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天匯合規線上培訓課程更新（2025）及證監會CPT 要求 天匯合規網上培訓平台 2025年的課程已全面更新，同時符合香港證券及期貨事務監察委員會（證監會）對持續專業培訓（CPT）的要求。 網上培訓課程不僅是對持牌代表（LRs）及負責人員（ROs）主要義務的提醒，這些規定源自證監會的《持續專業培訓指引》，目的是確保從事受規管活動的個人維持專業能力、道德操守，並緊跟行業發展，從而保持其適當性與合適性。 要求 持牌代表（LRs） 負責人員（ROs） 每個曆年最低CPT小時 10小時 （不論從事受規管活動的數量或類型） 12小時 （包括額外2小時專注於監管合規主題） 與受規管活動直接相關的主題小時 至少 5 小時: 涵蓋持牌受規管活動相關主題（例如合規規定、立法與監管標準、業務操守、市場動態、新金融產品、風險管理系統；按各活動佔比分配） 同LRs 道德或合規小時 每年至少 2 小時: （成為LR後首12個月後），涵蓋道德操守（例如誠信、公平、盡責、善意、客觀、客戶最佳利益、公平對待客戶、避免利益衝突、客戶資訊保密）或合規議題（例如金融業法律框架、行為準則、行業指引、內部政策） 同LRs 從事保薦人工作的個人小時 每年至少 2.5 小時: 專注保薦工作相關主題（例如監管規則的技能、知識及其更新），可計入5小時受規管活動要求 同LRs 從事收購守則交易工作的個人小時 每年至少 2.5 小時: 專注收購守則諮詢相關主題（例如監管規則的技能、知識及其更新），可計入5小時受規管活動要求 同LRs 其他注意事項 i. 新入行者（成為LR或RO的首12個月）: 必須完成2小時道德培訓。此可計入年度CPT總小時，但不可用於RO額外2小時或豁免勝任力要求。此項不按比例調整。 ii. 年中首次獲牌的按比例計算: CPT小時（道德要求除外）可依持牌期間比例計算（例如7月1日獲牌為50%）。獲牌前而又是同年完成的培訓，若有相關考試通過證明，可計入CPT小時。 iii. 轉換僱主: 前僱主完成的CPT小時可結轉。新僱主可依賴個人聲明及證據，不需為先前不合規負責，但須確保之後合規。無需按僱傭期分配小時。 iv. 可接受CPT活動: 涉及相關活動的時間，須具實質知識或實務內容及互動性，包括：參與課程、工作坊、講座或研討會（面對面或網上）；附作業的遠距學習；附獨立評估的自學或網上課程（例如評核或測試）；行業研究；發表論文；演講；授課或教學；對行業諮詢文件提供意見；參與證監會監管委員會或正式工作組；午餐講座（計0.5小時）。記錄須證明完成度及持續時間。 v. 非CPT活動: 日常工作、在職訓練、金融新聞或文獻的一般閱讀、無互動活動、語言課程（一般情況）、相同內容的重複CPT活動。超額小時不可轉至下一年。 vi. 記錄保存: 個人須保存CPT活動記錄（例如證書、出席證明、考試成績）至少3年，供證監會查閱。 vii. 年度確認: LRs及ROs須每年透過電子申報向證監會確認前一曆年的合規狀況（或說明不合規原因）。 viii. 額外要求: 證監會可在特定情況下要求額外CPT小時，例如豁免認可行業資格或本地監管框架考試（詳見《勝任指引》）。 **若未能滿足這些要求，可能影響您的適當性及合適性，並導致證監會採取紀律措施。建議提前規劃培訓，確保全面遵守。** 2025年天匯合規線上培訓平台更新 天匯合規線上培訓平台 在2025年已全面更新課程！您可隨時通過以下鏈接： 瀏覽最新課程 選購所需培訓 線上自主學習 即時下載證書及保存記錄 中文版 https://complianceone.thinkific.com/collections/cptzh 英文版 https://complianceone.thinkific.com/pages/cpten 如有進一步查明，歡迎通過以下方式與我們聯絡： 1) WhatsApp: +852 5490 8117 2) 微信: CompOneCS 3) 電郵: cs@complianceone.hk ComplianceOne’s Online Training Course Updated (2025) – CPT Requirements We at ComplianceOne Consulting Limited are committed to supporting your ongoing compliance with the regulatory requirements set forth by the Securities and Futures Commission (“ SFC ”) of Hong Kong. As part of our dedication to excellence, we would like to remind you of the key obligations regarding Continuous Professional Training (“ CPT ”) for Licensed Representatives (“ LRs ”) and Responsible Officers (“ ROs ”). ComplianceOne’s online training platform has updated its 2025 CPT courses - align with the guidelines. These requirements, outlined in the SFC's Guidelines on Continuous Professional Training are designed to ensure that individuals engaging in regulated activities remain competent, ethical, and up-to-date with industry developments. Key SFC CPT Requirements Requirement Licensed Representatives (LRs) Responsible Officers (ROs) Minimum CPT Hours per Calendar Year (Total) 10 hours 12 hours (including 2 additional hours on regulatory compliance topics) Hours on Regulated Activities At least 5 hours: on topics directly relevant to the licensed regulated activities (allocated proportionally to time spent in each activity) Same as LRs Hours on Ethics or Compliance At least 2 hours: per year (after the first 12 months in the industry) on topics like integrity, fairness, conflict avoidance, client confidentiality, legal frameworks, codes of conduct, and internal policies Same as LRs Specialized Hours for Sponsor Work At least 2.5 hours: per year on relevant topics (e.g., regulatory rules for listings), countable toward the 5 hours on regulated activities Same as LRs Specialized Hours for Codes on Takeovers Transactions At least 2.5 hours: per year on relevant advisory topics, countable toward the 5 hours on regulated activities Same as LRs Additional Considerations i. New Joiners (First 12 Months as an LR or RO): Must undertake 2 hours on ethics. This counts toward the annual CPT requirement but cannot be counted toward the 2 additional hours for ROs or used for exemptions from competence requirements. This requirement is not pro-rated. ii. Pro-Ration for Individuals First Licensed During the Year: CPT hours (excluding the ethics requirement for new joiners) can be pro-rated based on the licensed period (e.g., if licensed on July 1, 50% of annual hours apply). Training attended prior to licensing but in the same calendar year can count if a pass in a relevant examination is proven. iii. Change of Employer: CPT hours from the previous employer can be carried forward. The new employer can rely on the individual's declaration and evidence; it is not accountable for prior non-compliance but must ensure ongoing compliance. No need to apportion hours by employment periods. iv. Acceptable CPT Activities: Time spent on relevant activities with significant intellectual/practical content and interaction, including: attending courses/workshops/lectures/seminars (face-to-face or virtual); distance learning with assignments; self-study/online courses with independent assessments (e.g., evaluations or tests); industry research; publication of papers; delivery of speeches; giving lectures/teaching; providing comments to industry consultation papers; attending SFC regulatory committees or formal working groups; luncheon talks (0.5 hour credit). Records must demonstrate fulfillment and duration. v. Unacceptable Activities: Normal working activities, on-the-job training, general reading of financial press or literature, activities without interaction, language courses (generally), repeated CPT activities with the same content. Excess hours cannot be carried forward to the next year. vi. Record-Keeping: Individuals must retain records of CPT activities (e.g., certificates, attendance proofs, examination results) for at least 3 years, available for SFC inspection upon request. vii. Annual Confirmation: LRs and ROs must confirm compliance (or explain non-compliance) annually via electronic returns to the SFC for the previous calendar year. viii. Additional Hours Requirements: The SFC may impose additional CPT hours in certain cases, such as for exemptions from recognized industry qualifications or local regulatory framework papers (refer to Guidelines on Competence). **Failure to meet these requirements may reflect adversely on fitness and properness, potentially leading to disciplinary action by the SFC. We encourage proactive planning to ensure full adherence.** Updated ComplianceOne Online Training Platform for 2025 ComplianceOne’s Online Training Platform has been fully updated in 2025! You can now: Browse the latest courses Purchase required training courses Complete courses online at your own pace Download certificates and keep record English Version: https://complianceone.thinkific.com/pages/cpten Chinese Version: https://complianceone.thinkific.com/collections/cptzh For further inquiries, please contact us via: 1. WhatsApp: +852 5490 8117 2. WeChat: CompOneCS 3. Email: cs@complianceone.hk

Deficiencies and substandard conduct noted in the management of private funds and discretionary accounts Compliance Impact Alert: Deficiencies and substandard conduct noted in the management of private funds and discretionary accounts Nov 2024 Disclaimer: Contents contained in this document including should not be regarded as a substitute legal and / or compliance advice in any circumstances and shall not be reproduced (in whole or in part), distributed or otherwise passed on to any other person without our prior written consent. Language: English version only Executive Summary The recent circular " Circular to licensed corporations engaged in asset management business: Deficiencies and substandard conduct noted in the management of private funds and discretionary accounts " issued by the Securities and Futures Commission (“SFC”), identifies critical deficiencies and misconduct within the asset management sector. The SFC's findings in appendix part reveal a pressing need for asset managers to strengthen their governance frameworks and compliance mechanisms. This summary serves as an important reminder for asset managers to uphold integrity, transparency, and compliance with regulatory standards. Key Regulatory Concerns: Conflicts of Interest Poor management of conflicts of interest, leading to decisions that favor personal or related interests over those of investors. Risk Management Deficiencies Ineffective risk management procedures, exposing investors to significant risks, including concentration and liquidity risks. Insufficient Investor Communication Inadequate information provided to investors regarding fund performance and risks, hindering informed decision-making. Improper Valuation Practices Use of inappropriate valuation methodologies, obscuring true investment losses and compromising transparency. Non-Compliance with Regulatory Requirements Breaches of the SFC’s Code of Conduct, FMCC, and Internal Control Guidelines, indicating systemic issues within asset management practices. Senior Management Accountability Emphasis on the responsibility of senior management to ensure adherence to standards of conduct and effective compliance programs. How We Can Help ComplianceOne possess extensive experience in the asset management industry and are well-equipped to provide valuable guidance to asset managers in several key areas. Our expertise ensures adherence to regulatory standards and enhances overall compliance practices. Continuous Support: Stay ahead of regulatory changes with our continuous monitoring and updates, ensuring that you are always in compliance. Expert Guidance: Benefit from our deep industry expertise and experience, providing you with valuable insights and best practices for managing your assets. Enhanced Governance: Strengthen your governance frameworks with our tailored solutions, enhancing your operational integrity and investor confidence. Proactive Risk Management: Identify and mitigate potential risks before they impact your business with our proactive risk management strategies. Comprehensive Training: Ensure your team is always up-to-date with the latest regulatory requirements and best practices through our ongoing training programs. Peace of Mind: Focus on your core business activities while we take care of your compliance and risk management needs, providing you with peace of mind. By using our ongoing compliance service, asset managers can enhance accountability, ensure compliance with regulatory standards, and protect investors' interests. It is crucial for asset managers to critically evaluate their existing frameworks and make necessary adjustments to align with regulatory expectations. For any inquiries, please refer to our Ongoing Compliance Support Service or feel free to Contact us .

This article delves into the ongoing obligations of LCs under the SFC, focusing on AML requirements, the pivotal role of ongoing monitoring, and the severe consequences of non-compliance. Ongoing AML Obligations of SFC Licensed Corporations In Hong Kong, the Securities and Futures Commission (“ SFC ”) is the cornerstone of financial regulation, overseeing the securities and futures markets to ensure their integrity and stability. Licensed Corporations (“ LCs ”), which are entities authorized by the SFC to conduct regulated activities, face stringent compliance obligations to uphold these standards. Among these, Anti-Money Laundering (“ AML ”) requirements are particularly critical, given the global emphasis on combating financial crimes. This article delves into the ongoing obligations of LCs under the SFC, focusing on AML requirements, the pivotal role of ongoing monitoring, and the severe consequences of non-compliance. 1. AML Requirements for Licensed Corporations AML encompasses a set of laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. In Hong Kong, the SFC enforces these standards through the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Licensed Corporations and SFC-licensed Virtual Asset Service Providers) , which outlines comprehensive requirements for LCs to mitigate money laundering and terrorist financing (“ ML/TF ”) risks. The following table summarizes the core AML obligations for LCs: Requirement Description AML/CFT Systems LCs should implement systems and controls proportionate to identified ML/TF risks, approved by senior management, and regularly reviewed. Customer Due Diligence (“CDD”) Before establishing business, relationships or conducting transactions above HK$120,000 (or HK$8,000 for wire transfers), LCs must verify customer identities, understand their business, and assess the purpose of establishing the business relationship. Suspicious Transaction Reporting LCs should report transactions suspected of involving ML/TF to the Joint Financial Intelligence Unit ("JFIU”). Record-Keeping Records of CDD, transactions, and related documents must be maintained for at least five years after the business relationship ends or transaction completes. Risk-Based Approach (“RBA”) LCs should assess institutional and customer risks to tailor their AML/CFT measures, ensuring higher scrutiny for high-risk scenarios. 2.1 Ongoing Monitoring Functions Ongoing monitoring is a cornerstone of AML compliance, ensuring that LCs can detect and respond to potential ML/TF activities in real time. The SFC mandates that LCs continuously monitor their business relationships and transactions to ensure consistency with their knowledge of customers, their business activities, and risk profiles. The following table outlines the key ongoing monitoring obligations: Continuous Review Regularly update customer information to ensure it remains relevant and accurate. Transaction Scrutiny Monitor transactions for consistency with customer profiles, flagging complex, unusually large, or unusual patterns lacking apparent economic or lawful purpose. CDD Record Reviews Conduct periodic reviews of CDD records, with annual reviews (or more frequent) for high-risk customers like PEPs. Systematic Monitoring Implement systems to monitor transactions, tailored to the LC’s size, complexity, and risk profile, providing timely data to relevant staff. System Effectiveness Regularly review and validate transaction monitoring systems, including parameters and thresholds, to ensure adequacy. 2.2 Enhanced Monitoring for High-Risk Customers For high-risk customers, LCs must apply enhanced measures, including obtaining senior management approval, establishing the source of wealth and funds, and conducting more frequent monitoring. SFC also requires LCs to use reliable data sources, such as publicly available information or commercial databases, to identify PEPs, while acknowledging the limitations of such databases. 3.1 Penalties for Non-Compliance with AML Guidelines Non-compliance with AML regulations carries significant consequences, reflecting the SFC’s commitment to maintaining a robust financial system. The Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) (“ AMLO ”) and SFC’s Disciplinary Fining Guidelines outline the penalties for violations. The following table summarizes the consequences of AML non-compliance: Fines: Up to HK$10 million or three times the profit gained from non-compliance, whichever is higher. Regulatory Actions: Restrictions on business activities, license suspension, or revocation. 3.2 Enforcement Examples SFC recently took disciplinary action against CSC Futures (HK) Limited (“ CSC ”) and its former responsible officer (“ RO ”), highlighting critical failures in AML compliance, including ongoing monitoring obligations. SFC’s investigation, covering the period from January 2017 to December 2018 (the Relevant Period), uncovered two primary areas of non-compliance by CSC, with ongoing monitoring being a significant focus: Inadequate Due Diligence on Customer Supplied Systems Failure in Ongoing Monitoring of Client Accounts Disciplinary Action For LC: A HK$4.95 million fine and a public reprimand, signaling reputational damage and financial loss. For RO: A six-month industry ban, reflecting personal accountability for oversight failures. SFC emphasized that such lapses undermine market integrity and public confidence, necessitating strong deterrence. For more details of the case, please refer to SFC – Enforcement News 4.1 Our Solution for Ongoing Monitoring Effective ongoing monitoring relies heavily on technology to process large volumes of data and identify risks promptly. It is recommending LCs to implement systems that can integrate with existing infrastructure, provide real-time updates, and support holistic monitoring across multiple accounts and business lines. This is where Screen-X AML/CRM Solutions excel. We recognize the complexities faced by licensed corporations in meeting the continuous monitoring requirements of SFC. Screen-X AML/CRM Solutions — supported by data from the globally authoritative database Acuris Risk Intelligence and developed with input from and ComplianceOne Consulting Limited — provides a set of efficient and compliant AML solutions. It also supports API connections, is easy to operate, and offers seamless API integration, flexibly adapting to the compliance needs of institutions of different sizes. 4.2 Key Features of Screen-X AML/CRM Solutions The following table highlights how our solution supports ongoing monitoring: Feature Benefit Global Blacklist Matching Automatically checks customers against over 1.4 million PEPs and 5 million high-risk records, ensuring comprehensive risk identification. Real-Time Updates Sanctions updated within 30 minutes, PEPs within 24 hours, keeping data current. Adverse Media Monitoring Curated articles in native languages using advanced technology and human intelligence to detect reputational risks. Company Credit Reports Provides credit reports on approximately 200 million limited companies to assist in due diligence. API Integration Seamless integration with existing systems for real-time monitoring and data exchange. High Data Growth Adds up to 40,000 high-risk profiles monthly, ensuring coverage of emerging risks. Historical Data Access 16 years of historical data for in-depth risk analysis. Screen-X AML/CRM Solutions provide a powerful tool for LCs to navigate this regulatory landscape. With features like real-time blacklist matching, adverse media monitoring, and seamless API integration, our platform enables LCs to meet SFC requirements efficiently while focusing on their core business activities. By leveraging advanced technology, LCs can not only ensure compliance but also enhance their risk management capabilities, safeguarding their operations and reputation in Hong Kong’s dynamic financial market. 5.2 Conclution The ongoing obligations of LCs, particularly in the realm of AML compliance, are both complex and critical. Implementing effective AML/CFT systems, conducting thorough CDD, and maintaining rigorous ongoing monitoring are essential to prevent financial crimes and uphold regulatory standards. The severe penalties for non-compliance—ranging from substantial fines to license revocation—emphasize the need for LCs to prioritize these obligations. Screen-X AML/CRM Solutions provide a powerful tool for LCs to navigate this regulatory landscape. With features like real-time blacklist matching, adverse media monitoring, and seamless API integration, our platform enables LCs to meet SFC requirements efficiently while focusing on their core business activities. By leveraging advanced technology, LCs can not only ensure compliance but also enhance their risk management capabilities, safeguarding their operations and reputation in Hong Kong’s dynamic financial market. For more information on how our solutions can support your AML compliance needs, visit EDON website . Any further assistance with other Compliance inquiries, please visit: https://www.complianceone.hk/ongoingcompliancesupportservice

The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Insurance Newsletter – Dec 2024 The topics discussed in this monthly newsletter are as follows: 1. IA Proposes Cap on First-Year Commissions for Savings Insurance Policies 2. Asian Insurance Forum 2024 Concludes with Record Participation and Key Insights 3. Change of Managers for Tahoe Life Insurance Company Limited to maintain stability 4. Stephen Yiu Kin-wah was reappointed as the Chairman of Insurance Authority 5. IA publishes revised Guidelines on Cybersecurity and Guideline on Actuary’s Report IA News Updates 1. IA Proposes Cap on First-Year Commissions for Savings Insurance Policies The IA is consulting the industry on new regulatory measures for the sale of participating savings insurance policies, aiming to address sales malpractices. The IA proposes capping the first-year commissions at 65%, down from the current rates which can exceed 90%. The IA suggests a transition period of 6 to 9 months, with implementation as early as mid-2025 . This change is expected to impact around 100,000 insurance intermediaries in Hong Kong. For more details, please refer to the original source – Stheadline 2024-12-17 Reasons for the Proposal This initiative follows the IA's May 2024 circular and Annex , which highlighted issues such as unlicensed referrers, high first-year commissions leading to "orphan policies" and inadequate after-sales service. The Conduct in Focus – August 2024 also addressed the need for better claims handling and provided guidance on regulatory matters which meant to be a best practice only, but the IA now seeks to formalize these practices into regulatory requirements to ensure better compliance and consumer protection. Industry Reactions and Concerns The proposed cap on first-year commissions has sparked significant reactions within the industry. Currently, commissions for brokers can reach up to 90%, while agents typically receive 30-40%, depending on the policy term and the company. The IA's proposal aims to curb these issues by spreading the remaining 35% of commissions over the second to sixth years for policies with periodic payments. SIGNIFICANCE: The IA's initiative is part of a broader effort to enhance consumer protection and ensure fair treatment of policyholders. The proposed measures also include setting upper limits on projected returns and establishing a comparison platform for dividend realization rates. 2. Asian Insurance Forum 2024 concludes with record participation and key insights The Asian Insurance Forum (“ AIF ”) 2024, themed Rising to the Challenge amidst Global Volatility concluded with over 2,400 attendees. The forum featured insightful speeches and panel discussions by over 20 esteemed speakers, focusing on global supervisory priorities, bolstering the headquarters economy, and insurance solutions in wealth management. Keynote speakers included: Mr. John Lee , Chief Executive of the HKSAR; Mr. Stephen Yiu , Chairman of the IA; Mr. Jonathan Dixon , Secretary General of the International Association of Insurance Supervisors (“ IAIS ”); and Ms. Luo Yanjun , Director General of the Personal Insurance Supervision Department of the National Financial Regulatory Administration (“ NFRA ”). A significant announcement was that Hong Kong will host the 2026 International Association of Insurance Supervisors (“ IAIS ”) Annual Conference. Impact on the Insurance Sector The forum underscored the pivotal role of insurance in mitigating uncertainties and fostering sustained progress. It highlighted Hong Kong's leadership in the insurance sector and the opportunities for regional integration and cooperation, particularly within the Guangdong-Hong Kong-Macao Greater Bay Area. SIGNIFICANCE: The AIF 2024 showcased Hong Kong's strategic position as a global financial center and a hub for asset and risk management, emphasizing the importance of insurance in navigating global volatility and driving future growth. 3. Change of Managers for Tahoe Life Insurance Company Limited to maintain stability The IA appointed new managers for Tahoe Life Insurance Company Limited (“ Tahoe Life ”) due to ongoing financial and governance issues. On 17 December 2024, Mr. Glen Ho and Mr. Ivan Chan of Deloitte Touche Tohmatsu were appointed as Joint and Several Managers, joining Mr. Oliver Cheng of Deloitte Advisory (Hong Kong) Ltd. The IA announced to take full control of Tahoe Life, effective on 26 July 2024. This decision follows a series of supervisory interventions since mid-2020 to protect policyholders' interests. For more details of the Tahoe Life case, please refer to ComplianceOne Insurance Newsletter – Jul 2024 (Topic 8) or IA Enforcement News . Impact on Policyholders These appointments follow the resignation of previous appointed manager Mr. Derek Lai and Mr. Forrest Kam. The change in management will not affect the terms and conditions of existing policies. Policyholders are encouraged to carefully consider their circumstances and avoid making hasty decisions, as life insurance products are long-term commitments. SIGNIFICANCE: The IA's proactive measures aim to maintain stability and trust in Tahoe Life's operations, ensuring policyholders' interests are safeguarded during this transition period. 4. Stephen Yiu Kin-wah was reappointed as the Chairman of Insurance Authority The Government announced new appointments to the IA effective from 28 December 2024. The Chief Executive has reappointed Mr. Stephen Yiu Kin-wah as Chairman of the IA. Additionally, the Financial Secretary has reappointed nine incumbent Non-Executive Directors (“ NEDs ”) and appointed three new NEDs. Mr. Yiu expressed his enthusiasm for the new appointments, highlighting the valuable experience and fresh perspectives the new NEDs will bring. He also conveyed deep appreciation for the contributions of outgoing NEDs Dr. Evelyn Lam, Dr. Ares Leung, and Professor Anna Wong in setting the corporate vision and strategic goals of the IA. SIGNIFICANCE: The reappointments and new appointments bring a wealth of expertise to the IA, ensuring continued strong leadership and effective regulatory oversight. IA Regulatory Updates 5. IA publishes revised Guidelines on Cybersecurity and Guideline on Actuary’s Report The IA has published and revised two important guidelines to enhance regulatory compliance and operational standards within the insurance industry. Both guidelines incorporate feedback from authorized insurers to ensure practical and effective implementation. GL20: Guideline on Cybersecurity Attachment: Revised GL20 Effective from 1 January 2025 , the revised GL20 introduces the Cyber Resilience Assessment Framework (“ CRAF ”) that provides prescriptive guidelines on risk assessment and control principles to assist authorized insurers in implementing their cybersecurity frameworks effectively. The CRAF aims to bolster the cybersecurity resilience of insurers. GL35: Guideline on Actuary’s Report of Investigation in respect of Long Term Business Attachment: GL35 Effective from 31 December 2024 , the GL35 sets out expectations for actuarial reports and introduced in view of the enactment of the Insurance (Submission of Statements, Reports and Information) Rules (Cap. 41S) . It outlines the IA’s expectations for the minimum scope and content of actuarial reports required under section 18 of the Insurance Ordinance (Cap. 41) . [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

Navigating Regulatory Requirements for EAM and Virtual Asset Management Navigating Regulatory Requirements for External Asset Managers (EAM) and Virtual Asset Management Join us for our first co-hosting webinar of the year with abc Multiactive! We'll be discussing the topic of Navigating Regulatory Requirements for External Asset Managers (EAM) and Virtual Asset Management . During the webinar, our expert speakers will share their knowledge and experience on the regulatory landscape and provide practical tips and strategies to help you ensure compliance and streamline your wealth management workflow. Topics: 1. Regulatory Requirements for EAM Client Onboarding: KYC, PI Assessment, Suitability, Risk Assessment, and More 2. Understanding the Fund Manager Code of Conduct (FMCC) and Its Impact on EAMs 3. Key Considerations & Requirements for Managing Virtual Assets 4. Tips and Strategies for EAMs and Virtual Asset Managers: Best Practices with Wealth Management Solutions Event Details: Date: 20 Apr 2023 (Thur) Time: 16:30 - 17:30 Language: Cantonese 廣東話 *Attendance Cert will be provided upon completion of the webinar by request. Speakers: Tao Wong , Co-founder & Partner, ComplianceOne Consulting Limited Nelson Wong , Business Development Director, abc Multiactive (HK) Limited Don't miss out on this informative and valuable event! Register now to secure your spot. https://us06web.zoom.us/webinar/register/9816812016364/WN_pOKc4BQZTcGJ_UcRgHKHuw

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter – July 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES Implementation of regulatory regime for stablecoin issuers Itinerant Professional are allowed to stay longer each calendar year SFC will amend the FRR to foster market developments for OTC derivatives and other products Anti-Scam Consumer Protection Charter 3.0 MARKET NEWS Latest SFC Report shows growing AUM and net fund inflow to Hong Kong SFC hosts meeting to promote industry collaboration in Hong Kong’s digital asset sector HKEX launched Order Routing Service on its Integrated Fund Platform ENFORCEMENT NEWS SFC and ICAC Launch Joint Operation "Leverage" Against Suspected Market Manipulation Syndicate The court-appointed administrator distributed $19 million in assets to clients of Hong Kong Wan Kiu Investment MMT Rules Former Dan Form Company Secretary and Associate Guilty of Insider Dealing Regulatory Updates 1. Implementation of regulatory regime for stablecoin issuers The Hong Kong Monetary Authority (“ HKMA ”) announced the implementation of the regulatory regime for stablecoin issuers which has come into effect on 1 August 2025 (the commencement date). A bundle of documentations has been published as below: Consultation conclusions on the Guideline on Supervision of Licensed Stablecoin Issuers and the finalized Guideline on Supervision of Licensed Stablecoin Issuers ; Consultation conclusions on the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Licensed Stablecoin Issuers) and the finalized Guideline on AML & CFT (For Licensed Stablecoin Issuers) ; Explanatory Note on Licensing of Stablecoin Issuers on various aspects of the licensing regime and application process; Explanatory Note on Transitional Provisions for Pre-existing Stablecoin Issuers As we are just on the inception stage of the stablecoin licensing regime, and no license has been granted yet, we will focus more on the initial transitional period where interested parties : are encouraged to contact the HKMA before 31 August 2025 , showing their intention to apply for a license; and the HKMA will communicate with the applicants, conveying to them the regulatory expectations and provide feedbacks as appropriate; which consider themselves sufficiently ready and wish to be considered early should submit an application to HKMA by 30 September 2025 . Key takeaways of the “ Explanatory Note on transitional provisions for pre-existing Stablecoin Issuers ” (“Note”): The Stablecoin Ordinance (SO) effective 1 August 2025 defines Regulated Stablecoin Activities (RSA), including issuing specified stablecoins in Hong Kong or those pegged to the Hong Kong Dollar from outside. Transitional provisions under Schedule 7 of the SO, detailed in this Explanatory Note, apply specifically to Pre-existing Issuers (PEIs). PEIs are entities that substantively carried on RSA in Hong Kong before 1 August 2025; mere "shell" operations do not qualify. These provisions give PEIs time to either apply for a license or wind down their operations. PEIs wishing to continue must submit a formal license application, a written declaration of prior RSA activity, and a written undertaking to comply with regulations to the HKMA by 31 October 2025. Meeting this deadline grants "Application Submitted and Acknowledged" (APSA) status, allowing continued RSA operation until 31 January 2026. During this period, the HKMA assesses APSA entities and may grant a Provisional License, a Full License, issue a Rejection Notice, or refuse the application. PEIs that miss the 31 October deadline, or whose application is rejected, refused, or withdrawn, must enter a closing down period. These entities have one month from the trigger event (e.g., rejection date or 1 November 2025 for non-applicants) to cease RSA activities, operating only to effect an orderly shutdown. SIGNIFICANCE: The RSA licensing process of the HKMA looks alike to that of the VA licensing regime adopted by the SFC, starting with transitional period, provisional license, mutual and interactive communication with the applicants by the regulatory body, with assessment and final determination of license approval. It demonstrates the effectiveness of such pragmatic approach with interactive adjustment through bilateral communication and feedback, and the applicants are given the entire roadmap whether to go or to quit! 2. Itinerant Professional are allowed to stay longer each calendar year The SFC is joining regulators across the globe to curb activities of unlawful financial influencers (“ finfluencers ”) who are putting millions of social media users at risk by touting financial products or services illegally. To achieve this aim, the SFC and the other members of the International Organization of Securities Commissions (“ IOSCO ”) are participating in the “Global Week of Action Against Unlawful Finfluencers” during the week of 2 June 20The SFC post a circular in July 2025 which enhanced measure to facilitate visiting professionals to conduct regulated activities or provide virtual asset service (VA service) in Hong Kong. Current arrangement visiting professionals from an overseas group company of a licensed corporation or licensed provider can choose to apply for a representative licence to be an itinerant professional (“ ITP ”) for providing services in Hong Kong for a short period of time each year to (a) conduct regulated activities on behalf of the licensed corporation; or (b) provide VA service on behalf of a licensed provider, under company of a licensed person at all times; the ITPs are only allowed to stay not more than 30 days each calendar year, and the license is imposed with a condition to this effect ( existing ITP condition ). Revised measure to facilitate and provide more flexibility to visiting professionals to conduct these activities in Hong Kong, the SFC is now extending the period to 45 days each calendar year; it should be noted that the application process, and any exemptions for ITPs remain unchanged; the new condition of extended period is applicable to all existing licensed ITPs, and the SFC will replace their existing ITP condition with a 45-day period accordingly. 3. SFC will amend the FRR to foster market developments for OTC derivatives and other products The SFC launched a public consultation on draft amendments to the Securities and Futures (Financial Resources) Rules (FRR) and related guidelines for implementing a set of internationally comparable capital requirements for licensed corporations (LCs) engaging in over-the-counter derivative activities (“ OTCD capital requirements ”) Under the current proposal, and after a couple of consultations papers & conclusions in 2015 and 2017 respectively before, the OTCD capital requirements previously proposed have been fine-tuned with reference to recent changes to Hong Kong’s Banking (Capital) Rules and the Basel Framework. Some key takeaways from the public consultation (please refer to original for details) the capital requirements for inter-dealer brokers will also be significantly lowered, and the introduction of OTCD in various licenses as below with substantial reduction in capital requirements (reference to APPENDIX 2 regarding details of the proposed minimum capital requirements): (i) LCs conducting OTCD dealing under Type 1, 2, 3 or 11 regulated activity; (ii) LCs conducting OTCD clearing under Type 12 regulated activity; (iii) LCs operating OTCD platform under Type 7 regulated activity; (iv) LCs conducting OTCD advising under Type 4, 5 or 11 regulated activity; (v) LCs conducting OTCD asset management under Type 9 regulated activity Some major incidental and technical changes with respect to: (i) minimum capital requirements (ii) market risk (iii) counterparty credit risk (iv) sundry requirements some substantial amendments to the Securities and Futures (Financial Resources) Rules as compared with the previous 2017 version proposed exemption of capital requirements for centrally-cleared repurchase transactions (repos) to promote central clearing in Hong Kong and the development of the city’s inter-dealer repo market SIGNIFICANCE: As Dr. Eric Yip, the SFC’s Executive Director of Intermediaries, has said, “ To reinforce Hong Kong’s status as an international financial centre, it is crucial to align our OTCD capital requirements with global standard .” Licensed corporations which are keen to engage in OTCD business are strongly advised to take a look and assess if they can fulfil the capital and regulatory requirements with the facilitations proposed. 4. Anti-Scam Consumer Protection Charter 3.0 The Hong Kong Monetary Authority (“HKMA”), the Securities and Futures Commission (“SFC”), the Insurance Authority (“IA”) and the Mandatory Provident Fund Schemes Authority (“MPFA”) together announced the launch of the Anti-Scam Consumer Protection Charter 3.0 (the Charter 3.0) which is fully supported by the Consumer Council, the Hong Kong Association of Banks, the Hong Kong Police Force, and the Office of the Communications Authority. Leveraged with success of previous versions, the Charter 3.0 is enhanced in anti-scam actions by collaboration with the financial regulators, technology firms and telecommunications firms in combatting financial scams. Six principles focused of the Anti-Scam Consumer Protection Charter 3.0 are: (1) Reporting Functions for Users. (2) Reporting Channels for Financial Regulators. (3) Checking of Advertisers. (4) Internal Monitoring Processes. (5) Enforcement of Terms of Service, (6) Collaboration on Public Awareness. During the launch event, executives from various sectors engaged in productive discussion on the latest trends of financial frauds/scams and their collaborative efforts for the common purpose of combatting such frauds and scams. SIGNIFICANCE: Mr Eddie Yue, Chief Executive of the HKMA, said, “ The fight against financial frauds and scams and to protect the public requires a united front, …. The Charter 3.0 represents a significant milestone in this endeavour, harnessing the collective strength of the financial, technology, and telecommunications industries to better safeguard the public .” Ms Julia Leung, Chief Executive Officer of the SFC, added, “ This initiative not only echoes global governments and regulators’ call to action but also positions Hong Kong as a leader in safeguarding the financial world’s digital future. Together, we are building a safer, more responsible online landscape that prioritises vigilance, collaboration, and public trust .” And Mr Clement Cheung, Chief Executive Officer of the IA, said, “ The IA will leverage on this platform to strengthen public education and empower policy holders so that they can safeguard effectively against the increasingly sophisticated plots concocted by swindlers. ” Finally, Mr Cheng Yan-chee, Managing Director of the MPFA, said, “ We urge the working population to stay vigilant and join hands with us by proactively reporting suspected scams to safeguard their MPF interests. ” Though the executives represent interests in their own fields, the Charter 3.0 really achieves concerted efforts by spearheading towards a common goal of combating frauds and scams. Market News 5. Latest SFC Report shows growing AUM and net fund inflow to Hong Kong A growth in Hong Kong's asset and wealth management sector, as revealed in the SFC 2024 Asset and Wealth Management Activities Survey . Released on 16 July 2025, the report underscores Hong Kong's rising prominence on the global stage amid evolving market dynamics. Hong Kong continues to solidify its position as a leading international asset and wealth management center, with assets under management (“ AUM ”) climbing 13% year-on-year to HK$35.1 trillion (US$4.53 trillion) by the end of 2024. This surge was fuelled by net fund inflows of HK$705 billion (US$91 billion), marking an 81% increase from the previous year. Noteworthy Developments Private Banking and Wealth Management Growth The AUM in this segment rose 15% to HK$10.4 trillion (US$1.3 trillion), highlighting strong investor confidence. SFC-Authorized Funds Shine Hong Kong-domiciled funds saw their net asset value (“ NAV ”) jump 22% to HK$1.64 trillion (US$211 billion) by year-end 2024, with further growth of 21% to HK$1.99 trillion (US$256 billion) by May 2025. Net inflows reached HK$163 billion (US$20.9 billion) in 2024, followed by an impressive HK$237 billion (US$30.5 billion) in the first five months of 2025. The number of such funds also expanded to 954 in 2024 and 987 by May 2025. Fund Inflows Surge The asset management and fund advisory business recorded a staggering 571% increase in net inflows to HK$321 billion (US$41.3 billion). Open-Ended Fund Companies (OFCs) Registrations soared 93% in 2024, as managers leveraged Hong Kong's corporate fund structures and government grants. Mainland-Related Firms Thrive Their AUM grew 15% to HK$3.1 trillion (US$397 billion), with net inflows up 68%, marking five consecutive years of outperformance. Licensed Firms Expansion The number of firms licensed for asset management (Type 9 regulated activity) increased 4% to 2,212. Asset managers in Hong Kong are increasingly diversifying their portfolios, allocating 59% of assets outside Mainland China and Hong Kong. Non-equity investments have grown by 13 percentage points over the past five years, now comprising 59% of holdings, as firms adapt to global shifts. These findings align with the Boston Consulting Group's (BCG) Global Wealth Report 2025 , which ranks Hong Kong alongside Switzerland as one of the world's top two cross-border wealth centers. In 2024, Hong Kong achieved the highest absolute growth in cross-border wealth at US$231 billion, with a 9.6% year-on-year increase outpacing the global average. It is on track to surpass Switzerland as the leading global hub for offshore asset management by 2028. SIGNIFICANCE: Ms. Christina Choi, SFC's Executive Director of Investment Products, commented: " Hong Kong is gaining more clout than ever as a leading international hub for asset and wealth management, propelled by strong fund inflows, financial innovation, and a growing talent pool. The SFC is committed to supporting Hong Kong’s continued advancement as a full-service international financial centre and a leading offshore renminbi hub through fixed income and currency market developments. " The survey, which included 1,237 participating firms, covers asset management, fund advisory, private banking, private wealth management, SFC-authorized real estate investment trusts, and assets under trusts. Note that it excludes entities like single family offices, sovereign wealth funds, and government direct investments. 6. SFC hosts meeting to promote industry collaboration in Hong Kong’s digital asset sector On 7 July 2025, the SFC held the second meeting of the Digital Asset Consultative Panel (“ DACP ”), highlighting progress in regulatory innovation and industry collaboration. The SFC convened the meeting with licensed virtual asset trading platforms (“ VATPs ”), fostering dialogue on key market and regulatory advancements in Hong Kong's digital asset sector. Discussions centered on initiatives under Pillars A (Access) and P (Products) of the SFC’s ASPIRe roadmap , including proposals for new regulatory frameworks for virtual asset dealing and custodian providers, as well as enhancements in market accessibility and product offerings. This engagement underscores the SFC's commitment to building a sustainable, competitive digital asset environment while prioritizing investor protection. “A-S-P-I-Re” Roadmap: Pillar A (Access) Streamline market entry through regulatory clarity Pillar S (Safeguards) Optimising compliance burdens without compromising security Pillar P (Products) Expand product offerings and services based on investor categorisation Pillar I (Infrastructure) Modernise reporting, surveillance and cross-agency collaboration Pillar Re (Relationships) Empower investors and industry through education, engagement and transparency SIGNIFICANCE: Dr Eric Yip, the SFC’s Executive Director of Intermediaries and chair of the DACP, stated: “ Today’s DACP meeting is constructive and insightful, underscoring the importance of engagement with licensed VATPs in nurturing a sustainable and competitive digital asset ecosystem. The SFC remains committed to maintaining global competitiveness while ensuring robust investor protection and local safeguards within the digital asset sector .” 7. HKEX launched Order Routing Service on its Integrated Fund Platform On 3 July 2025, the SFC welcomed the rollout of HKEX's Order Routing Service on the Integrated Fund Platform (“ IFP ”) , marking a pivotal step in enhancing Hong Kong's retail funds ecosystem. This service streamlines communication among market participants, fostering greater collaboration within the fund distribution network. What is the Integrated Fund Platform (IFP)? IFP is a business-to-business fund services platform developed with the support of the Hong Kong Special Administrative Region (HKSAR) Government and the SFC. Key features and services include: Fund Repository : An online database featuring all SFC-authorized fund products, providing transparency and helping investors make informed decisions. Launched in 13 December 2024 . Order Routing Service : Connects distributors, fund houses, and transfer agents to facilitate subscriptions and redemptions, improving operational efficiency. Upcoming Services : Platform and Nominee Services are expected to be rolled out subject to regulatory approvals. SIGNIFICANCE: Ms Christina Choi, the SFC’s Executive Director of Investment Products, remarked: “ By enhancing the connectivity between various market participants, the Order Routing Service can help significantly improve the efficiencies of the fund distribution ecosystem. This is expected to contribute to cost optimisation in the fund sales chain, which will also strengthen the overall competitiveness of the Hong Kong retail funds marke t.” The SFC expressed gratitude for industry support and pledged ongoing collaboration with HKEX and stakeholders to ensure the IFP's full implementation. Enforcement News 8. SFC and ICAC Launch Joint Operation "Leverage" Against Suspected Market Manipulation Syndicate On 25 July 2025, the SFC and Independent Commission Against Corruption (“ ICAC ”) announced the results of a joint operation conducted on July 23, codenamed " Leverage " targeting a sophisticated syndicate accused of manipulating shares of a listed company and engaging in corrupt practices. The operation involved searches at 14 locations, including the listed company's offices and SFC-licensed brokers. Key details from the investigation include: Arrests : The ICAC arrested a former chairman and a former executive director of the listed company under the Prevention of Bribery Ordinance. Alleged Scheme : The syndicate is suspected of using false documents, such as internal records and public announcements, to fabricate a share subscription agreement and joint venture with a Mainland company worth over HK$20 million. They allegedly created a false market appearance through nominee accounts. Additional Misconduct : The former executive director, who was also a responsible officer and director of a broker, is accused of accepting advantages from the former chairman and misappropriating client shares valued at approximately HK$9 million. Detection and Collaboration : The SFC initially identified suspicious trading, referring corruption aspects to the ICAC while handling market misconduct under the Securities and Futures Ordinance (“ SFO ”). The operation follows the Memorandum of Understanding between the SFC and ICAC. SIGNIFICANCE: The listed company's shares have been suspended since March 2025 due to a court-ordered liquidation. Suspected offenses include bribery, using false documents, handling proceeds of crime under the Organized and Serious Crimes Ordinance, and market manipulation under the SFO. 9. The court-appointed administrator distributed $19 million in assets to clients of Hong Kong Wan Kiu Investment On 23 July 2025, the SFC reported that court-appointed administrators have distributed around $19 million worth of assets as compensation to impacted clients of Hong Kong Wan Kiu Investment Company Limited (“ HKWK ”), a corporation licensed by the SFC for Type 1 regulated activity. This distribution, completed this month, follows the Court of First Instance's approval in January 2025 and stems from final court orders granted in November 2022 under section 213 of the Securities and Futures Ordinance (SFO). HKWK investigation Case Recap The SFC's actions originated from an investigation uncovering financial irregularities at HKWK. Findings revealed that HKWK and its sole director and shareholder, Connie Sham Khi Rose, had unauthorizedly sold client securities, misappropriated proceeds totalling about $58 million between 2011 and 2019, and falsified statements to hide the activities. The case was referred to the Police, leading to criminal prosecution by the Department of Justice. In the High Court, Sham, aged 88, pleaded guilty and was sentenced on 3 July 2025, to 160 hours of community service, considering her remorse and personal compensation efforts via family and friends. The court orders included a restoration directive for clients and the appointment of administrators—Mr Fok Hei Yu and Mr Chow Wai Shing Daniel of FTI Consulting (Hong Kong) Limited—to recover and manage HKWK's assets. HKWK's license for Type 1 regulated activity (dealing in securities) was revoked in March 2024. SIGNIFICANCE: Prior steps included a restriction notice in November 2019 prohibiting HKWK's operations and asset dealings, followed by an interim injunction in February 2020 to freeze assets. Mr Christopher Wilson, SFC’s Executive Director of Enforcement, stated: “ The SFC is firmly committed to safeguarding market integrity and protecting investors. The actions taken by the SFC in this case highlights the SFC’s strong stance against dishonest practices by intermediaries and its dedication to maintaining public trust in the financial markets .” 10. MMT Rules Former Dan Form Company Secretary and Associate Guilty of Insider Dealing On 17 July 2025, the Market Misconduct Tribunal (“ MMT ”) determined that Ms Cynthia Chen Si Ying, ex-company secretary of Dan Form (now Asiasec Properties Limited) (HKEX: 00271), and her Mainland associate, Mr Wen Lide, engaged in insider dealing related to the company's shares. The tribunal ordered them to disgorge over $1 million in illicit profits and imposed additional sanctions. Case Recap: The case revolves around inside information about the sale of Dan Form's controlling stake. On 22 September 2016, Dan Form, Tian An China Investments Company Limited, and its subsidiary Autobest Holdings Limited announced a conditional agreement for Autobest to acquire 36.45% of Dan Form’s shares from then-chairman Mr Dai Xiaoming at $2.75 per share. Key findings: Chen possessed the inside information by 2 September 2016, and disclosed it to Wen, knowing he might use it for trading. Wen, aware of the information, purchased 1,250,000 Dan Form shares between September 5 and 19, 2016, via his Shenwan Hongyuan Securities account, plus 250,000 shares on September 6 and 50,000 on September 12 through his and his wife's accounts at Grand Investment (Securities) Limited. Chen had an interest in Wen’s dealings through the Shenwan Hongyuan account. The MMT deemed Chen’s actions particularly grave due to her role as company secretary, her managerial responsibilities entrusted by Dai, her encouragement of Wen’s trades, and efforts to obscure profits via layered accounts. Sanctions imposed: Chen and Wen to jointly disgorge $794,347; Wen to disgorge an additional $206,067, plus compound interest from October 26, 2016. Four-year disqualification for Chen from managing Asiasec or any listed Hong Kong corporation without court approval; recommendation for disciplinary action by the Hong Kong Chartered Governance Institute. Four-year cold shoulder orders banning both from dealing in Hong Kong securities, futures, leveraged forex, or collective schemes. Cease and desist orders against future market misconduct. Payment of government and SFC costs. For prior context, see SFC press releases from 23 April 2024 , and 21 January 2025 . [End of ComplianceOne Newsletter – July 2025] 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 2023 The topics discussed in this monthly newsletter are as follows: Virtual Asset Trading Platforms licensing regime has come into effect on 1st June, 2023 HashKey and Hundsun Ayers signed MOU for Strategic Cooperation in Virtual Asset Market  Reminder to Licensed Corporations regarding the (1) Revised Financial Return form, (2) Analysis of client assets and (3) Audit questionnaire  SFC commenced MMT proceedings against former bank employee over alleged insider dealing  SFC reprimanded and fined China on Securities Limited $6 million for failures as share placement agent MARKET NEWS 1. Virtual Asset Trading Platforms licensing regime has come into effect on 1st June, 2023 The SFC released the Consultation Conclusions on the Consultation Conclusions on the Proposed Regulatory Requirements for Virtual Asset Trading Platform Operators Licensed by the SFC . A significant majority of respondents agreed to the proposal to allow licensed trading platform operators to serve retail investors, given the conditions that a number of robust measures should be implemented by the SFC for protection of these retail investors, including the prerequisite of suitability in onboarding new clients, governance, enhanced token due diligence, admission criteria and disclosure obligation. As Ms Julia Leung, CEO of the SFC, said: “ providing clear regulatory expectations is the key to fostering responsible development ”, and she further reiterated the principle of “ same business, same risks, same rule s”, demonstrating the standpoint of the SFC to uphold investor protection and risks management as the key issues. Since the Guidelines for Virtual Asset Trading Platform Operators (the “VATP Guidelines”) has come into effective on 1 June 2023. The VATP Guidelines set out, among others, safe custody of assets, segregation of client assets, avoidance of conflicts of interest and cybersecurity standards and requirements expected of licensed trading platforms. And more additional guidance on the new regulatory requirements, licence application procedures, as well as information about the transitional arrangements had been posted on 31 May 2023 just before the new Guidelines are in effect. SIGNIFICANCE: Apart from the above VATP Guidelines, there is also another corresponding Guidelines on AML/CFT (For Licensed Corporations and SFC-licensed Virtual Asset Service Providers) (the “VASP Guidelines”) under the AMLO VASP regime for non-security virtual assets. With the deliberation to ensure business continuity of the licensed VATP under SFO regime amid any characteristic changes in defining a specific virtual asset, it is of the SFC’s view that VA trading platform providers should abide a “dual license arrangement” to be licensed in both the SFO VATP regime and AMLO VASP regime. Interested applicants can seek reference to the FAQ of VA licencing conditions regarding “ Competence requirements for individuals ” for details of the pragmatic approach SFC has adopted in RO eligibilities. There are also some key takeaways in the Consultation Conclusions: The SFC has removed the requirement to submit legal advice from VATP on admission of a new token (which would not amount to a security token) to be made available for trading to the retails; The coverage of the compensation arrangement has been lowered to a threshold of 50% for client virtual assets held in cold storage (subject to the condition that 98% of the client virtual assets are already held in cold storage), while tightening the condition to less than 2% should only be held in hot storage of which is more vulnerable to hacking risk; Despite the availability of accesses to retail investors, it should be noted that the onboarding requirements applicable to individual professional investors will be the same as those applicable to retail investors under the new regulatory regime; The licensed VATP should establish a token admission committee to enhance governance. It is the intention of the SFC that the committee should consist of members from senior management who are “ principally responsible for ” managing the key business line, compliance, risk management and information technology of whom are also the corresponding managers-in-charge (MICs) of the platform operator for reason of augmenting the accountability of senior management of the VATP; The disclosure obligations in the VATP Guidelines to require platform operators to take all reasonable steps to ensure the product specific information they disclose is not false, biased, misleading or deceptive. 2. HashKey and Hundsun Ayers signed MOU for Strategic Cooperation in Virtual Asset Market On 4 May 2023, Hash Blockchain Limited (“HashKey”) and Hundsun Ayers Technologies Limited (“Ayers”) jointly made an announcement of their decision of signing a Memorandum of Understanding (“MOU”) to explore strategic cooperation in the field of virtual assets and financial services. HashKey is the operator of HashKey PRO, as one of the two licensed VATPs under the SFO regime to operate a virtual asset trading platform under the Type 1 (Dealing in securities) and Type 7 (Providing automated trading service) license. Under the MOU, Ayers and HashKey will collaborate on various initiatives aimed at enhancing the respective product offerings and exploring new business opportunities. This strategic partnership aims to leverage the strengths of both parties to provide customers with innovative and cutting-edge solutions in the financial and virtual asset markets. SIGNIFICANCE: The fabulous encounter of HashKey and Ayers is definitely to make a catalyst in the economies of scale and transferability of technologies in the industry, given the pioneer status of being one of the first two licensed VATP of HashKey, with the partnership of Ayers, which is also one of the most popular broker supplied systems vendors in Hong Kong, would undoubtedly pose an absolute advantage on exploring, marketing new products, providing customised solutions to catch up with the ever-changing prevailing regulatory regime, and maximizing the market shares of the two stakeholders. 3. Reminder to Licensed Corporations regarding the (1) Revised Financial Return form, (2) Analysis of client assets and (3) Audit questionnaire On 25 May 2023, the SFC published revised versions of: (i) the financial return form which is required to be submitted by licensed corporations under section 56 of the Securities and Futures (Financial Resources) Rules; (ii) the analysis of client assets for associated entity which is required to be submitted by associated entities of an intermediary under section 3(3) of the Securities and Futures (Accounts and Audit) Rules; and (iii) the audit questionnaire completed by auditors of licensed corporations for submission to the SFC; all pertaining to the period ending on or after 1 December 2023 , (i) Financial return form - the electronic version of the revised financial return form should be used for submitting a return, superceding the existing version of the form; - mainly with the inclusion of virtual assets items in the excel forms. (ii) Analysis of client assets for associated entity - the revised version of analysis of client assets for associated entity should be used for submitting an analysis of client assets as at the end of the financial year for an associated entity of an intermediary; - the reason for this is that associated entity of the VATP is subject to the host of private key management and custody requirements under the VATP Guidelines with respect to client virtual assets . (iii) Audit questionnaire - mainly with the inclusion of virtual assets items in the questionnaire ENFORCEMENT NEWS 4. SFC commenced MMT proceedings against former bank employee over alleged insider dealing The SFC had commenced proceedings in the Market Misconduct Tribunal (MMT) against Mr Wu Kam Shing, a former executive deputy general manager of China CITIC Bank International Limited (CITIC Bank), for alleged insider dealing in the shares of Bloomage BioTechnology Corporation Limited (Bloomage). In possession of inside information about the privatisation, Wu purchased a total of 10,000 and 1,265,000 Bloomage shares via the securities accounts of himself and his spouse respectively between 22 May and 15 June 2017, and later sold 10,000 and 1,007,500 shares of Bloomage for a profit of about $3 million; while the remaining shares of Bloomage in Wu’s spouse securities account were cancelled pursuant to the privatisation. 5. SFC reprimanded and fined China On Securities Limited $6 million for failures as share placement agent The SFC had reprimanded and fined China On Securities Limited (China On) $6 million over its failures as the placing agent in a share placement between 25 November and 6 December 2019. On 25 November 2019, China On was appointed as the placing agent by the then majority shareholder (Vendor) of Hon Corporation Limited (Hon Corp) to procure placees to subscribe up to 45% for the shares of Hon Corp. The SFC’s investigation found that upon identifying six placees for the placement, China On failed to ensure that it acted within the scope of the Vendor’s authority and adequately safeguard the Vendor’s assets by: - entering into bought and sold notes relating to the shares on the Vendor’s behalf with the placees, but the transaction prices therein were inconsistent with the placing price agreed with the Vendor; - transferring the shares to the placees without first requiring payment of the purchase price or the certainty that they would be able to make payment of the placing price to the Vendor; and - executing a purported instruction by a third party for part of the shares to be transferred to one of the placees for free without verifying the instruction with the Vendor. SIGNIFICANCE: In the Statement of Disciplinary Action, it was stated as the view of the SFC that China On was grossly negligent, if not reckless, in its disregard of its fundamental duties to safeguard its client’s assets and ensure that it was acting under its client’s instructions and authorities. In particular, China On’s conduct constituted breaches of the following provisions: i) not properly safeguarding client assets; ii) failing to satisfy itself on reasonable grounds that the steps it took in effecting a transaction (of the bought and sold notes) for the Vendor were authorised; iii) to act with due skill, care and diligence in the best interest of the Vendor. 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 are as follows: ComplianceOne Newsletter - July 2024 The topics discussed in this monthly newsletter are as follows:  Consultation conclusions for legislative proposal to implement regulatory regime for stablecoin issuers in Hong Kong Enduring strength of Hong Kong as leading international asset and wealth management hub, a SFC survey 2023 SFC is to launch new online application and submission system for investment products Financial resources management and compliance with the Securities and Futures (Financial Resources) Rules SFC sets clear timeline for implementing an uncertificated securities market in Hong Kong HKMA takes disciplinary action against DBS Bank (Hong Kong) Limited for contraventions of the AML-CTF Ordinance Hedge Fund manager ordered to disgorge HKD5.6 million illicit profits from false trading and disqualified for four years MARKET NEWS 1. Consultation conclusions for legislative proposal to implement regulatory regime for stablecoin issuers in Hong Kong The Financial Services and the Treasury Bureau ( FSTB ) and the Hong Kong Monetary Authority ( HKMA ) jointly issued the consultation conclusions on 17 July 2024 on the legislative proposal to implement a regulatory regime for fiat-referenced stablecoin ( FRS ) issuers in Hong Kong. The consultation ended in February with 108 response submissions received; most of the respondents agreed with: the existing increased prevalence and evolving development of virtual assets (VAs); the view that a regulatory regime should be introduced for FRS issuers in order to facilitate proper management of potential monetary and financial stability risks, as well as providing transparent and suitable guardrails; the proposed regulatory requirements and implementation arrangements. The Secretary for Financial Services and the Treasury, Mr. Christopher HUI, also demonstrated his consent to the view that a licensing regime for FRS issuers will further strengthen the VA regulatory framework in Hong Kong in line with international standards. The Chief Executive of the HKMA, Mr Eddie Yue also added “ we believe that a well-regulated environment is conducive to the sustainable and responsible development of the stablecoin ecosystem in Hong Kong .” SIGNIFICANCE: The FSTB and the HKMA will take into account the views and suggestions from respondents in finalising the legislative proposal for implementing the regulatory regime, with a view to introducing a bill into the Legislative Council as soon as possible. Actually, in early stage on 12 March 2024, the HKMA had announced the launch of the stablecoin issuers sandbox arrangement with parties interested in issuing FRS in Hong Kong, and the applicants have to come up with proposed operations under a sandbox arrangement conducted within a limited scope and in a controllable manner. 2. Enduring strength of Hong Kong as leading international asset and wealth management hub- a SFC survey 2023 On 12 July 2024, an annual survey by the SFC further affirmed the theme of Hong Kong’s position as a premier asset and wealth management hub with a highly-diversified investor base, globalised asset allocation and robust fund inflows. According to the Asset and Wealth Management Activities Survey 2023 published that date, key findings of the Survey were as follows: investors outside Mainland China and Hong Kong accounted for 54-56% of total AUM in the past five years; 60% of the assets managed in Hong Kong were allocated to overseas markets; the number of Type 9 asset management firms increased steadily by 12% to 2161 as of June 2024; overall AUM grew 2% year-on-year in 2023 to HKD31,193 billion, while net fund inflows surged 342%; a strong net fund inflow for Hong Kong domiciled SFC-authorized funds with 93% year-on-year growth to HKD87 billion in 2023; with a strong net fund inflow of HKD33 billion in Q1 of 2024! the AUM of Mainland-related firms’ asset and wealth management business grew 4% to HKD2,676 billion, with net fund inflows increased 16% to HKD153 billion; the number of registered open-ended fund companies (OFC) surged 118%! SIGNIFICANCE: As Ms Christina Choi, the SFC’s Executive Director of Investment Products, had said: “ The survey’ s findings underscored the enduring strengths of Hong Kong’ s asset and wealth management industry, particularly the market’ s growing breadth and depth, as well as its resilience in the face of unprecedented challenges and macro headwinds .” Despite the negative figures of increasing number of securities brokers opting for exit plans to cease business, Hong Kong is undergoing a structural innovation to navigate to other scope of the financial industrial regime, in particular the recent remarkable development in nascent virtual assets and wealth management landscape. 3. SFC is to launch new online application and submission system for investment products On 8 July 2024, the SFC announced its launch of a new online application and submission system named e-IP for investment products administered by the Investment Product Division (IDP) on 29 July 2024 . The e-IP is developed on the existing WINGS portal that digitalises all processes and serves as a one-stop online platform for e-IP users to facilitate the following procedures: (i) submit new product applications; (ii) proceed with post-authorisation or registration submissions; (iii) track the progress of applications; (iv) maintain information profiles of investment products and (v) settle fee payments. To start off, e-IP users are advised to activate their e-IP administrator accounts and review the account administration arrangements like account delegation to advisory firms (if applicable), or any permission rights to be assigned. SIGNIFICANCE: For market participants to get familiarized with the new system, the launch will be accompanied by a three-month parallel run of the existing application and regulatory submission channels until 29 October 2024 . Briefing sessions, user guides and online clips are all available on the SFC website. 4. Financial resources management and compliance with the Securities and Futures (Financial Resources) Rules (FRR) On 3 July 2024, the SFC published a circular which elaborated on the SFC’s expectations regarding the governance and internal controls standards of licensed corporations ( LCs ) for monitoring their compliance with the FRR of the SFO. During its monitoring of LCs’ financial resources adequacy, the SFC has discovered various cases of deficiencies, typical examples were: (i) inadequate control over the liquid capital monitoring; (ii) ineffective management oversight; and (iii) failure to employ competent and qualified staff for calculating and monitoring liquid capital; (iv) late notification to SFC regarding the deficit of required liquid capital ( RLC ). With respect to FRR monitoring, five crucial areas SFC would focus on: (1) Expected Standards (a) an LC must at all times maintain liquid capital NOT less than the RLC, and cease operation immediately in case it fails to do so; (b) an LC should be aware of the internal controls over the FRR compliance as breach of which would lead to sudden cessation of operation and incur adverse impact on its clients’ interests; (c) as contravention of the FRR would cast doubt on the fitness and competence of the LC to remain licensed; it is of top priority for an LC to identify and ensure certain standards which are the minimum to be observed. (2) Governance (a) management oversight: since the ROs and MICs are primarily accountable, it is advised for an LC’s senior management to designate at least one RO or MIC to be responsible for overseeing the compliance of FRR; (b) competence: the LC should ensure the designated RO or MIC are competent and have the relevant knowledge in complying with FRR requirements; (c) FRR returns: since the FRR returns of an LC must be signed by its RO or officer approved by the SFC (each a Signer), it is necessary for an LC to produce reliable, up-to-date and accurate financial information to the Commission. (3) Internal Control Standards According to internal control guidelines, an LC should implement effective controls for its FRR compliance in areas like: (a) a maker-checker mechanism for calculation; (b) effective ongoing monitoring of its RLC status; (c) maintaining a regular projection of its liquid capital conditions; (d) any advance alerts when certain thresholds of Excess Liquid Capital ( ELC ) are triggered. (e) the frequency of liquid capital monitoring should be commensurate with the operational complexity of an LC (4) Incident Report and Remedial Measures (a) in case where an LC is aware of its failure to maintain the RLC, it should notify the SFC in full details of the incidence, the reasons for such occurrence and the immediate remedial measures to mitigate the situation. (5) Financial Distress Situation (a) In case where an LC has ceased business operations, it is still subject to all FRR requirements until the license has been revoked by the Commission. SIGNIFICANCE: LCs are strongly advised to take a look at the Appendix A where illustrative examples of deficiencies commonly discovered in FRR compliance, and expected standards are delineated in details. The examples also serve as guidelines for the LCs to follow and examine themselves if the same deficiencies in calculations have been adopted before, and to implement remedial measures accordingly in due course. 5. SFC sets clear timeline for implementing an uncertificated securities market in Hong Kong On 16 July 2024, the SFC released a consultation conclusion on its proposed subsidiary legislation, code and guidelines for implementing an uncertificated securities market ( USM ) in Hong Kong in the wake of its two consultation papers in March & October 2023 respectively. In response to market feedback, the SFC now proposed a 5-year timeline as below: subject to completing the legislative process, the USM regime will be implemented towards the end of 2025; companies whose laws are compatible with the regime will have to transition to the new regime in batches by the end of 2030; a more detailed timeline will be set to ensure an orderly transition. In the interim, the SFC will conduct a separate consultation on the maximum levels of certain USM-related fees, aiming to set upper limits in respect to the three fees charged by share registrars, i.e. transfer fees, dematerialisation fees and the fees charged for setting up a new facility since these fees may be shifted to the investors, thus affecting their participation in the USM. Under the USM arrangement, the need for manual and paper-based process will be removed, and thus enhancing the operational efficiencies with Hong Kong’s financial market infrastructure. Investors will be able to hold securities in uncertificated form electronically with better protection and convenience. ENFORCEMENT NEWS 6. HKMA takes disciplinary action against DBS Bank (Hong Kong) Limited for contraventions of the AML-CTF Ordinance On 5 July 2024, the HKMA announced its disciplinary action against DBC Bank (Hong Kong) Limited ( DBSHK ) for contraventions of AML-CTF Ordinance, and fined the bank with HKD10 million as pecuniary penalty. The disciplinary action followed an investigation by the HKMA on DBSHK’s systems and controls for compliance with the AMLO , key findings of contravention were reported during various periods between 1 April 2012 and 30 April 2019, precisely that DBSHK had failed to : obtain the copies of the identity document of 609 Authorizers of a corporate internet banking service offered by the bank; duly complete the trigger event review of customer due diligence ( CDD ) documents of 23 customer; identify transactions that have no apparent economic or lawful purpose when there were review alerts generated from its transaction monitoring system, or take any action to examine the background and purpose of these suspicious transactions in respect of 15 customers; take reasonable measures to establish the source of wealth ( SoW ) and the source of funds ( SoF ) of the high-risk customers, or take any additional measures to mitigate the risks of money laundering involved in the business relationship with 15 customers; establish and maintain effective procedures for purpose of carrying out its “ duties to continuously monitor business relationships ” with customers under section 5 of Schedule 2 to the AMLO; in particular with respect to the requirements of enhanced due diligence in high-risk situations where it is necessary to establish the principal business activities of customer in particular to SoF and SoW information; keep records required under section 20(1)(b) of Schedule 2 to the AMLO for a period of at least 5 years on the date on which the business relationship ended. SIGNIFICANCE: The AMLO and its relevant guidelines have been made available to all financial institutions, and there is no reason of ignorance or omission if the management team has taken the measures with due care, to implement the measures effectively and conduct reviews as required in order to identify, mitigate and remediate any deficiencies thus discovered. It could be deducted to the very interactive relationship between the "policies and procedures" per se and the personnel to whom these policies are applied and to be implemented! To foster a culture of compliance and integrity is an indispensable technique to harmonize such interactive relationship. 7. Hedge Fund manager ordered to disgorge HKD5.6 million illicit profits from false trading and disqualified for four years On 3 July 2024, the Market Misconduct Tribunal (MMT) had ordered Mr Jonathan Dominic Iu Wai Ching (LU), a former responsible officer of Tarascon Capital Management (Hong Kong) Limited (Tarascon), to disgorge illicit profit of over $5.6 million from false trading and disqualified him for four years following legal proceedings brought by the SFC. In findings of the investigation, on 22 trading days between August and September 2014, LU placed contemporaneous orders in the shares of Sinopharm Tech Holdings Limited and Quantum Thinking Limited through the brokerage accounts of the hedge fund managed by Tarascon and of his mother, leading to opposing orders to be executed against each other. The matched trades artificially created a false appearance of active trading in the listed shares, resulted in gains of HKD5.6 million in the brokerage account of LU’s mother at the expense of the hedge fund. The MMT has made the following orders against LU precisely as below: a disqualification order to prohibit him from being a director, effective from 28 June 2024; LU is banned from dealing in securities, futures contracts, leveraged foreign exchange contracts or CIS in HK for four years, effective from 28 June 2024; LU is not to engage in any conduct which constitutes market misconduct; LU is to pay the sum of the amount of profits gained by his market misconduct; and pay the SFC ‘s investigation costs. SIGNIFICANCE: At the material time, LU, who was responsible for managing and making investment decision for the hedge fund, was also a director, the chief investment officer, and a substantial shareholder of Tarascon. So ironical that LU was supposed to be the key management person to safeguard compliance of Tarascon and the hedge fund, and he turned out to be the main culprit to breach the rules he had to uphold by his capacity! 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 – Dec 2024 The topics discussed in this monthly newsletter are as follows: 1. The SFC grants 4 more VTAP licenses under swift licensing process 2. HKEX Data Marketplace is launched 3. Mainland-Hong Kong Mutual Recognition of Funds enhancements to take effect on 1 January 2025 4. SFC Quarterly Report states greater connectivity is driving Hong Kong’s capital markets a further step forward 5. The SFC launched “Don’t be Sucker” campaign to raise anti-scam awareness 6. A joint investigation by SFC and ICAC on suspected misconduct in public office 7. Fund manager Ng Ka Shun banned for life by SFC and fined $1.7 million for window-dressing FRR 8. SFC reprimands and fines Ever-Long Securities Company Limited $3 million for sponsor failures 9. Alpha Advice is on suspicious list of the SFC for its deceptive unauthorised advertisements on Facebook Market News 1. SFC grants 4 more VTAP licenses under swift licensing process On 18 December 2024, the SFC granted licenses to four virtual asset trading platforms (“ VATPs” ) under the swift licensing process for handling deemed-to-be-licensed VATP applicants (“ deemed applicants ”). In First-Phase , the SFC will engage proactively with senior management and ultimate controllers of the deemed applicants (or the VATPs) through onsite inspections, and provide feedback with the VATP to reach a rectification plan. The SFC will grant a conditional license that requires the VATP to complete penetration test and vulnerability assessment with satisfactory results. The VATP can then operate on a restricted scope of business as a licensing condition; and the VATP can proceed to engage a suitable External Assessor (“ EA ”) to perform the Second-Phase Assessment through a Tripartite Agreement with the SFC and the EA. The revamped Second-Phase will focus on VATP’s policies, procedures, system and controls (“ P&P ”) if these are suitably designed and implemented. The VATP is required to assess and revise its P&P in response to the findings & exceptions identified by the EA and the SFC with remediation measures. Upon completion of the Second-Phase Assessment, the licensing condition(s) that restricts the scope of business of the VATP will eventually be uplifted . SIGNIFICANCE: A clear roadmap has been posted in another Circular as Appendix to provide a comprehensive guidance to the VATPs who are interested to acquire a VATP license, and helps alleviate the burden from the previous onerous procedures. 2 . HKEX Data Marketplace is launched On 18 December 2024, the HKEX announced the launch of the HKEX Data Marketplace (the “ Platform ”), a web-based platform that offers data users a more intuitive experience in accessing HKEX’s historical and reference data. The new Platform allows modern interface with multiple data delivery channels, including cloud transfer, to obtain data directly from the HKEX and offers investors with optimal user experience and convenience. In its initial stage, the Platform will provide shareholding data from the Central Clearing and Settlement System (“ CCASS ”) for commercial use, as well as historical full book data from HKEX’s securities and derivatives markets, and securities market daily non-trading reference data. The HKEX will progressively add more data product offerings and functionality to the Platform, including tools to customise data, and additional options for data delivery, supporting the evolving needs of global investors. More details are available in the HKEX website . SIGNIFICANCE: Given the vogue of global investors for richer and more insightful market data to complement their investment strategies, the HKEX is pioneering itself to seize the opportunities as commented by Bonnie Y Chan, the HKEX CEO, that “ We are therefore delighted to be launching the HKEX Data Marketplace, providing clients with value-added services from our universe of comprehensive proprietary market data, further enhancing the vibrancy and attractiveness of Hong Kong’s financial markets. Data and analytics will complement our core business and present new and exciting opportunities for us as an adjacency. ” Opportunities are for those who are well prepared. 3. Mainland-Hong Kong Mutual Recognition of Funds enhancements to take effect on 1 January 2025 On 20 December 2024, the SFC made a publication of the revised Provisions on the Administration of Recognised Hong Kong Funds (香港互認基⾦管理規定) by the China Securities Regulatory Commission (“ CSRC ”) and also the revised operating guidelines jointly by the People’ s Bank of China and the State Administration of Foreign Exchange (國家外匯管理局), for the purpose of implementing the enhancements to the Mutual Recognition of Funds (“ MRF ”) scheme. Key takeaways of the enhancement: (i) The MRF is one of the five measures on the capital market cooperation announced by the CSRC on 19 April 2024; (ii) Relaxation of the sales limit on the value of units of a recognised fund sold to investors from 50% to 80% of the fund’s total assets; (iii) Relaxation of overseas delegation restriction which provides more opportunities for international asset managers to offer more offshore solutions and products to investors in Mainland with their expertise and knowledge. SIGNIFICANCE: The straight impact of the relaxation of the sales limit is an anticipated increase in maximum potential sales value on the Mainland by three times. Ms Julia Leung, CEO of the SFC, has said, “ We also feel confident that these enhancements will significantly increase the diversity as well as the scale of products under the MRF, thus injecting fresh momentum into the scheme .” The MRF enhancements becomes effective from 1 January 2025. 4. SFC Quarterly Report states greater connectivity is driving Hong Kong’s capital markets a further step forward On 12 December 2024, the SFC publicly a Quarterly Report showing that Hong Kong’ s capital markets have continued to reap benefits since the third quarter from the success of Connect schemes with the Mainland and breakthroughs in Middle East market connectivity. Highlights in the quarterly report are: (a) Hong Kong’ s ETF market continued to grow, with the market capitalisation of ETFs up 34% year-on-year (YoY). (b) The numbers of both corporate and individual licence applications received by the SFC increased in the quarter, up 56% and 23% YoY, respectively. (c) The SFC is reviewing 15 licence applications from virtual asset (“ VA ”) trading platforms (11 deemed to be licensed), and is on track to license a few deemed operators this year under a swift licensing process ( Remark: Our comment on the licensing process is also covered in this Newsletter ). (d) A number of leading Mainland enterprises went public through IPOs in Hong Kong after the Mainland announced support measures in April last year. (e) The Court of First Instance handed down the heaviest jail sentence on market manipulation cases (i.e. the enforcement news on 22 July 2024 ) since the Securities and Futures Ordinance took effect. SIGNIFICANCE: As Ms Julia Leung, CEO of the SFC, said, “ Our ETF market has achieved new milestones this year with continued robust growth in eligible ETFs under the Connect scheme and with new connectivity to the Middle East. Going forward, with broadening mutual market access with the Mainland, the SFC will strive to elevate Hong Kong to a global hub for multi-asset investing and offshore renminbi fixed-income business. ” 5. The SFC launched “Don’t be Sucker” campaign to raise anti-scam awareness On 13 December 2024, launched a new anti-scam campaign titled “ Don’t be Sucker ” to raise public awareness of the common tactics used in fraudulent schemes, as part of its ongoing efforts to caution investors against investment scams especially in the digital realm. The main character in this campaign promulgated by the SFC is named Shui Yu (⽔⿂) which symbolises an impulsive, simple-minded and gullible personality, an easy target of the investment scams. The focus is on three common scam scenarios, namely online romance scams, impersonation, and deceptive tips from financial influencers. As Ms Julia Leung, CEO of the SFC, said, “ Like enforcement, education is another essential prong of our efforts to maintain financial market integrity and protect investors against fraudsters. ” To achieve this aim, the SFC adopts more innovative approach on Shui Yu to attract audience among investors of all age groups, especially the young generation, delivering to them the message to “stay cool-headed towards too-good-to-be-true investment offers” coming upon them. Complimented with this was a series of catchy reap song and music video , and YouTube channels which reinforce the SFC’s fraudulence prevention message to and to cultivate the audience with a mindset of alertness. To go further, the SFC also set up booths themed “Rescuing Shui Yu” providing fund and educational games for all age groups at large. SIGNIFICANCE: Preventive education is always more preferred to learning a lesson by paying a heavy cost with regret. The crux is not to be greedy, and be alert to any temptations in the camouflage like "it is now or never!" Enforcement News 6. A joint investigation by SFC and ICAC on suspected misconduct in public office The SFC confirmed that a former staff member is one of the three individuals in a case of suspected misconduct in public office brought by the ICAC as a result of a joint investigation which remains ongoing. The other two defendants are a senior government counsel of the Department of Justice and a registered nurse of the Hospital Authority. The joint investigation was triggered by an internal probe of the SFC followed by its suspicion of obtaining and misusing of confidential information came to its attention. It was found in the SFC’s investigation that the former staff had acted on his own with other two individuals mentioned above, and the Commission is looking into potential violations under the Securities and Futures Ordinance. SIGNIFICANCE: The SFC upholds the highest standard of integrity and takes any misconduct seriously. It had conducted a thorough review of its internal policies regarding the handling of confidential information and conflict of interest. Further, the employment of the former staff had been terminated, and the matter was under investigation by the ICAC. 7. Fund manager Ng Ka Shun banned for life by SFC and fined $1.7 million for window-dressing FRR On 23 December 2024, it was announced that SFC had banned Mr Ng Ka Shun (“ NG ”), responsible officer (RO) of Agg. Asset Management Limited (“ Agg” ), for life and fined him $1.7 million for window-dressing Agg’ s financial resources and mismanaging two funds. Key findings of the case are as follows. (1) Window-dressing the financial resources NG misled the SFC into believing that Agg had satisfied the financial requirements for a licence by window-dressing the firm’ s liquid capital as of 31 March 2017. NG continued to conceal the fact of Agg’s inability to maintain sufficient liquid capital of HKD3 million after obtaining the license for a period of 34 months from May 2017 to February 2020 by providing misleading information in the financial returns submitted to the SFC. (2) Deficiencies and substandard conduct in fund management The SFC also found that Agg mismanaged two funds in its capacity as investment manager which seriously jeopardised the interests of the funds’ investors. The issues identified are: a) Conflicts of interest and risk management Agg invested all of its assets in debentures issued by companies controlled by Ng, resulting in Ng granting loans to himself with investors’ subscription; b) Investment within mandate, safety of fund assets and valuation Agg failed to properly safeguard the fund’ s assets by allowing Ng to withdraw part of the investors’ subscriptions from the fund ultimately for his own benefits; Agg further failed to ensure that the fund’ s investments were in line with its stated investment objective and its assets were valued properly. SIGNIFICANCE: This lifelong ban imposed by the SFC indicated the severity of the breach which not only jeopardised the integrity of the market, but induced investors with substantial loss which transcended the bottom-line of the regulatory body; a deterrent message must be manifested to the wrong-doers that they have to pay for their misfeasance. 8. SFC reprimands and fines Ever-Long Securities Company Limited $3 million for sponsor failures On 27 December 2024, the SFC reprimanded and fined Ever-Long Securities Company Limited (“ Ever-Long” ) $3 million for failing to discharge its duties as the sole sponsor in the application of Coastal Corporation Limited (“ Coastal ”) in 2016 to list on the Growth Enterprise Market (“ GEM ”) of the Stock Exchange of Hong Kong Limited (“ SEHK ”). At the material times, Coastal and its subsidiaries (“ Coastal Group” ) were providers of vessel chartering services based in Singapore. The important incidence was the change of business model. In January 2014, Coastal’s subsidiary underwent a change of business model from leasing vessels to one of Coastal’s connected persons (Connected Person A) to leasing them to the top customer, an independent third party. Under this business arrangement, the top customer was able to utilise the vessels to provide bunkering services to its customers, which included another connected person of Coastal (Connected Person B). This leasing arrangement accounted for over 50% of Coastal Group’s revenue for each of the financial years ended 30 June 2015, 2016 and 2017, which fell within the track record periods of Coastal’s listing applications. Findings in the investigation showed Ever-Long was charged with: (1) Failure to perform proper due diligence on rationale for and legality of leasing arrangement which might involve a license requirement in Singapore. (2) Failure to perform proper due diligence on operations of leasing arrangement and Coastal’s business : the descriptions of the operation model of the leasing arrangement in the Application Proof and relevant agreements were at odds with evidence available to Ever-Long. (3) Failure to perform proper due diligence on deemed connected transactions Though under the Application Proof, the Coastal’s directors considered it prudent to deem the transactions between Coastal’s subsidiary and the top customer as connected transactions under the GEM Listing Rules; Ever-Long failed to conduct reasonable due diligence to ascertain and ensure the basis and accuracy of such disclosure. (4) Failure to disclose a known material issue to SEHK and ensure completeness of information in Application Proof Despite Ever-Long’s knowledge of the top customer’s lack of licence and the materiality of the same to Coastal’s suitability for listing, Ever-Long did not disclose this in the Application Proof and its submission to SEHK. SIGNIFICANCE: The SFC is of the view that Ever-Long’s conduct failed to fulfil the standards expected of it as a sponsor and breached the requirements of the Code of Conduct. 9. Alpha Advice is on suspicious list of the SFC for its deceptive unauthorised advertisements on Facebook On 19 December 2024, the SFC warned the public of Facebook advertisements paid by Alpha Advice in relation to a suspicious investment product “Litigation Asset-Backed Notes” or “90-Day Notes” The advertisements appeared to be targeting Hong Kong investors, and contain references to the common features of debentures which are not authorised by the SFC. In the view of the SFC, these advertisements may constitute “prospectuses” under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (“ CWUMPO ”) without the SFC’ s authorisation for registration, and have already been posted on the Suspicious Investment Products Alert List on 19 December 2024. SIGNIFICANCE: The SFC urges the public not to invest in any securities (including debentures) without a document authorised by the SFC for registration and/or issue, where appropriate. The public should also be vigilant and sceptical about “too-good-to-be-true” investment opportunities when making investment decisions. [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 - August 2023 The topics discussed in this monthly newsletter are as follows: SFC’s Consultation Conclusion on Proposed Risk Management Guidelines for Futures Contracts Dealing Activities was released SFC concluded Consultation on Amendments to Enforcement-related Provision of the SFO SFC and CSRC reached Consensus on Introducing Block Trading under Stock Connect HKMA, SFC, and IA jointly Published a New Roadmap to Promote Fintech Adoption in Financial Services Sector Reminder to Intermediaries on the Over-the-counter Securities Transactions Reporting Regime (OTCR) SFC Warned Investors about Improper Practices of Unlicensed Virtual Asset Trading Platforms Changjiang Corporate Finance (HK) Limited was fined $20 million for Serious Sponsor Failures in 6 Listing Applications during 2015 to 2017 China Industrial Securities International Brokerage Limited was fined $3.5 million for failures to monitor Suspicious Trading Activities and record of Client Order Instructions Mayer Holdings Limited ( 1116.HK ) and its Former Senior Management were found misconduct for Late Disclosure of Inside Information MARKET NEWS 1. SFC’s Consultation Conclusion on Proposed Risk Management Guidelines for Futures Contracts Dealing Activities was released The SFC had published the consultation conclusions on its proposed risk management guidelines for the licensed futures brokers. The guidelines provide a very comprehensive risk management approach which covers market risk management, commodity futures trading, client credit risk management, concessionary margining and risk management over executing or clearing agents. Other requirements like the funding of liquidity risk management, safeguarding client assets, trading in futures markets outside Hong Kong and stress testing are also included. As Ms Julia Leung, the SFC’s Chief Executive Officer, had said, “ a robust risk management framework is crucial in ensuring the resilience of futures brokers when the market is volatile .” A prudent risk management approach not only helps futures brokers ensure their continuity in business; it is also crucial for protection of clients’ assets held under the brokers. Futures brokers have a transitional period of six months to comply with the guidelines and an additional 12 months to implement system changes for compliance with requirements relating to the automation of client risk limit controls and stress testing. SIGNIFICANCE: There are some key takeaways futures brokers have to bear in mind in order to maintain themselves compliant with the coming requirements: (i) Responsible Officers (ROs) and Managers-In-Charge (MICs) of the futures brokers are revised to have coordination in the risk management of futures business; (ii) Futures brokers handling physical settlement of commodity futures are required to have sufficient knowledge about the underlying commodity markets; (iii) Futures brokers can follow their internal policies in deciding whether a forced liquidations (“FLQ”) on a client who has triggered the internal policy’s threshold should be executed or not. Waivers can be granted provided that the senior management has a proper justification and be safeguarded that a deviation from FLQ would not have adverse influence on the financial stability of the futures broker ; (iv) The thresholds for applying concessionary margining to clients have been revised to a limit of 50% of the higher of a futures broker’s excess liquid capital (ELC) and its available fundings; (v) For margins maintained with overseas brokers, futures brokers should adopt a prudent approach to manage their exposures to maintain excess clients’ margins and to disclose to clients the relevant risks involved in conducting transactions overseas; (vi) As a minimum requirement, futures brokers have to perform stress tests at least on a weekly basis; further that it is necessary to follow the requirements set by the exchanges or clearing houses in formulating the scenarios for conducting the stress tests; (vii) Last but not least, futures brokers have to observe the transitional period after which they have to ensure that client risk limits have been incorporated in the risk management system, order management system or the trading platforms; and to carry out stress tests using the assumed stress scenarios as designed by the Guidelines. 2. SFC concludes Consultation on Amendments to Enforcement-related Provision of the SFO The SFC published on 8th August 2023 a consultation conclusions on proposed amendments to enforcement-related provisions of the SFO. It was stated that the SFC would proceed with the proposal which was intended to broaden the scope of the SFO’s insider dealing provisions to cover: (i) insider dealing perpetrated in Hong Kong with respect to securities listed on overseas stocks markets; and (ii) insider dealing perpetrated outside of Hong Kong involving stocks listed on a recognised stock market like the SEHK. Having received responses from industry practitioners, and considered the complexities in implementation raised by the respondents, the SFC has decided to put a hold on the other two proposed amendments which concern the professional investors exemption and injunctions and other orders at this stage. SIGNIFICANCE: The proposed amendments consisted of three parts: Part 1: Amendments to section 213 of the SFO: Despite comments on legal and implementation issues from the industry, the SFC reiterated that the policy objective of the proposal was to enhance the remedies to protect the investing public in situations where the SFC cannot directly require the regulated persons in breach of SFC codes or guidelines to compensate the suffered clients. Part 2: Amendments to exemptions in section 103 of the SFO: Many respondents had expressed concerns about the (i) necessities of the amendments and (ii) foreseeable operational difficulties and impact on the marketing process to professional investors. The SFC reiterated that the policy objective of the proposal was to enhance investor protection by limiting retail investors’ exposure to unauthorised advertisements of investment products intended for professional investors and by reducing the risk of the professional investor exemption being abused by advertisements. Part 3: Amendments to the insiders dealing provision of the SFO: Most respondents supported for these proposed amendments and the SFC would proceed with the amendments to the insider dealing provisions of the SFO accordingly. 3. SFC and CSRC reached Consensus on Introducing Block Trading under Stock Connect On 11 Aug 2023, the SFC and the China Securities Regulatory Commission (CSRC) jointly announced that they had reached a consensus on the introduction of block trading (manual trades) under Stock Connect. Block trading provides an alternative trading mechanism to enable market participants to execute large-sized transactions, and such an introduction under the Stock Connect will enable southbound and northbound investors to participate in the block trading facilities currently available in the Hong Kong and Mainland markets respectively. The block trading arrangements for Stock Connect will be developed based on the existing operational models and regulations in each market with appropriate adjustments. SIGNIFICANCE: As Ms Julia Leung, Chief Executive Office of the SFC, had said: “ block trading is an important trading mechanism to achieve best execution of large-sized transactions and minimise the price impact on the market ”. From a markert participant’s point of view, block trading arrangements can help maintain price stabilities by avoiding large orders placed directly to the market which may exhibit substantial influence on the market prices. 4. HKMA, SFC, and IA jointly Published a New Roadmap to Promote Fintech Adoption in Financial Services Sector The Hong Kong Monetary Authority (HKMA), the SFC and the Insurance Authority (IA) jointly published on 25th August 2023 a new Fintech Promotion Roadmap (the “Roadmap”) which contains a series of initiatives to be undertaken by the three regulators over the next 12 months to give further impetus to Fintech adoption in the financial services Sector. HKMA has all along been actively promoting the “ All banks go Fintech ” initiative under the “Fintech 2025” strategy, and a Tech Baseline Assessment was conducted. The assessment highlights substantial potential developments in Fintech areas like Wealthtech, Insurtech and Greentech as well as the Artificial Intelligence (AI) and Distributed Ledger Technology (DLT). To further expedite Fintech adoption in the wider financial services sector, the new Fintech Promotion Roadmap will provide practical recommendations at different stages of the Fintech adoption journey, from sourcing to implementation. These initiatives will present excellent opportunities for financial institutions to share practical insights, exchange innovative ideas across sectors and expand your institution’s Fintech network. SIGNIFICANCE: The Fintech and AI has penetrated into our daily walk of life with the widely used in retail banking and mobile devices, any institutions having intention to develop technology-oriented business must equip themselves with relevant and competent staff to “catch the train” in order not to be left out from the market. 5. Reminder to Intermediaries on the Over-the-counter Securities Transactions Reporting Regime (OTCR) Relevant Regulated Intermediaries (“RRIs”) are reminded that the OTCR will become effective on 25th September 2023. Those that have not yet completed the testing and preparation for reporting under the OTCR are urged to do so before the effective date. RRIs have to submit the OTCR through the OTCR WebApp or the OTCR SFTP submission channels on WINGS depending on their licensed status. RRI are strongly advised to take a look at the quick start for reference to proceed whereas technical details are available from the updated version of the OTCR Technical Information Paper for specifications and configurations. 6. SFC Warned Investors about Improper Practices of Unlicensed Virtual Asset Trading Platforms The SFC has observed some unlicensed virtual asset trading platforms (VATPs) engaging in improper practices recently, and a statement had been published on 7th August 2023 warning VATPs of the potential legal and regulatory consequences of these improper practices and reminded investors to be wary of the risks of trading virtual assets on unregulated VATPs. Some crucial observations as stated as below. Falsely claiming to have submitted an application to the SFC Some unlicensed VATPs claim to have submitted licence applications to the SFC when in fact they have not done so. These untrue and misleading claims give the public a false sense of assurance that the VATP is in compliance with the SFC’s regulatory requirements, and is considered as an offence by the SFC. VATPs which do not comply with the SFC’s requirements The transitional arrangements under the new regime were designed to provide reasonably sufficient time for VATPs which provided virtual asset services in Hong Kong before 1 June 2023 to prepare for compliance with the legal and regulatory requirements applicable to licensed VATPs. Yet, it has come to the attention of the SFC that some unlicensed VATPs set up new entities to provide virtual asset services in Hong Kong where the services and products offered by some of these new entities may not be in compliance with the new regulatory regime. Some examples are advertisements providing virtual assets services to retail investors in the disguise of virtual asset “depost”, “savings” or “earnings” which are not allowed under the new regime. Unlicensed VATPs’ established entities operating in Hong Kong The SFC also reminds that any other established entities of unlicensed VATPs which are operating a business in Hong Kong of providing virtual asset services will also be subject to the new virtual asset service provider regime to be licensed as well. SIGNIFICANCE: The SFC has taken this opportunity to warn investors that some unlicensed VATPs are misleading the public by claiming to have submitted licence applications to the SFC when in fact they have not done so. Some other unlicensed VATPs may have publicly announced an intention to apply for a licence from the SFC. Given the high profile approach of the HKSAR before to advocate itself as a pioneer in virtual assets licensing regime, the protection of investors amid the transitional period is an obligation on priority list to the regulatory bodies. ENFORCEMENT NEWS 7. Changjiang Corporate Finance (HK) Limited was fined $20 million for Serious Sponsor Failures in 6 Listing Applications during 2015 to 2017 On 21st August 2023, the SFC had reprimanded and fined Changjiang Corporate Finance (HK) Limited (CJCF) HK$20 million for serious and extensive failures in discharging its duties as the sponsor in six listing applications. The license of CJCF has been partially suspended to the extent that the firm shall not act as a sponsor for listing applications on the SEHK of any securities, for one year from 18th August 2023 or until the SFC is satisfied with the controls and procedures of CJCF. The investigation of the SFC reveals systemic records keeping failures of CJCF, and thus failed to demonstrate that it had exercised professional scepticism by querying the reliability of information provided by the listing applicants and their experts, and verifying the statements disclosed in their respective Application Proof prospectuses SIGNIFICANCE: The SFC is of the view that CJCF’s conduct fell substantially below the standards expected of it as a sponsor and breached the requirements under Chapter 17 of the Code of Conduct and other regulatory requirements. 8. China Industrial Securities International Brokerage Limited was fined $3.5 million for failures to monitor Suspicious Trading Activities and record of Client Order Instructions It was published on 22nd August 2023 that the SFC had reprimanded and fined China Industrial Securities International Brokerage Limited (China Industrial) HK$3.5 million for internal control failures relating to monitoring of suspicious trading activities and recording of client order instructions. Findings of the SFC investigation showed that China Industrial had failed to effectively implement its internal policy on post-trade monitoring and ensure all unusual transactions flagged by its post-trade surveillance system (Alerts) were properly examined; even worse was that the findings and outcomes thus examined were not adequately documented or to have in place effective compliance procedures to ensure proper implementation of the internal policy on post-trade monitoring during the Relevant Periods. In addition, China Industrial also failed to diligently supervise its account executives and take adequate and timely follow-up actions against those in breach of the internal policy on recording of telephone orders and report immediately to the SFC after it became aware of its account executives’ breaches of the regulatory requirements on recording of telephone order instructions. 9. Mayer Holdings Limited (1116.HK) and its Former Senior Management was found misconduct for Late Disclosure of Inside Information Announced on 9th August 2023, the Market Misconduct Tribunal (MMT) has found that Mayer Holdings Limited (Mayer) and nine of its former senior executives failed to disclose inside information as soon as reasonably practicable as required under the SFO following remitted proceedings after the Court of Appeal allowed appeals by Mayer and its directors against an earlier determination by the MMT. In the remitted proceedings, upon assessing the cumulative impact of the undisclosed pieces of specific information regarding suspicious transactions and the resignation of auditors that would have had on the potential buyers and sellers of Mayer shares at the material time, the MMT was satisfied that the undisclosed information would have been likely to have had a material effect on the share price of Mayer and therefore found that the undisclosed specific information constituted inside information. It was also found by the MMT that Mayer had no written guidelines and/or internal control policies on the statutory requirements to disclose inside information which resulted in the breach of the disclosure requirement imposed on it under the SFO. As for the other nine former senior executives, the MMT also found that they had also breached the disclosure requirement imposed on them under the SFO, in that their intentional, reckless or negligent conduct resulted in the breach of the disclosure requirement by Mayer. The MMT will determine the sanctions against Mayer and its former senior executives in a later hearing on a date to be fixed. 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 To unsubscribe, please click “ unsubscribe ”.

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter – April 2023 The topics discussed in this monthly newsletter are as follows: SFC welcomes Stock Exchange consultation on climate-related reporting requirements for listed companies The RAMP-AND-DUMP Scam Storyline SFC reprimands and fines Ninety One Hong Kong Limited $1.4 million for unlicensed futures trading SFC seeks court orders to disqualify former directors and ex-chief financial controller of China Candy Holdings Limited (8182.HK) SFC bans Peter Law Chi Kin for 10 years and fines him $535,500 for taking part in stock manipulation scheme MARKET NEWS 1. SFC welcomes Stock Exchange consultation on climate-related reporting requirements for listed companies The SFC announced on 14 April 2023 on its support for the public consultation issued today by the The Stock Exchange of Hong Kong Limited (SEHK) on proposed climate-related reporting requirements for listed companies in Hong Kong. The consultation was a major step towards aligning Hong Kong with the global baseline for climate-related reporting standards to be published by the International Sustainability Standards Board (ISSB) As Ms Julia Leung, Chief Executive Officer of the SFC, had said: “ Hong Kong’s early adoption of climate-related corporate reporting requirements will consolidate its position as a leading green and sustainable finance hub within the region and globally ” and further stated that the SFC had been working closely with SEHK to adopt a balanced approach aiming to provide appropriate flexibility for listed companies while promoting relevant, consistent and comparable disclosures to investors. SEHK’s proposals had made reference to the ISSB’s exposure drafts for sustainability-related disclosures and was aligned with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). This was consistent with the objective set out by the Green and Sustainable Finance Cross-Agency Steering Group. SIGNIFICANCE: The HKEX had pioneered in launching the Core Climate back on 28 October 2022 last year, with an aim to advocate the low-carbon, climate-resilient global economy. It was a further leap ahead for the HKEX to enhance climate-related disclosures under the environmental, social and governance (ESG) framework. On the other hand, the SFC has also implemented the regulatory requirement for the licensed corporations engaging in managing funds to observe the Climate-Related Risk Disclosure since Nov November 2022 last year where all the licensed corporations have to examine themselves with regard to relevance and materiality in order to comply with the four core categories of governance, investment management, risk management and disclosure. The concerted efforts from both of the regulatory institutions of HKEX and SFC are instrumental in mutually reinforcing determination of the HKSAR government to develop Hong Kong as financial hub for low-carbon economy. ENFORCEMENT NEWS 2. Six more charged in SFC and Police joint operation against sophisticated ramp-and-dump syndicateThe RAMP-AND-DUMP Scam Storyline It was published on 4 April 2023 that six additional suspects – including key members and an alleged ringleader – were charged with various criminal offences following an earlier joint operation of the SFC and the Police against a large-scale and sophisticated syndicate suspected of operating “ramp-and-dump” market manipulation. Four of them were charged with the offences of conspiracy to defraud and conspiracy to employ a scheme with intent to defraud or deceive in transactions involving securities under common law, section 300 of the Securities and Futures Ordinance and section 159A and 159C of the Crimes Ordinance and the rest were charged with money laundering related offences. The SFC’s Executive Director of Enforcement, Mr Christopher Wilson, said: “We will see to it that suspects of market misconduct are brought to justice and the integrity of Hong Kong’s financial market and the investing public are protected. To this end, we will not hesitate to deploy legal and regulatory tools at our disposal and continue our collaboration with the Police and other law enforcement agencies in combating financial crimes.” The series of extensive investigation and prosecutions by the SFC and the Police continued through the month with number of suspected core members brought to the Court amounted to 24 by the end of April; mostly of the charges were connected with the “ramp-and-dump” stock investment schemes and suspected money laundering activities. The syndicate was alleged to have induced investors to purchase shares in these stocks through social media platforms to facilitate their disposal of shares at a profit. The prices of these stocks collapsed in November 2018 and April 2019 once the demand was exhausted. On the other side of the story, on 25 April 2023, the SFC had issued restriction notices to “10 brokers” (refer to original circular for details), prohibiting them from dealing with or processing certain assets held in 31 trading accounts which were related to the "ramp-and-dump" scam involving the shares of a company listed on the Stock Exchange of Hong Kong Limited between November 2021 and June 2022. The restriction notices prohibited the 10 brokers, without the SFC’s prior written consent, from dealing with, or disposing of, any assets in any way in the trading accounts, including a number of conditions as specified by the SFC. The brokers were also required to notify the SFC if they had received any of these instructions from the account holders. SIGNIFICANCE: It was such a high profile, proactive joint operation of the SFC and the HK Police rarely seen in recent years to mobilize concerted efforts to engage in combating a large-scale and sophisticated syndicate suspected of operating “ramp-and-dump” market manipulation, and the number of suspects involved was up to 24 by the end of April 2023. It was found that the SFC had frozen the assets held in the securities trading accounts by members of these alleged syndicates to an unconceivably total large amount of $650 million! Such unscrupulous misfeasance to defraud the investors at large through social media and manipulate the stock prices was undeniably detrimental to the sound image of Hong Kong as an international financial centre where market integrity and investor protections are of paramount importance. The concerted efforts of SFC and the Police are much more than welcome to uphold the image and prestige of Hong Kong; and the joint operation definitely delivers a signal to any syndicates or potential ring-leaders that their unlawful intrigues will never be tolerated or connived to any extent under the prevailing regulatory regime. 3. SFC reprimands and fines Ninety One Hong Kong Limited $1.4 million for unlicensed futures trading The SFC had reprimanded and fined Ninety One Hong Kong Limited (NOHK) $1.4 million for dealing in futures contracts without the required licence. It was found that between April 2014 and January 2020, NOHK executed 4,864 trades in futures contracts for portfolios managed by its three overseas affiliates without the required licence, in breach of the SFO and the Code of Conduct. SIGNIFICANCE: With reference to Section 1.3. Exemptions paragraph 1.3.6 with "incidental exemption" of the Licensing Handbook, it is stated that for corporations licensed for Type 9 regulated activities (asset management) to carry out Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities) and/or Type 5 (advising on futures contracts) regulated activity, they do not need to be licensed for these regulated activities provided that they are carried out solely for the purposes of your asset management business in the course of managing their "own client's portfolios” of securities and/or futures contracts. In the Statement of Disciplinary Action attached in the circular, the investigation had found that: (1) the futures trades were not executed under discretion of NOHK for purpose of managing its portfolios; (2) NOHK had received remunerations from providing trading services to its overseas affiliates; (3) the trading services were carried out on a recurring monthly basis over a period of five years. It has come to the attention of the licensed corporations while they are exercising the incidental exemptions on a rationale consistent with the guidelines as stipulated by the SFC. 4 . SFC seeks court orders to disqualify former directors and ex-chief financial controller of China Candy Holdings Limited (8182.HK) On 20 April 2023, the SFC published that it had commenced legal proceedings in the Court of First Instance (CFI) to seek disqualification orders against seven former members of the board of directors of China Candy Holdings Limited (China Candy) and the company’s former chief financial controller The SFC’s legal action follows an investigation which found that China Candy’s 2016 interim report and 2016 annual report had falsely and misleadingly portrayed the company’s financial strength by overstating the cash and bank balances in June 2016 and December 2016 respectively. To this end, falsified bank and accounting records were created to cover up the overstatement of the company’s cash and bank balances (Fraudulent Scheme) The SFC alleges that Xu, Hong and Wang were the instigators and perpetrators of, or at least knowingly permitted, acquiesced or turned a blind eye to the Fraudulent Scheme. As for the remaining directors, the SFC alleged that they were negligent and/or in breach of their duties owed to China Candy including, inter alia, duties of care, skill and diligence and duties to act in the best interest of the company. 5 . SFC bans Peter Law Chi Kin for 10 years and fines him $535,500 for taking part in a stock manipulation scheme On 26 April 2023, the SFC had banned Mr Peter Law Chi Kin, a former licensed representative of Convoy Asset Management Limited (CAML), from re-entering the industry for 10 years from 26 April 2023 to 25 April 2033 for taking part in a stock manipulation scheme. The SFC also fined Law $535,500, equivalent to the profit that he gained from participating in the scheme. From June to July 2016, Law was persuaded by his colleague Mr Wong Kwun Shing to join the stock manipulation scheme, and 10 of Law’s clients and friends were persuaded to buy, hold and prop up the shares of a company from the manipulators involved in the scheme. The SFC also found that Law coordinated with Wong to arrange the transactions through which his clients were instructed to ensure the bid and ask orders were matched as previously agreed. In return, Law was remunerated with cash rebates from the manipulators. As the clients were dissuaded to offload their shares while the prices were plummeting, they ended up with forced liquidation by the brokers and suffered huge losses; in contrast, lucrative rewards were accrued to Law and Wong. Law’s conduct fell far short of the standards set out in the Code of Conduct for Persons Licensed by or Registered with the SFC, and casts serious doubts on his character, reliability and ability to carry on regulated activities competently, honestly and fairly. The SFC considered that he was not fit and proper to be a licensed person, a consequent 10-year ban on the license was the price Law had to pay! 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 ”.

Recent Business and Compliance Trends of the Payment Industry – Hong Kong Join us for the seminar co-hosted with The Association of International Accountants (AIA)! We'll be discussing the topic of " Recent Business and Compliance Trends of the Payment Industry – Hong Kong ". Topics: Part 1: A Practical Discussion on how to maintain your MSO license properly 1. The basics of MSO Licensing Guide 2. Ongoing Obligations (Licensing Guide Section XI) 3. How to maintain your Client Relationships (Client Onboarding / Ongoing Monitoring) 4. How to maintain your Business Relationships (Local / Overseas business partners) 5. How to maintain your Bank Accounts (if any) 6. How to study for the Competence Assessment Event Details: Date: 16 Sep 2023 (Saturday) Time: 13:00 – 15:00 Fee: $100 for AIA / $150 for non-members / Free for PolyU HKCC and SPEED students Language: Cantonese 廣東話 (Supplemented with English PPT) Venue: PolyU Hong Kong Community College (West Kowloon Campus) Address: 9 Hoi Ting Road, Yau Ma Tei, Kowloon Training hours: 2 Hours *Training Certificate will be issued and sent via email after the seminar. Speakers: Tao Wong , Co-founder & Partner, ComplianceOne Consulting Limited Boris Luk , Chief Compliance Officer and Money Laundering Reporting Officer (MLRO), with qualifications including Master of Business Administration, Master of Laws, and Forensic CPA. Don't miss out on this informative and valuable event! Register now to secure your spot. https://www.aiaworldwide.com/cpd/events/recent-business-and-compliance-trends-of-the-payment-industry-hong-kong/ For further information, please contact Tiffany Chan at WhatsApp +852 37517810. ComplianceOne Consulting Limited