investment advice on Telegrams 11. SFC fines Enlighten Securities Limited $5 million for securities margin financing failures 12. SFC bans former RO of Kylin International for private fund management failures Regulatory Updates 1. The SFC issues additional guidance for high-multiplier IPO subscription The SFC recently completed a review (“ Review ”) of the risk management practices and control measures of selected licensed corporations (“ LC ”s) in relation to their initial public offering (“ IPO ”) subscription and financing services. A circular dated 20 March 2025 set out the findings of the Review and provides guidance to LCs on the expected standards of conduct. An Executive Summary of the Review 1. Key Findings from the Review The Review identified the deficiencie s including lenient credit control in assessing clients’ financial capabilities, imprudent IPO financing, thus rendering the LCs to risk exposure levels beyond their anticipation. (1) Credit controls are too lenient the LCs over-emphasized on the subscription levels rather the assessment of the clients’ financial capacities, resulting in over-leverage for clients, subject the LCs to increased client default risk; practices observed like applying high multiplier to clients’ account balances based on some pre-set leverage ratios without written justification ; (2) IPO funding arrangement some LCs collected minimal upfront subscription deposits on non-fully funded IPO subscription orders, while relying on house money to meet pre-funding requirement, putting significant pressure on the liquidity level of the LCs; (3) Handling subscription deposits the LCs failed in proper and timely segregation of the subscription deposits received from the clients that were not placed with the designated banks for pre-funding confirmation; causing under-segregation of client monies in segregated bank accounts; the LCs failed in timely segregation of the client money released from designated banks after the balloting process and before returning to clients within one day after receiving the receipts by the LCs; 2. The Regulatory Guidance With the aim to mitigate excessive exposure for the investors, some expected standards of conduct are set out in particular with respect to FRR capital requirements and relevant internal control measure. (1) For IPO financing activities, the LCs should: assess the financial capabilities of the clients, and collect minimum upfront subscription deposits of not less the 10% of the subscription amounts; conduct financial and liquidity assessment prior to offering any IPO financing activities to the clients, including estimation of the maximum amount of IPO financing as well as the utilization of any external sources of financing clients’ subscriptions; (2) For Segregation of subscription deposits LCs are reminded to properly segregate upfront subscription deposits that are not placed with designated banks for pre-funding confirmation; 3. Other important points with compliance Issues (1) Investor identification requirement under FINI to ensure the Client Identification Data (“CID”) submitted to FINI for IPO subscriptions is accurate; to prevent clients from submit multiple subscription orders; (2) Computation of liquid capital the LCs which provide IPO financing facilities to clients for pre-funding confirmation should follow the guidance set out in the circular with respect to FRR rules and requirements; FINAL REMINDER LCs should critically review their existing policies and procedures to ensure proper implementation of and full compliance with this circular for IPOs with offering periods commencing after the date of this circular. SIGNIFICANCE: LCs are advised to pay attention to this circular which outlines the perspective of the SFC in relation to imprudent IPO financing and its adverse impact on FRR compliance of the LCs; it is of top priority to strike a balance between risk, viability and compliance as the pendulum needs to swing to sustain the momentum rather than staying at either side. 2. SFC proposes enhancements to targeted tools to address corporate misconduct On 28 March 2025, the SFC began a consultation on proposed enhancements (“ PPEH ”) for the relating to Securities and Futures (Stock Market Listing) Rules (“SMLR”) for IPO cases and post-IPO matters, aiming to improve regulatory efficiency and providing protection for investors at large. In the wake of the SMLR review, the PPEH was put forward to ensure the SFC with sufficient targeted tools to encourage that the listed issuers and listing applicants to make more transparent & accurate disclosures, as well as addressing misconduct. The key PPEHs to the SMLR comprise of FOUR areas : (1) for IPO cases: listing applicants are required to meet continuing disclosure obligations post-listing without the SFC’s objections to the listing, given that the listing conditions remain effective after listing. It is expected that some applications can be expedited with increased transparency with this bespoke disclosure requirement; (2) for post-IPO matters: apart from the existing power to execute suspension of dealing in the securities, the SFC would be able to impose post-listing conditions on a listed issuer, requiring for more transparent and complete disclosures in order that investors can make more informed decisions; (3) for trading suspension: to shorten the suspension time through proposed simplified procedures to handle application for trading resumption more efficiently; (4) for issuers unsatisfied with SFC’s decisions: the aggrieved party would have the right to seek for a review by the Securities and Futures Appeals Tribunal, providing an independent safeguard to the aggrieved that the decisions made by the SFC are reasonable and fair. SIGNIFICANCE: The merits of these PPEHs can be summarised by what Mr. Michael Duigan, the SFC’s Executive Director of Corporate Finance, has said, “ Investors and listed issuers alike stand to benefit from these comprehensive enhancements to drive regulatory and operational efficiencies in Hong Kong’ s listing market as a favourite listing destination for companies at home and abroad .” The above PPEHs, despite its name as targeted tools for the SFC to address misconduct, are actually beneficial arrangements to both the issuers and the investing public by strengthening public accountability and streamlining the regulatory process on one hand; whereas further consolidating the execution authority of the SFC in implementing the policies and procedures with more flexibility. Market News 3. Hong Kong capital markets showed high achievements in 2024 A Quarterly Report (Q4) of the SFC in March showed that strong asset management sector and enhanced market connectivity amidst improving investor sentiments boosted the Hong Kong capital markets to end with high scores. Some key takeaways of the achievements: (1) The average daily turnover of ETFs surged 35% year-over-year to HKD18.9 billion with net inflows of HKD22.8 billion for the year; (2) Net inflows of HK-domiciled funds were up 88% to HKD 162.9 million with asset managed up 22% HKD1.64 trillion; (3) Cross-listing of two Hong Kong ETFs in Saudi Arabia with combined market capitalization of USD1.6 billion as of December; (4) Enhancement of the ETF Connect and the Mainland-Hong Kong Mutual Recognition of Funds scheme bolstered the fund sales in HK since January 2025; (5) Stock Connect saw 55% jump in average daily southbound trading to HKD48.2 billion, more than 18% of turnover in HK, with net inflows hit a 10-year high of HKD807.9 billion; (6) Total number of licensed corporations was up 1.5% with number of license applications up 15% as end of 2024; (7) The number of SFC licensed VA trading platforms was up three more to a total of 10; and the launch of “ ASPIRe ” roadmap further navigated the development of the VA regime in HK; (8) Step up of investor education and combat investment fraud, in December, the SFC launched a fresh anti-scam publicity campaign titled “ Don’t be Sucker ” through the mass media to arouse public alertness. SIGNIFICANCE: Undoubtedly, the support from Mainland is second to none as a driver for the success in Hong Kong. And to conclude the achievements, Ms Julia Leung, the SFC’s CEO, said, “ Building upon the progress, the SFC will remain committed to facilitating developments and fostering innovation for our markets while upholding their integrity and quality. ” 4. HKEX and Exchange Fund collaborate on development of fixed-income and currency (FIC) ecosystem The Hong Kong Exchanges and Clearing Limited (“ HKEx ”) has been providing an unrivalled connectivity between China and the rest of the world, and diversifying the business of the exchange to make it more resilient to volatility and prepared for opportunities. The HKEx has established the most comprehensive product ecosystems in Asia, and it continues to work. For the cash equity market, complemented by the equity derivatives franchise, the HKEX has provided the clients with one-stop-shop to trade and manage risk. Going further, the HKEX will be focusing on driving fixed-income and currency (“FIC”) market development to cultivate a similar ecosystem or this asset class. Mainland China’s fixed-income market, at USD24.6 trillion, ranks the second largest in the world. With strong policy support, it is expected that the growth trajectory of Mainland’s FIC market to continue and connectivity with offshore market. Two cornerstone s of market liquidity and resilience: (a) Diverse investor base: Bond Connect is a key channel for international investors to gain access to China’s domestic fixed income market, given the average daily turnover of its northbound broke records since its launch in 2017. (b) Well-functioning derivative market : allowing investors to effectively and efficiently manage their risks. On 4 March 2025, the HKEx marked a new milestone in building HK’s FIC ecosystem with the announcement to collaborate with CMU OminClear Limited (“ CMU OmniClear ”). CMU OmniClear , a wholly-owned subsidiary of the Exchange Fund with USD610 billion assets under custody, and HKEX signed a MOU on that date to deepen their collaboration in enhancing the post-trade securities infrastructure of the Hong Kong’s capital markets, and supporting a long-term development of the fixed-income and currencies (FIC) ecosystem. Key points of the MOU are that the two parties will explore and pursue cooperation in the following areas: (i) realising cross-asset class efficiencies across equities and fixed income; (ii) expanding the use of Mainland bonds as collaterals; (iii) enhancing HK as a bond issuance centre; (iv) developing an international centre securities depository (“ ICSD ”) in Asia; SIGNIFICANCE: This MOU sets an important milestone and a commitment from both parties to the development of the capital markets, and also for building a vibrant FIC ecosystem in HK. Moreover, through the MOU, the HKEX, HKMA and the CMU OmniClear are collaborating to enhancing the development of HK’s fixed-income market, materializing the RMB internationalization and consolidating HK as an international financial centre as well as an offshore RMB business hub. 5. Hong Kong’s securities industry posted broad-based growth in 2024 On 26 March 2025, the SFC published that from a report on the financial review of the securities industry , it showed that the securities industry demonstrated a remarkable resilience in financial performance in 2024 with total net profits up 56% year-on-year to HKD44.4 billion. The encouraging findings are as below: (i) earning growth of 11% increase in total income to HKD222.6 billion; (ii) the total value of transactions of all securities dealers and securities margin financiers jumped 34% to HKD144.1 trillion; (iii) broad-based growth across different categories: securities commission up 18% to HKD20.2 billion; asset management income up 14%to HKD37.5 billion, and underwriting and placing of securities (up 18% to HKD11.1 billion). For details of the financial review, it is available on the website. 6. Hashkey Capital was granted type 1 license by the SFC On 18 March 2025, HashKey Capital was granted a Type 1 license from the SFC on top of its Type 9 (providing discretionary account management) and Type 4 (providing advisory service on securities and virtual asset investments) licenses. Under the new Type 1 license, HashKey Capital can now offer brokerage services to both retail and professional investors, as well as marketing and distributing funds including those related to virtual assets. With the addition of Type 1 license, HaskKey Capital can now offer a broader range of services which can be classified into three major categories: (1) Market access: providing brokerage services to two markets between crypto exchanges and brokers; (2) Investment funds: its clients now have the access to funds with diverse strategies; (3) Structured products: its clients are now provided with access to diverse suite of structures products HashKey Capital is now able to serve investors with more diversified goals and trading strategies. Enforcement News 7. SFC obtains disqualification order against former financial controller of Anxin-China Holdings Limited SFC has successfully obtained a court order disqualifying Ms. Yang Shuyan, the former financial controller of Anxin-China Holdings Limited (“ Anxin ”, 01149.HK ), from serving as a director, liquidator, receiver, or manager of any listed or unlisted corporation in Hong Kong, or being involved in their management, for three years. This ruling, effective without court permission, stems from her admitted failure to uphold the required standards of skill, care, and diligence in her role. Case Details: The Court of First Instance issued the order following Ms. Yang’s admission that she did not adequately oversee Anxin’s financial reporting. Between 2011 and 2015, the company significantly overstated its cash position, with discrepancies amounting to $1.26 billion in 2012 and $1.73 billion in 2013, as reflected in its audited financial statements. To mask these inaccuracies, false bank records were supplied to auditors during a 2014 audit. As financial controller, Ms. Yang was tasked with ensuring the accuracy of Anxin’s financial statements and overseeing the audit process. However, she failed to take reasonable steps to verify the company’s cash reserves or investigate discrepancies identified by auditors. Additionally, as a member of a special team formed to probe these inconsistencies, she accepted the team’s findings without scrutiny, neglecting to raise concerns about cash flow irregularities or the integrity of senior management. The court described her negligence as "nothing short of breath-taking," emphasizing that such large-scale financial misstatements could not have occurred without gross oversight on her part. SIGNIFICANCE: Mr. Christopher Wilson, SFC’s Executive Director of Enforcement, commented: “ The role of financial controllers in listed companies is pivotal to ensuring the integrity of financial reporting. Professional scepticism is not just a best practice; it is an essential duty. Financial controllers must approach their responsibilities with a critical mindset, actively questioning and verifying financial information to protect stakeholders.” This is not the first instance of regulatory action against Anxin’s leadership. In June 2021, SFC secured an eight-year disqualification order against a former executive director of the company, as part of broader proceedings against its senior management. These repeated interventions signal the severity of governance issues at Anxin and SFC’s resolve to address them. The disqualification of Ms. Yang serves as a powerful reminder of the responsibilities financial professionals bear in safeguarding stakeholder trust. Her failure to exercise professional scepticism and diligence led to significant misrepresentations that undermined the company’s credibility and misled investors. For further details of the case, please refer to - Case No.: HCMP314/2020 8. SFC seeks disqualification and compensation orders against entire former board of 3DG Holdings (International) Limited SFC has initiated legal proceedings in the Court of First Instance against eight former directors of 3DG Holdings (International) Limited, previously known as Hong Kong Resources Holdings Company Limited (“ HK Resources ”, 02882.HK ), which listed on the Main Board of Stock Exchange of Hong Kong since 30 June 2003. SFC is seeking disqualification and compensation orders for their alleged failure to prevent the misappropriation of $74.4 million in corporate funds. There are in total of eight directors (5 Executive Directors & 3 Non-Executive Directors), all serving on the board at the time of the alleged misconduct. Allegations of Misconduct SFC’s investigation revealed that on 8 June 2017, HK Resources acquired a company with a money lender’s license. Between June 2018 and March 2019, the company issued 12 loans totalling $74.4 million through this new money lending business, all of which defaulted. SFC alleges that the acquisition and subsequent loans were part of a scheme to misappropriate HK Resources’ cash. Legal Action and Potential Consequences - SFC is seeking: Compensation Orders: To recover the $74.4 million paid out for the loans, with the directors potentially liable individually or jointly. Disqualification Orders: To bar the directors from serving in corporate management roles for up to 15 years, under Section 214(2)(d) of SFO. SFC claims the directors breached their duties by failing to exercise proper skill, care, and diligence in their roles. SIGNIFICANCE: This case highlights SFC’s commitment to upholding corporate governance and protecting shareholders. The outcome could influence future standards for director accountability in Hong Kong’s financial markets. 9. SFC obtains disqualification orders against former executive directors of Tech Pro Technology Development Limited On 20 January 2025, SFC has won disqualification orders in the Court of First Instance against three former executive directors of Tech Pro Technology Development Limited (“ Tech Pro ”, 03823.HK ) for failing to oversee a joint venture, resulting in significant financial losses. Directors Penalized Mr. Li Wing Sang (former Chairman and Executive Director): Disqualified for 7 years. Mr. Liu Xinsheng (former Executive Director): Disqualified for 7 years. Mr. Chiu Chi Hong (former Executive Director): Disqualified for 4 years. Case Details SFC’s investigation revealed that Li, Liu, and Chiu failed to properly supervise a joint venture, leaving its management to the mainland partner. Li and Liu served as director and supervisor of the venture, respectively, while Chiu had no direct role in it. Their lack of oversight allowed the partner to misappropriate over RMB 300 million. Worse still, the partner didn’t pay rent for a Shanghai building (the venture’s main asset), leading to a mainland court order terminating its sub-leasing rights. This wiped out Tech Pro’s investment, and the directors were oblivious to the legal proceedings. The disqualification orders bar Li, Liu, and Chiu from acting as directors, liquidators, receivers, or managers, or being involved in managing any listed or unlisted corporation in Hong Kong. For Li and Liu, this lasts until 2032; for Chiu, until 2029. SIGNIFICANCE: SFC’s Executive Director of Enforcement, Mr Christopher Wilson, said: “As executive directors of the company, they should be responsible and accountable for managing the financial and operational status of the joint venture. Any delegation of the management of the joint venture to the mainland partner would not exonerate their fiduciary duties and obligation to act in the best interests of the company and safeguard its assets.” “These judgments reinforce the SFC’s commitment to upholding the highest standards of corporate governance and individual accountability in protecting the interests of investors and ensuring market integrity.” Mr Wilson added. The disqualifications which barring the trio from corporate roles in Hong Kong highlight the importance of diligent oversight in joint ventures and SFC’s resolve to maintain market integrity. For further details of the case, please refer to - Case No.: HCMP 2068/2020 10. SFC suspends a Finfluencer for 16 months for unlicensed investment advice on Telegram SFC has suspended Mr. Wong Ming Chung, a financial influencer known as Franky Wong, for 16 months, from 19 March 2025 to 18 July 2026. Wong, a licensed representative of Tse’s Securities Limited (“ TSL ”), was penalized following his criminal conviction for providing investment advice through a subscription-based Telegram chat group without the proper license. Case Details Between 2 January 2018 and 21 May 2019, Wong operated the Telegram chat group in his personal capacity, offering investment advice without the requisite licensing. This led to his conviction on 20 June 2024, where he pleaded guilty, receiving a $10,000 fine and an order to pay SFC’s investigation costs. Although Wong held SFC licenses for Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities and has been accredited to TSL since 20 August 2010, he was only authorized to act on behalf of TSL. Under the SFO, "advising on securities" is a regulated activity requiring an SFC license. Sections 114(1)(a) and 114(8) of the SFO make it an offense to carry on such a business without proper licensing, barring a reasonable excuse. Wong’s operation of the Telegram group violated these provisions, leading to his conviction. SFC determined that Wong’s actions rendered him unfit to remain licensed to conduct regulated activities. However, in deciding the 16-month suspension, SFC took into account Wong’s cooperation in addressing their concerns. SIGNIFICANCE: Mr. Christopher Wilson, SFC’s Executive Director of Enforcement, issued a stern warning to investors: “Investors should remain vigilant and exercise caution when availing themselves of information shared by finfluencers. Some finfluencers who provide investment-related content on social media and other online platforms may in fact be conducting regulated activities for which they need to be licensed by SFC. Finfluencers who are not licensed may not adhere to SFC’s requisite standards of conduct and accountability, and investors may suffer by relying on their advice.” He further advised: “Before acting upon an investment advice, investors should ensure that firms and individuals who provide the advice are properly licensed.” Wong represents a growing trend of finfluencers who use social platforms like Telegram to share investment-related content. This case highlights the risks of relying on unlicensed advice and reinforces SFC’s commitment to protecting investors by enforcing strict regulatory standards. 11. SFC fines Enlighten Securities Limited $5 million for securities margin financing failures SFC has taken disciplinary action against Enlighten Securities Limited (“ ESL ”), imposing a $5 million fine and a reprimand for serious internal control lapses in its securities margin financing operations. Additionally, Mr. Denny Kua Kong Chak, a responsible officer (“ RO ”) and senior manager at ESL, faces a seven-month suspension of his licence, effective from 21 March 2025 to 20 October 2025. Case Details SFC’s investigation uncovered multiple deficiencies in ESL’s risk management practices over margin financing during the period of 1 May 2020 to 30 November 2022. The key issues included: No safeguards to halt further securities purchases by clients with insufficient equity in their accounts. Weak margin call enforcement, including a failure to liquidate positions when necessary and inadequate documentation for policy deviations. Inadequate oversight of clients’ credit limits. Delayed action on collecting overdue margin payments. These failures breached the Internal Control Guidelines, the Code of Conduct, and the Guidelines for Securities Margin Financing Activities, standards that ESL, as a licensed entity under the SFO, was obligated to meet. Consideration behind the Penalties SFC’s decision was influenced by several factors: Recurring issues: Similar problems were flagged by SFC in 2015, yet persisted into 2022. Prior warnings: ESL received reminders from SFC in 2015 and 2022 to tighten its risk management practices. Kua’s responsibility: His oversight failures as a senior manager were a significant factor. Financial context: ESL’s decision to cease operations and its financial state led to a reduced fine (from a potential $6.5 million). Deterrence: SFC aimed to send a clear message to the industry about the importance of robust controls. Clean records: Both ESL and Kua had no prior disciplinary history, a mitigating factor. SIGNIFICANCE: This case highlights SFC’s commitment to enforcing prudent risk management and holding both firms and their leaders accountable, particularly in high-stakes areas like margin financing. The penalties serve as a warning to other licensed corporations to prioritize compliance or face serious consequences. For further details of the case, please refer to - STATEMENT OF DISCIPLINARY ACTION 12. SFC bans former RO of Kylin International for private fund management failure SFC has barred Mr. Steven Wong Yung, former Responsible Officer (“ RO ”) and CEO of Kylin International (HK) Co., Limited (“ Kylin ”), from the industry for 14 months, from 18 March 2025 to 17 May 2026. The sanction stems from his failure to properly manage private funds under Kylin’s oversight. Case Detail: Between August 2018 and July 2021, Kylin acted as the investment manager and/or consultant for sub-funds of a Cayman-incorporated fund. Wong, who served as RO for Type 9 (asset management) regulated activity from 2016 to 2023, was tasked with overseeing Kylin’s operations and internal controls. SFC found that he : Failed to ensure Kylin maintained appropriate standards of conduct a nd adhered to proper procedures in managing the funds. Did not adequately manage risks tied to Kylin’s business. These lapses fell short of the standards expected of an RO and senior manager, roles in which Wong also served as manager-in-charge for critical functions like compliance, risk management, and overall oversight. The Penalty Wong’s industry ban reflects SFC’s stance on accountability. In determining the 14-month duration, SFC considered: His cooperation in addressing their concerns. His clean disciplinary record prior to this incident. Wong, no longer licensed by the SFC as of 30 November 2023, cannot re-enter the industry until mid-2026. SIGNIFICANCE: Kylin ceased regulated activities on 31 December 2023, and its licence was revoked by the SFC on 22 January 2025 at the firm’s request. SFC’s action against Wong ties into broader disciplinary proceedings against related entities involved with the same funds. Details of these failures remain under wraps until those cases conclude. This ban underscores SFC’s commitment to holding senior management accountable for fund oversight failures. It’s a reminder that ROs must proactively manage risks and uphold rigorous standards to protect investors and maintain market integrity. [End of ComplianceOne Newsletter – March 2025] 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 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

The SFC and HKMA issued a Joint Circular on 20 October 2023 to provide further guidance on intermediaries’ virtual asset-related activities. We have prepared an executive summary to summarize the key points for easier reference.

The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Insurance Newsletter – Nov 2024 The topics discussed in this monthly newsletter are as follows: 1. Asian Insurance Forum 2024: Navigating Global Volatility 2. CPD Course for Insurance Brokers on Grandfathered ILAS Policies 3. The SFC Announces First Batch of Brokers for Wealth Management Connect Pilot Scheme and Insights on Insurance Connect IA News Updates 1. Asian Insurance Forum 2024: Navigating Global Volatility The IA's annual flagship event, the Asian Insurance Forum (“AIF”), will be held on 10 December 2024 , themed “Rising to the Challenge amidst Global Volatility.” This event will feature prominent speakers from the insurance and financial sectors, as well as regulators and government officials from Hong Kong and around the world. Keynote speakers include Mr. John Lee, Chief Executive of the HKSAR, Mr. Paul Chan, Financial Secretary of the HKSAR, and Mr. Jonathan Dixon, Secretary General of the IAIS. Panel discussions will cover: Global supervisory priorities. Strengthening the headquarters economy. Insurance solutions in wealth management, along with a dialogue with IA leadership. Participants can register online to join the forum virtually for free. For more details and the full program, visit the AIF 2024 website . 2. CPD Course for Insurance Brokers on Grandfathered ILAS Policies The IA published the circular on 8 November 2024 which provides additional details on the CPD course required for compliance with the Grandfathering Arrangements. From 1 October 2024, licensed insurance brokers offering advisory or discretionary investment services for ILAS Policies must meet new competency requirements as per the Practice Note . Grandfathering Arrangements: Licensed insurance brokers unable to meet the new requirements by 1 October 2024 can continue servicing policies issued before this date (Grandfathered ILAS Policies) until 31 July 2027, provided they comply with the Additional CPD requirement. This entails completing 2 additional CPD hours annually in the following periods: 1 August 2024 to 31 July 2025 1 August 2025 to 31 July 2026 1 August 2026 to 31 July 2027 Firs run of the Course for Insurance Brokers on Grandfather ILAS Policies The Hong Kong Securities and Investment Institute (“HKSI”), in collaboration with the Professional Insurance Brokers Association (“PIBA”) and The Hong Kong Confederation of Insurance Brokers (“CIB”), is launching the first Course on 26 November 2024 , which fulfills the Additional CPD requirement under the Grandfathering Arrangements established by IA. Market News 3. SFC Announces First Batch of Brokers for Wealth Management Connect Pilot Scheme and Insights on Insurance Connect SFC has announced that 14 LCs are now eligible to participate in the Cross-boundary Wealth Management Connect Pilot Scheme (“WMC”) in the Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”). This scheme enhances connectivity between Hong Kong and Mainland China, offering new business opportunities for financial services. Impact on Insurance Brokers and Future of Insurance Connect The success of the WMC is seen as a positive indicator for the potential implementation of similar mechanisms, such as the anticipated Insurance Connect. This would allow Hong Kong and Macau insurance companies to sell insurance products directly to Mainland residents without establishing local branches. However, current Mainland regulations conflict with this approach, and a pilot for Insurance Connect is not yet feasible. Licensed insurer(s), insurance broker companie(s) shall see the WMC as a best practice to get ready for the eventual establishment of Insurance Connect. By familiarizing themselves with cross-boundary operations and regulatory requirements, they can smoothly transition once the Insurance Connect is approved. SIGNIFICANCE: Despite the delay in Insurance Connect, preparations for establishing insurance after-sales service centers in Nansha and Qianhai are in their final stages. These centers will offer policy management and claims services for Hong Kong policyholders in the GBA. [End of ComplianceOne Insurance Newsletter – November 2024] 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 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter – May 2022 ComplianceOne Newsletter – May 2022 The topics discussed in this monthly newsletter are as follows: 1. ETF Connect marks another milestone in mutual market access 2. Court orders Pyramid and Ponzi scheme fraudsters to compensate investors 3. SFC bans Ho Pak Hay for life MARKET NEWS 1. ETF Connect marks another milestone in mutual market access The Securities and Futures Commission (SFC) and the China Securities Regulatory Commission (CSRC) today announced details for the implementation of plans to include eligible exchange-traded funds (ETFs) in Stock Connect. According to the joint announcement, the principal arrangements for ETF Connect will follow the existing fund operations, regulations and operational models governing trading and clearing in the two markets. “ ETF Connect is another milestone in the expansion of mutual market access between Hong Kong and Mainland China,” said Mr. Ashley Alder, the SFC’s Chief Executive Officer. Significance: Investors in both markets are provided with more choices, and help foster a healthy development of ETF by expanding the investor base and improving liquidity in the market. ENFORCEMENT NEWS 2. Court Orders Pyramid and Ponzi scheme fraudsters to compensate investors Under the scheme, DFRF and its founder Filho falsely claimed that DFRF would soon be listed in the US, and persuaded a number of Hong Kong investors to acquire “membership units”. DFRF also falsely claimed that investors would be offered the option to convert their units into preferred shares of DFRF at certain price. In December 2016 and March 2017, the SFC obtained interim injunctions to freeze the assets of DFRF in their two bank accounts. And the Court has appointed administrators to receive and distribute the proceeds of the scheme remaining in the two bank accounts – approximately totalling $2.8 million – for the benefit of the investors on a pro rata basis. Significance: The global scale of such a scam as the Ponzi scheme is really unprecedented in recent decades. The scheme camouflaged itself as a type of investment scheme where the founders (basically the "crooks") stole money from investors and masked the theft by funneling returns to clients from funds contributed by newer investors. 3. SFC bans Ho Pak Hay for life The SFC has banned Mr. Ho Pak Hay, a former licensed representative of KGI Asia Limited (KGI) and KGI Futures (Hong Kong) Limited (KGI Futures), from re-entering the industry for life. It was found that Ho had misappropriated and misused funds totalling $1.8 million from the clients between 2018-2019; instead of making investments for the clients , Ho had spent the funds on gambling, and had also issued dishonoured cheques to the clients as repayment of funds. The SFC considers that Ho is not a fit and proper person to be licensed, and has decided that a life ban on Ho is appropriate and commensurate with the gravity of his conduct. Significance: Ho had misappropriated client money and undermined the fundamental principles of GP1 of “Honesty and Fairness” as a licensed person, and GP8 of “Client Assets” being adequately safeguarded. 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 call us at (852) 39550277. Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk To unsubscribe, please simply reply with “ I don’t like to know more about Compliance ”.