主題：《跨境投融資實務操作-系列一：香港金融牌照實務解析》香港作為中資企業出海的橋樑和亞洲金融中心，不論監管架構的成熟度、公開交易 跨境投融資實務操作-系列一：香港金融牌照實務解析 主題：《跨境投融資實務操作-系列一：香港金融牌照實務解析》 香港作為中資企業出海的橋樑和亞洲金融中心，不論監管架構的成熟度、公開交易市場的完善性、及金融產品的豐富性都處於國際金融市場的前列。 作為天匯合規顧問有限公司的合夥人，本人非常榮幸得到匯智集團和財視中國的邀請，擔任《跨境投融資實務操作-系列一：香港金融牌照實務解析》的線上直播講座的主講嘉賓，為大家講解申請香港金融牌照的注意事項，希望能為大家解決難題，以助中資企業發展跨境投融資業務。 線上直播講座詳情： 主題：《跨境投融資實務操作-系列一：香港金融牌照實務解析》 日期：10-5-2022 (星期二) 時間：2:00PM-3:00PM 如您有興趣參加的話，請您掃碼參與，本人期待跟大家在線上見面，謝謝！

The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Newsletter – December 2025 The topics discussed in this monthly newsletter are as follows: Regulatory Updates FSTB and SFC conclude consultations on virtual asset dealer and custodian regimes Market News A quarter of connecting, innovating and diversifying Hong Kong markets: SFC Report Enforcement News - Intermediary SFC Suspends Loretta LEE Si Kar for Three Months and Two Weeks Over Neglect of Duties in Safeguarding Client Assets at Tung Tai Securities SFC Reprimands and Fines EFG Bank AG $10.85 Million for Regulatory Breaches and Internal Control Failures Enforcement News - LISTCO SFC Convicts and Sentences Former Vice President of Computershare to Imprisonment and Fine for Insider Dealing SFC Obtains Order to Freeze $101 Million Belonging to Suspected Shadow Director in Corporate Misconduct Case Involving Teamway (1239.HK) SFC Secures Conviction and Eight-Month Prison Sentence in False Trading Prosecution Involving China All Access Shares SFC Suspends Dealings in Dashan Education (9986.HK) Shares over Significant Overstatement of Corporate Bank Balances Regulatory Updates 1. FSTB and SFC conclude consultations on virtual asset dealer and custodian regimes The Financial Services and the Treasury Bureau (“ FSTB ”) and the SFC published two consultation conclusions on legislative proposals to regulate virtual asset (VA) dealing and custodian service providers in Hong Kong; and also proceed for further consultation on new regimes to cover VA advisory and management services providers adopting the familiar philosophy of “same business, same risks, same rules” principle, these new regimes are formulated on the model base of similarities with the securities market. For VA dealers , the regime will be aligned closely with that for Type 1 (dealing in securities) regulated activity, some key takeaways from the consultation conclusions are as follows: Scope and Coverage : still adhering to the principle of“same business, same risks, same rules”; Regulatory Requirement : SFC-licensed VATPs are permitted to integrate with intra-group liquidity via a shared order book while still upholding an appropriate balance between investor protection and market development; Transitional Period : no plan for any deeming arrangement to existing VA dealing service providers; Expedited Licensing Process : SFC-licensed VATPs and licensed corporations currently providing VA dealing services will be subject to an expedited approval process; Prohibition : any person is prohibited from actively marketing its VA dealing services, whether in Hong Kong or elsewhere, to the public of Hong Kong, unless that person is licensed by with the SFC; Powers of Regulatory Authorities : the SFC and the HKMA would be provided with the proposed powers. For VA custodians , the new regime will focus on managing risks related to safekeeping private keys of client VAs in Hong Kong, to secure client assets and protect investors. Key takeaways from the consultation conclusions are as follows: Scope and Coverage : target entities safekeeping private keys which represent the core risk area in VA custody; Activities Allowed : safekeeping of VAs and provision of staking services; Financial Resource Requirements: subject to the similar financial requirements as an LC carrying on Type 13 regulated activity of providing depositary services; Transitional Arrangement : no plan for any deeming arrangement to existing VA custodian service providers; Prohibition : any person is prohibited from actively marketing VA custodian services, whether in Hong Kong or elsewhere, to the public of Hong Kong, unless the person is licensed by with the SFC; Powers of the Regulatory Authorities : the SFC and the HKMA would be provided with the proposed powers. SIGNIFICANCE: As Julia Leung, CEO of the SFC, said: “ The significant progress in our VA regulatory framework ensures Hong Kong remains at the global forefront of digital asset market developments by fostering a trusted, competitive and sustainable ecosystem .” Meanwhile, Mr. Christopher Hui, the Secretary for Financial Services and the Treasury, said: “ The proposed licensing regimes strike a prudent balance among fostering market development, managing risks and protecting investors. ” Market News 2. A quarter of connecting, innovating and diversifying Hong Kong markets: SFC Report In the Jul-Sep 2025 Quarterly Report, it showed Hong Kong’s capital markets continued to deepen connectivity with Mainland and overseas markets, while driving advanced financial innovation and diversification. Some key takeaways of the Report on the financial areas are as follows: The SFC signed six MOUs in 2025 (three in the quarter) with overseas and Mainland markets to strengthen global asset management ties and reinforce Hong Kong’s super‑connector role. Swap Connect, with its product expansion, recorded a 56% year-on-year (“ YoY ”) increase in trading volume as of November 2025, with aggregate transactions exceeding RMB9.3 trillion since its 2023 launch. The SFC collaborating with the HKSAR Government to finalize two new virtual asset (“ VA ”) regulatory regimes, namely , in dealing and custodian areas. VA spot ETFs authorized by the SFC reached $5.47 billion in market cap (+33% YoY) increasing to 11 ETFs as of end‑November; tokenized retail money market fund hit $5.48 billion AUM (+557% since the first launch this year) with eight funds in total. To support Hong Kong as an offshore renminbi and fixed‑income hub, the SFC and HKMA issued a RMB fixed income and currency roadmap in September and are preparing a detailed workplan for implementing the roadmap initiatives. The 24 IPOs in the quarter raised over $70 billion, more than 70% higher YoY, keeping Hong Kong among global leaders by IPO funds raised. Hong Kong‑domiciled funds recorded net inflows of $46.9 billion; their AUM grew 35.9% YoY to $2.27 trillion as of September, while SFC‑authorized ETFs’ market capitalization rose 31.8% YoY to $653.5 billion, accounting for 13% of daily turnover. 2,799 new SFO license applications were filed in the period (+12% YoY); SFC‑licensed corporations and individuals increased to 3,379 and 46,457 respectively (+2.7% and +3.6% YoY). The SFC and HKMA issued a joint statement highlighting the development of the stablecoin regime. On the regulatory landscape, we can take a look at the table below relating breaches noted during the SFC on-site inspections. Quarter ended 30.9.2025 Six months ended 30.9.2025 Six months ended 30.9.2024 YoY change (%) Breach of the Code 72 180 193 -6.7 Breach of FMCC 40 99 56 +76.8 Non-compliance with AML guidelines 55 113 142 -20.4 Internal control weakness 176 341 472 -27.8 It is obvious that there was an increasing trend in deficiencies found in asset management regulatory regime in 2025 as contrast to the other categories where the figures were decreasing. SIGNIFICANCE: As Julia Leung, CEO of the SFC, said: “ Our capital markets delivered another quarter of steady and diversified growth despite global headwinds and volatility. ” On the regulatory side, the acute increase in breaches of FMCC signalled the need to have more comprehensive guidelines and implementable measures to safeguard compliance from market participants. Enforcement News - Intermediary 3. SFC Suspends Loretta LEE Si Kar for Three Months and Two Weeks Over Neglect of Duties in Safeguarding Client Assets at Tung Tai Securities On 3 December 2025, the SFC announced the suspension of Ms Loretta LEE Si Kar (“ LEE ”), a responsible officer (“ RO ”), manager-in-charge (“ MIC ”), and director of Tung Tai Securities Company Limited (“ Tung Tai ”), for three months and two weeks, effective from 1 December 2025 to 14 March 2026 (see Statement of Disciplinary Action ) Case Details This action stems from LEE's neglect of her supervisory duties, which contributed to Tung Tai's failures in handling unauthorized instructions from a bogus email, leading to the sale of client securities and improper transfers totaling US$3,301,740 to undesignated overseas accounts. Despite red flags such as rejected telegraphic transfers (“ TTs ”) and inconsistent beneficiary details, Tung Tai processed the transactions without client verification, breaching requirements to safeguard assets and maintain effective internal controls against theft or fraud. Enforcement Act Following the incident, Tung Tai compensated the affected client, implemented remedial measures, and engaged independent reviewers to strengthen procedures. The SFC factored in LEE's cooperation, clean record, and the seriousness of the lapses when determining the sanction, after previously reprimanding and fining Tung Tai HK$900,000 for related violations (see the SFC’s press release dated 13 November 2025 ). For more details of the background, please refer to ComplianceOne Newsletter (Nov) - Topic 6 SIGNIFICANCE: This disciplinary measure reinforces the SFC's emphasis on senior management's responsibility to uphold robust internal controls and vigilance against fraud in securities firms. It serves as a reminder for financial intermediaries, including those in related sectors, to prioritize client asset protection through proactive verification and risk management, as lapses can result in significant financial losses, regulatory penalties, and reputational harm. The case may prompt firms to review email authentication protocols and TT processes to mitigate similar cyber-enabled threats. 4. SFC Reprimands and Fines EFG Bank AG $10.85 Million for Regulatory Breaches and Internal Control Failures On 11 December 2025, the SFC reprimanded and fined EFG Bank AG (“ EFG ”) $10.85 million for failures in product due diligence, record-keeping, and late reporting during the period from January 2015 to December 2020 (the “ Relevant Period ”). The SFC’s action followed an investigation triggered by a self-report from EFG and findings referred by the Hong Kong Monetary Authority (“ HKMA ”). Case Details EFG, registered to conduct regulated activities including dealing in securities, advising on securities, and asset management under the Securities and Futures Ordinance, failed to adequately assess special features of 322 bonds during product due diligence. It also neglected to update internal policies promptly in line with regulatory changes and did not provide customers with sufficient information or warning statements for certain complex products prior to transactions. Additionally, EFG did not maintain product due diligence records for 141 bonds and delayed reporting its suspected failures to the SFC, despite identifying them in July 2020. These breaches contravened the Code of Conduct for Persons Licensed by or Registered with the SFC and the Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the SFC. Enforcement Act In determining the sanctions, the SFC considered EFG’s remedial actions to strengthen its product due diligence framework, its cooperation with the HKMA and SFC investigations, and its commitment to implement Enhanced Complaint Handling Procedures (“ ECHP ”). Under the ECHP, EFG will review complaints from customers who acquired any of the 351 affected products during the Relevant Period, ensuring fair resolution. An impact assessment by EFG indicated potential failures in considering special features for these 351 products. For more details of the background, please refer to Statement of Disciplinary Action (appended with a list of the 351 products) SIGNIFICANCE: This enforcement action highlights the SFC’s emphasis on robust internal controls, timely compliance with evolving regulations, and proactive self-reporting in the financial sector. For institutions like EFG, which intersect with banking, securities, and potentially insurance-linked activities, such failures can erode investor trust and expose clients to undue risks. The case serves as a reminder for all regulated entities to prioritize comprehensive due diligence, accurate record-keeping, and swift disclosure of issues to maintain market integrity and avoid severe penalties. The implementation of ECHP demonstrates a balanced approach, allowing for remediation while reinforcing accountability. Enforcement News - LISTCO 5. SFC Convicts and Sentences Former Vice President of Computershare to Imprisonment and Fine for Insider Dealing SFC’s press release dated 4 December 2025 & 18 December 2025 . The SFC prosecuted Mr. CHOI Chun Wai (“ CHOI ”), former Vice President of Computershare Hong Kong Investor Services Limited (“ Computershare ”), a global provider of share registration and investor services, for insider dealing in the shares of ENM Holdings Limited (“ ENM ”) ( 128.HK ), listed on the Main Board of the Stock Exchange of Hong Kong Limited since 1972. Computershare was engaged by ENM to despatch and collect proxy forms, and to act as the scrutineer for the voting process at a court meeting related to ENM's proposed privatisation. CHOI, while employed as a vice president of Corporate Services, was involved in coordinating and monitoring the voting process. He accessed inside information indicating the privatisation would fail and sold his shares ahead of the public announcement, avoiding a significant financial loss. Case Details Date Event 2 June 2023 ENM and the Offeror (Solution Bridge Limited) jointly announced a proposed privatisation of ENM by way of a scheme of arrangement under section 673 of the Companies Ordinance, offering $0.58 per share for cancellation of approximately 55.72% of ENM's issued share capital, subject to 75% approval from disinterested shareholders at a court meeting scheduled for 26 September 2023. 22 September 2023 CHOI learned from proxy forms that the required voting threshold for the privatisation could not be met, constituting inside information. 25 September 2023 CHOI sold all his 1,500,000 ENM shares, despite knowing the inside information. 27 September 2023 ENM announced the lapse of the privatisation, causing ENM’s share price to fall 10.26% to close at $0.35, resulting in CHOI avoiding a loss of around $289,500. Court Order On 4 December 2025, the Eastern Magistrates’ Courts convicted CHOI of insider dealing following a prosecution by the SFC. CHOI pleaded guilty. The Eastern Magistrates’ Courts then sentenced CHOI to two months of imprisonment on 18 December 2025. He was ordered to pay a fine of $289,500 (equivalent to the losses avoided) and the SFC's investigation costs of $120,407. The Court noted that although CHOI showed remorse, insider dealing is a serious offense warranting an immediate custodial sentence. SIGNIFICANCE: The SFC’s Executive Director of Enforcement, Mr. Michael DUIGNAN, stated: “ The conviction underscores the SFC’s commitment to tackle insider dealing and enhance the integrity of Hong Kong’s financial markets. The immediate jail sentence by the Court serves as a strong deterrent. The misuse of non-public information for personal gain, particularly market professionals in a position of trust, is unacceptable and will have serious consequences. The SFC will continue to take robust enforcement action to protect investors and uphold a level playing field for all market participants. ” 6. SFC Obtains Order to Freeze $101 Million Belonging to Suspected Shadow Director in Corporate Misconduct Case Involving Teamway (1239.HK) On 16 December 2025, the SFC obtained a court order from the Court of First Instance to freeze more than $101 million in cash held in the personal bank account of Mr NG Kwok Fai (“ NG ”), a suspected shadow director of Teamway International Group Holdings Limited ( 1239.HK ) (“ Teamway ”). This action was taken by consent between the SFC and NG in ongoing legal proceedings under section 214 of the SFO, stemming from allegations of corporate misconduct. The freeze follows NG and others agreeing to pay $192 million in compensation to independent public shareholders of the delisted Combest Holdings Limited (“ Combest ”) for related misconduct. Case Details The SFC's investigation revealed that NG and Mr YANG Zhihui (“ YANG ”) allegedly gained control of Teamway and acted as shadow directors, transforming it into a "listed shell" for injecting new businesses while prejudicing the company's interests through a series of transactions. The SFC claims that the below individuals breached their fiduciary duties by approving these transactions or allowing NG and/or YANG to dominate company affairs: Name Position/Role Mr LIU Liangjin; Mr HE Xiaoming; Ms XIE Yan; Mr LING Zheng; Ms NGAI Mei; Mr XU Gefei; and Ms DUAN Mengying The seven former executive directors (“ ED ”) Mr CHAN Chun Kau; Mr LAM Chi Wai; and Mr Joshua LEE Chi Hwa The three Former independent non-executive directors (“ NED ”) Additionally, the former company secretary, Ms CHOI Yee Man (“ CHOI ”), is accused of negligence or recklessness in her duties. This case spans several years, involving interconnected corporate actions and related proceedings. Below is a timeline of key events: Date Event 2015 NG and YANG acquired a 75% interest in Teamway through a nominee, becoming shadow directors and planning to transform it into a "listed shell" by injecting new businesses to replace its original packaging operations. 2015–2022 NG and YANG, as shadow directors, allegedly engineered prejudicial transactions, with former directors approving them and the company secretary failing in oversight duties. May 2020 SFC commenced court proceedings under sections 212 and 214 of the SFO against NG, Mr LIU Tin Lap (“ LIU ”), and Mr LEE Man To (“ LEE ”) for misconduct related to Combest. Source: SFC’s press release dated 21 May 2020 . 8 November 2022 SFC initiated section 214 proceedings against Teamway and 13 individuals, including NG, YANG, the seven EDs, three NEDs, and the company secretary. September 2024 SFC and Combest, NG, LIU, and LEE reached an agreement via the Carecraft procedure to dispose of Combest proceedings. Source: SFC’s press release dated 16 September 2024 . 2 June 2025 Court ordered NG, LIU, and LEE to pay $192 million in compensation to Combest's independent public shareholders. Source: SFC’s press release dated 2 June 2025 . Enforcement Act The SFC is seeking compensation orders totaling $532 million against NG, YANG, and the 10 former directors for losses incurred by Teamway and its subsidiaries, along with disqualification orders against them and CHOI from serving as directors or managing any listed or unlisted corporation in Hong Kong. The asset freeze against NG remains in effect until the proceedings are resolved or further court order. SIGNIFICANCE: This enforcement action highlights the SFC's commitment to combating corporate misconduct in listed entities, particularly where shadow directors exploit control to prejudice company and shareholder interests. By freezing assets and seeking substantial compensation and disqualifications, it underscores the importance of fiduciary duties, transparency, and accountability in Hong Kong's financial markets. Company with listed affiliations should review governance practices to mitigate similar risks, as such cases can erode investor confidence and trigger broader regulatory scrutiny across financial sectors. 7. SFC Secures Conviction and Eight-Month Prison Sentence in False Trading Prosecution Involving China All Access Shares On 4 December 2025, the Shatin Magistrates’ Courts convicted Ms WONG Yuk Lan (“ WONG ”), Administration Controller of China All Access (Holdings) Limited (former stock code: 633.HK ) (“ China All Access ”), for false trading in the company’s shares, following a prosecution initiated by the SFC. Case Details The case stemmed from WONG’s actions as the “Spouse” of Mr Chan Yuen Ming, the company’s Chairman, who held a beneficial interest in 381,400,000 China All Access shares through a securities margin account under Creative Sector Limited, a company he wholly owned and controlled. Between 29 and 31 December 2014, WONG placed a series of bid orders for China All Access shares via her personal securities account. These orders were executed in the final minutes before market close and at prices above prevailing market levels. The court determined that WONG had no genuine intent to purchase the shares but aimed to create a false or misleading appearance of market demand to alleviate margin call pressures on Creative’s account. Court Order This offense violates section 295 of the SFO, which prohibits actions intended to create a false or misleading appearance regarding the market for, or price of, securities. Magistrate Mr Jeffrey SZE Cho Yiu emphasized during sentencing that WONG’s misconduct harmed market integrity by fabricating an illusion of active trading. WONG was subsequently sentenced to eight months in prison on 17 December 2025, and ordered to pay the SFC’s investigation costs. SIGNIFICANCE: This enforcement action underscores the SFC’s dedication to preserving market integrity and deterring manipulative practices that undermine investor confidence in Hong Kong’s financial markets. By securing a conviction and prison sentence for false trading, it highlights the severe consequences of creating artificial market appearances to evade financial pressures, such as margin calls. Financial professionals and firms should strengthen internal controls and compliance measures to prevent similar misconduct, as such cases can lead to reputational damage, regulatory penalties, and broader scrutiny across interconnected sectors. 8.SFC Suspends Dealings in Dashan Education (9986.HK) Shares over Significant Overstatement of Corporate Bank Balances On 3 December 2025, the SFC directed The Stock Exchange of Hong Kong Limited (“ Stock Exchange ”) to suspend dealings in the shares of Dashan Education Holdings Limited ( 9986.HK ) (“ Dashan ”) effective from 9:00 am, under the Securities and Futures (Stock Market Listing) Rules (“ SMLR ”). This measure aims to maintain a fair and orderly market and protect investors amid an ongoing SFC investigation into suspected financial irregularities. Case Details The SFC's inquiry revealed discrepancies in bank statements related to a software development project (April 2022 to November 2023) and a UK company acquisition (September 2022), including omitted circular fund flows and overstatements of bank balances totaling RMB36.4 million as of 30 June 2023 (19% of net asset value) and RMB76.3 million as of 31 December 2023 (55% of net asset value). These findings suggest the transactions may not have been genuine or at arm's length, with potential fabrication of documents to conceal issues, raising concerns about management integrity, particularly involving executive director Mr. ZHANG Hongjun (“ ZHANG ”), internal controls, and market disclosures. Follow-up Action Dashan has not provided satisfactory explanations, and the SFC suspects the September 2024 trading resumption was based on misleading information. Trading had been halted at Dashan's request since 28 November 2025 pending inside information release. See HKEX News 28 November 2025 for more information. SIGNIFICANCE: This suspension emphasizes the SFC's role in upholding market transparency and investor protection by addressing potential financial misrepresentations in listed companies. It highlights risks associated with overstated assets, inadequate internal controls, and management accountability, which could impact stakeholder confidence and prompt enhanced due diligence for financial intermediaries dealing with similar entities. As the investigation continues, it may lead to further regulatory actions, underscoring the need for robust compliance frameworks in Hong Kong's capital markets. [End of ComplianceOne Newsletter – December 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 - October 2023 The topics discussed in this monthly newsletter are as follows: 1. China banned new offshore brokerage accounts to prevent “bypassing” of forex controls 2. SFC/HKMA joint circular on intermediaries’ virtual asset-related activities 3. Circular on distributors providing additional returns and other services or arrangements when marketing SFC-authorised funds 4. SFC consulted on market sounding guidelines 5. SFC expressed support for development of an industry-led voluntary code of conduct for ESG ratings and data products providers 6. SFC banned Ivan Chan Chuk Cheung for seven years for IPO sponsor failures 7. SFC, ICAC and AFRC conducted first tripartite operation against suspected corporate fraud and misconduct MARKET NEWS 1. China banned new offshore brokerage accounts to prevent 'bypassing' of forex controls According to Reuters news on 12 October 2023, China had for the first time issued a notice prohibiting domestic brokerages and their overseas units from taking on new mainland clients for offshore trading; whereas new investments by existing mainland clients are also subject to strict monitoring to prevent investors from bypassing China’s foreign exchange controls. The China Securities Regulatory Commission (CSRC) had made it explicit earlier in September that brokers should cease providing securities trading from offshore accounts such as from Hong Kong to new mainland investors, and activities now considered as illegal include cross-border securities brokerage services, securities lending, fund sales or investment consultancy. The story can be traced back to last December when the CSRC put a ban on the offshore investments through two main online brokers, Futu Holdings Ltd and UP Fintech Holdings Ltd where it was stated that such activities were in breach of the securities laws in China. Despite of the recent tightening measures, institutional investors from mainland China are still able to gain access to the HK stock markets through the Stock Connect, though on a quota-restriction basis. SIGNIFICANCE: The notice and subsequent actions are conceived by many market participants as symbols of restricting capital outflows from mainland, particular amid the weakening of RMB in the foreign exchange market over the past months. This impact from the regulatory regime can be far-reaching and suppressing, especially for brokerage firms with strong mainland backgrounds of which larger portion of offshore retail business was originated from. 2. SFC/HKMA Joint circular on intermediaries’ virtual asset-related activities On 20 October 2023, the SFC and the HKMA published a “ Joint Circular on intermediaries’ virtual asset-related activities ” amid the buoyant interests and enquiries from intermediaries about the distribution of virtual assets-related (VA-related) products, advisory and dealing services as well as asset management services in virtual assets industry. The SFC and the HKMA have been reviewing their existing policies for intermediaries contemplating to engage in virtual assets-related industry in the light of the ever-changing and fast-growing VA activities. This Joint Circular incorporated FOUR main categories of VA-related activities with relevant Appendices, providing guidance and “terms & conditions” in details for intermediaries engaging the following categories: A. Distribution of VA-related products B. Provision of virtual asset dealing services (VA dealing services) C. Provision of asset management services in respect of virtual assets D. Provision of virtual asset advisory services SIGNIFICANCE: Intermediaries with intention to engage in VA-related business or dealing services are strongly recommended to take notes of the relevant Appendices which serve as regulatory guidelines to ensure intermediaries themselves of being in compliance while conducting their VA-related activities or VA brokerage services. Please be reminded the prevailing Joint Circular supersedes the previous versions, and intermediaries have the obligations to keep abreast of the changing VA regulatory regime in collaboration with the ongoing concerted efforts of the law-enforcing counterparts like the SFC and the HKMA in order to develop and consolidate a sound regulatory landscape. 3. Circular on distributors providing additional returns and other services or arrangements when marketing SFC-authorised funds On 24 October 2023, this circular was published in the light of the recent observations of licensed corporations’ practice in offering and promoting SFC-authorised funds. It was noticed that intermediaries have been offering additional returns or other incentives that may divert the client’s focus from properly considering the risks and features of the underlying funds. In some observed cases, “guaranteed returns” and “lock-up period” are the common features. Guaranteed returns The “guaranteed returns” typically comprise: (i) the actual return of the relevant fund(s) invested by the investor (i.e., fund return); and (ii) a top-up return to make up the difference between the fund return and the guaranteed rate of return offered by the distributor. Moreover, the guaranteed returns offered by some distributors may be considered as a “gift” which may contravene paragraph 3.11 of the Code of Conduct that “distributors should not offer any gifts (other than a discount of fees or charges) in promoting a specific investment product or a particular type of investment product to a client", lest investors may be distracted from the unique features and risks of such particular fund per se. Lock-up period and dealing frequency When distributing SFC-authorised funds, some distributors imposed a lock-up period on their clients’ investments or lowered the funds’ dealing frequency. It is reminded that distributors should act fairly and in the best interests of their clients in providing services in accordance with General Principle 1 (Honesty and fairness) of the Code of Conduct that clients should not be restricted to redeem his investment in a fund which interferes with his timely investment decisions. SIGNIFICANCE: SFC-authorised funds without guaranteed features are required to highlight in their offering documents that they do not have these features and that investors may not get back the principal of their investment. For this reason, any guaranteed returns provided by distributors may create a misleading impression to the investors that these returns are provided by the underlying funds which is not a factual presentation indeed! As for the lock-up period, the SFC has made its expectation expressly that distributors should use their best endeavours to adhere to a fund’s dealing frequency as stipulated in the offering documents despite the need to achieve any administrative efficiency in setting any cut-off times. 4. SFC consulted on market sounding guidelines On 11 October 2023, the SFC launched a consultation on proposed guidelines for market soundings which highlighted the general principle of honesty, fairness and best interests to the clients while conducting the regulated activities. Under the proposals, intermediaries would have to implement robust governance and effective policies and internal control procedures to prevent the misuse and leakage of non-public information they are entrusted with. As Ms Julia Leung, the SFC’s Chief Executive Officer, has said: “ both sell-side brokers and buy-side participants have obligations to uphold market integrity by keeping in strict confidence non-public information entrusted to them and not abusing that information. ” SIGNIFICANCE: This consultation follows a thematic review of market soundings the SFC commenced in early 2022. In developing the proposed guidelines, the SFC took into consideration local and overseas market practices and regulatory requirements, related cases as well as information gathered and feedback from intermediaries in the thematic review. 5. SFC expressed support for development of an industry-led voluntary code of conduct for ESG ratings and data products providers On 31 October 2023, the SFC announced that it would support and sponsor the development of a code of conduct for voluntary adoption by environmental, social and governance (ESG) ratings and data products providers providing products and services in Hong Kong. The Voluntary Code of Conduct (VCoC) will be developed via an industry-led working group, namely the Hong Kong ESG Ratings and Data Products Providers VCoC Working Group (VCWG). And The SFC also welcomed the International Capital Market Association (ICMA) to act as the Secretariat of the VCWG. The proposed VCoC would align with international best practices as recommended by the International Organization of Securities Commissions (IOSCO) and relevant expectations introduced in other major jurisdictions, with the SFC, HKMA and the Insurance Authority (IA) as observers to the VCWG. As Ms Julia Leung, the SFC’s Chief Executive Officer, has said: “ the Voluntary Code of Conduct will help strengthen the transparency, quality and reliability of ESG information used by licensed corporations in their investment decisions; this is an important initiative to mitigate the risk of greenwashing in investment products .” The initiative is the culmination of the SFC’s fact-finding exercise and industry outreach conducted since mid-2022, the key observations from the exercise and proposed way forward for these providers were summarised in a report published by the SFC that date. ENFORCEMENT NEWS 6. SFC banned Ivan Chan Chuk Cheung for seven years for IPO sponsor failures An announcement made on 11 October 2023, the SFC had prohibited Mr Ivan Chan Chuk Cheung (Chan), a former responsible officer (RO) of Changjiang Corporate Finance (HK) Limited (CJCF), from re-entering the industry for seven years from 10 October 2023 to 9 October 2030 for failing to discharge his supervisory duties as a sponsor principal in charge of five listing applications The disciplinary action followed the earlier sanctions against CJCF for serious and extensive failures in discharging its duties as the sponsor in six listing applications, five out of which were attributable to neglect on the part of Chan. SIGNIFICANCE: Given a ban of such long duration of seven years, Chan had failed in his role as the sponsor principal to: (i) exercise due skill, care and diligence in handling the Five Listing Applications; (ii) diligently supervise the transaction teams in carrying out the sponsor work; and (iii) ensure the maintenance of appropriate standards of conduct by CJCF. 7. SFC, ICAC and AFRC conducted first tripartite operation against suspected corporate fraud and misconduct On 19 October 2023, the SFC, the Independent Commission Against Corruption (ICAC), and the Accounting and Financial Reporting Council (AFRC) have conducted the first tripartite operation involving two Hong Kong-listed companies on suspicion that they falsified corporate transactions totalling HK$193 million. In the joint operation, three persons, including an executive director of a listed company, were arrested by the ICAC for suspected offences of agent using documents with intent to deceive his principal under the Prevention of Bribery Ordinance. The investigation revealed that the management of the two companies listed on the SEHK had allegedly conspired with members of the syndicate to falsify corporate transactions, resulting in overstatements of HK$83.9 million in their revenue and misstatement of assets in the sum of HK$109.2 million. Such overstatements and misstatement of assets might lead to disclosure of false or misleading information in the interim results and/or annual reports of the two listed companies. The SFC’s Executive Director of Enforcement, Mr Christopher Wilson, said: “ Directors of listed companies are entrusted to govern truthful and accurate financial disclosures which serve as the bedrock of our capital markets. The tripartite operation, and the first with the AFRC, underscores our shared commitment to holding accountable those who abuse that trust and defraud investors .” Meanwhile, Deputy Commissioner and Head of Operations of the ICAC, Mr Ricky Yau Shu-chun, and Ms Janey Lai, Acting Chief Executive Officer of the AFRC, separately expressed their appreciation of the tripartite operation in upholding the integrity of the financial market in Hong Kong. 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 . 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The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Insurance Newsletter – Jan 2025 The topics discussed in this monthly newsletter are as follows: 1. Hong Kong Solidifies Insurance-linked Security Leadership with First Multi-Peril Catastrophe Bond 2. Insurance Sector Pivots to Silver Economy as Population Ages 3. Key highlights of provisional business Q1–Q3 2024 Statistics 4. Revision of the Mainland China Visitors Definition 5. SFC bans Chan Ka Him for life for insurance fraud IA News Updates 1. Hong Kong Solidifies Insurance-linked Security Leadership with First Multi-Peril Catastrophe Bond The IA announced the successful issuance of a catastrophe bond by Taiping Reinsurance Company Limited through its special purpose insurer, Silk Road Re Limited. This bond marks a milestone as the first insurance-linked security (“ ILS ”) in Hong Kong covering multiple perils and triggers, offering three-year protection against named storms in the United States and earthquakes in Mainland China from 1 January 2025. Key Highlights: This is the sixth ILS issuance in Hong Kong since the launch of the city’s dedicated regulatory framework and pilot grant scheme in 2021. Total ILS transactions in Hong Kong now stand at US$748 million (HK$5.86 billion), reflecting robust growth in the region’s insurance-linked securities market. SIGNIFICANCE: The bond highlights Hong Kong’s evolution into a versatile ILS hub capable of structuring complex, multi-jurisdictional risk solutions. By covering both U.S. and Mainland China perils, it demonstrates the city’s ability to attract global investors while supporting regional resilience against climate-related risks. Note: ILS are different from Investment-Linked Assurance Schemes (“ ILAS ”); ILS: Financial instruments linked to insurance events like natural disasters, transferring risk to capital markets; ILAS: Life insurance policies combining investment and insurance, focused on long-term savings and retirement planning. 2. Insurance Sector Pivots to Silver Economy as Population Ages The IA spearheaded a critical dialogue on the role of insurance in harnessing opportunities within the silver economy at the Asian Financial Forum (“ AFF ”). Titled “Navigating the Silver Economy: Insurance Sector Opportunities in an Aging Society,” the panel convened industry leaders and academics to address challenges and innovations in serving aging populations, both locally and across the Greater Bay Area (“ GBA ”). Key Highlights: Demographic Shifts: Explored Hong Kong’s rapidly aging population and the growing demand for tailored insurance solutions. Protection Gaps: Identified unmet needs in elderly healthcare, retirement planning, and long-term care coverage. Cross-Border Potential: Emphasized opportunities for Hong Kong insurers to collaborate with GBA partners to deliver integrated services. Education & Literacy: Stressed the need to boost public understanding of retirement planning and insurance products. SIGNIFICANCE: With over 20% of Hong Kong’s population projected to be aged 65+ by 2030, the panel underscored the urgency for insurers to develop products that address longevity risks, chronic care, and income security. The discussion also highlighted Hong Kong’s strategic role in leveraging GBA integration to create region-wide solutions. For more details, please refer to AFF full programme here . 3. Key highlights of provisional business Q1–Q3 2024 Statistics The IA’s released the provisional business statistics for the first three quarters of 2024, which highlights trends of long-term business, general business, and regulatory shifts critical for insurance licensees. Mainland Visitor Business: Adapt to Shifting Dynamics: While premiums from Mainland visitors remain significant (27.6% of new individual life business), the IA’s focus on monitoring this segment signals stricter enforcement of unlicensed referral practices. Recent discussions indicate a zero-tolerance stance on: (i) Unlicensed cross-border referrals (e.g. unlicensed Mainland agents/brokers directing clients to Hong Kong insurers); and (ii) non-compliant commission-sharing arrangements with unregulated third parties. For more details of unlicensed referral, please refer to circular issued by IA on 22 May 2024. Regulatory Overhaul: Prepare for RBC Changes: The Risk-based Capital (“ RBC ”) regime, effective 1 July 2024, introduces new reporting standards. Insurers now report by financial year instead of calendar year, and offshore general insurance metrics are now included. Historical comparisons may be unreliable—verify data context with partners. For more details of RBC regime, please refer to here . Semi-Annual Reporting: Starting Q1 2025, the IA will publish Mainland visitor business statistics semi-annually due to seasonal fluctuations. Long-Term Business Growth: New policy premiums for long-term business (excluding retirement schemes) reached $169.6 billion, up 15.7%. General Business Performance: Gross and net premiums for general business in the first three quarters of 2024 were $75 billion and $51.7 billion. For additional summary of the provisional statistics, please refer to the Annex and Market & Industry Statistics published by IA. SIGNIFICANCE: As the insurance landscape evolves, licensees must stay agile and informed. Adapting to the shifting dynamics of Mainland visitor business is crucial, especially with the IA's stricter enforcement on unlicensed referral practices. Aligning product offerings with Mainland visitor preferences and ensuring compliance with the new RBC regime will help licensees effectively navigate these regulatory changes. Market News 4. Revision of the Mainland China Visitors Definition The IA proposed to revise the official definition of Mainland China Visitors (“ MCV ”) to exclude individuals under related talent schemes (e.g. Top Talent Pass Scheme) to prevent data inflation and improve data accuracy and address risks tied to visitors’ limited familiarity with local insurance regulations. MCV Definition proposal Current MCV Definition: Mainland residents entering Hong Kong with a Double Entry Permit or Chinese passport. Proposed MCV Definition: Specific talent schemes participants may no longer be classified as MCV. Additionally, the IA will explore the possibility of collecting data on new policies from different regions. Considering the seasonal travel patterns of Mainland visitors, the related business statistics will be published semi-annually instead of quarterly starting from Q1 2025. Participating Business Reforms The IA has proposed three major changes to enhance transparency and consumer protection: Cap on Commission Rates: An annual review of maximum illustration rates, divided into HKD and non-HKD policy categories. Commission Ratio Comparison Platform: A public platform to compare insurers' actual vs. projected dividend payouts. Referral Compensation Review: An overhaul of unlicensed referrer’s commission structures. The above-mentioned will be reviewed and announced by IA within the year, with the cap on commission rates expected to be implemented first. SIGNIFICANCE: Reviewing the definition of Mainland visitors aims to prevent data inflation and improve consumer protection and risk management. The reforms in participating business practices will enhance transparency and ensure fair treatment of consumers. Licensed insurance companies and brokers need to adjust the business strategies promptly to comply with the new regulations and maintain client trust. Enforcement News 5. SFC bans Chan Ka Him for life for insurance fraud The SFC has permanently banned Mr. Chan Ka Him, a former insurance specialist at Standard Chartered Bank (Hong Kong) Limited, from re-entering the industry following his criminal convictions for insurance fraud. Case Details: Between January and March 2019, Chan assisted two clients in taking out insurance policies. Between August and September 2019, Chan induced one client to transfer US$52,300 and another client to transfer over HK$420,000 to a bank account connected to him, under the pretense that these transfers were for premium payments. Chan attempted to cancel the clients’ insurance policies by falsely representing to the insurer that the clients wished to do so. SIGNIFICANCE: Chan was sentenced to 20 months’ imprisonment by the District Court on 2 February 2024 after being convicted of three counts of fraud and one count of attempted fraud. For more details, please refer to Judgment – DCCC 1157/2022 The SFC considers that Chan is not fit and proper to be a regulated person due to his criminal convictions. [End of ComplianceOne Insurance 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 for insurance are as follows: ComplianceOne Insurance Newsletter – July 2025 The topics discussed in this monthly newsletter are as follows: 1. Practice Note: Commission Up to 70% in the first year, with the remainder paid over 5 years 2. Compulsory RO-CPD Requirement for Responsible Officers 3. Anti-Scam Consumer Protection Charter 3.0 Regulatory News 1. Practice Note: Commission Up to 70% in the first year, with the remainder paid over 5 years On 30 July 2025, the IA released a Practice Note . It builds on Guideline GL16, which covers long-term insurance business (excluding investment-linked policies). The goal is simple: ensure insurance companies pay commissions to agents and brokers in a way that encourages fair treatment of customers. This practice guideline shall come into effect on 1 January 2026 . Who Does This Apply To? Insurers: All authorized insurance companies in Hong Kong that issue participating policies with regular premiums. Intermediaries: Licensed individual agents, agencies, and broker companies who sell and service these policies. Key Rule: How Commissions Must Be Paid To avoid "front-loading" (paying too much too soon, which might lead to pushy sales and poor after-sales service), commissions must be spread out: Up to 70% can be paid in the first policy year (from the start date to 12 months later). The remaining at least 30% must be paid evenly over the next minimum 5 years (policy years 2 to 6) – or over the full premium payment term if it's shorter than 5 years. Example - a policy where the total commission is $100 (based on premiums paid): Policy Year Before 1 January 2026 After 1 January 2026 Commission paid % of total commission Commission paid % of total commission Year 1 $100 100% $70 70% Year 2 $0 Nill $6 6% Year 3 $0 Nill $6 6% Year 4 $0 Nill $6 6% Year 5 $0 Nill $6 6% Year 6 $0 Nill $6 6% Year 7 $0 Nill $0 Nill Under the existing practice (“ Before 1 January 2026 ”), with all commissions paid in the first year, intermediaries may have reduced incentive to provide ongoing service from year 2 onward, potentially leading to policies receiving less attention or being neglected. For the new practice (“ After 1 January 2026 ”), the spreading of commissions ensures that intermediaries remain motivated to carefully handle and service policies over subsequent years to secure the remaining payments, promoting better long-term customer care. The new practice applies to the total commission per policy, including basic pay, overrides (to managers), and bonuses tied to sales volume (unless exempted – see below). Exceptions (When Spreading Isn't Required) You can skip the 70/30 split if the below scenarios apply, but still required to follow GL16's fair treatment rules: Scenario Remarks Overriding commission (Agents only) Applies to: Commissions for producing agents (who introduce, arrange, and serve policies) and overriding commissions for agent managers (who oversee producing agents). Exception: Overriding commissions are exempt if calculated using objective non-financial performance metrics, such as policy persistency rates, product variety in portfolios, customer feedback, and agent retention rates, to ensure adherence to "treating customers fairly." Volume-Based bonus commission (Agents only) Applies to : Bonuses for licensed insurance agents contingent on meeting sales volume targets (e.g., minimum premium volume), where eligibility and amount are uncertain until targets are met. Exception : Exempt if the bonus incorporates objective non-financial metrics (e.g., persistency rates, product diversity, customer feedback, agent retention) alongside volume. Note for Brokers : Volume-based commissions are outright prohibited for licensed insurance brokers per a 2006 circular from the Office of the Commissioner of Insurance. Fixed salaries Exception : Fully exempt for fixed remuneration packages, which are contractually guaranteed regardless of policy arrangements, servicing, or premium volumes. Bank channels (bancassurance) Exception: Allowed departure for commissions in the bancassurance channel (e.g., banks as insurance agencies under the Banking Ordinance), provided they adhere to overriding principles in GL16. The IA and Hong Kong Monetary Authority (“ HKMA ”) will monitor and act if needed. Policy Holders Who Are Professional Investors Exception : Departure permitted for commissions on policies with policyholders qualifying as Professional Investors (per Securities and Futures Ordinance and Rules), subject to: Establishing effective controls to verify PI status during onboarding and KYC processes. Confirming the policyholder meets PI criteria. Ensuring commission structures continuously comply with GL16's overriding principles. SIGNIFICANCE: This Practice Note strengthens regulatory oversight of long-term insurance conduct, promoting sustainable practices that prioritize policyholder protection over short-term sales. By mandating commission spreading, it reduces risks of misconduct, enhances industry integrity, and supports fair treatment amid fluctuating policy benefits. Insurers are encouraged to consult the full document and FAQs for guidance; the IA may update it based on market developments. For inquiries, contact the IA at relevant channels. 2. Compulsory RO-CPD Requirement for Responsible Officers The IA has officially rolled out the compulsory Continuing Professional Development (“ CPD ”) requirement for Responsible Officers (“ ROs ”) (here refer as “ RO-CPD ”) of all licensed insurance broker companies. Effective from 1 August 2025 . Key Details of the Requirement RO must complete at least 2 RO-CPD hours focused specifically on management and control functions during each assessment period. The RO-CPD hours fall under the " Ethics or Regulations " category and count toward the existing 15-hour annual CPD requirement for ROs. RO-CPD Course Details, and how to attend The IA will organize the courses, delivered through the two key broker industry bodies: Professional Insurance Brokers Association (“ PIBA ”) The Hong Kong Confederation of Insurance Brokers (“ CIB ”) Further details on training sessions for the 2025/26 assessment period will be announced soon. ROs must attend at least one session per period through either body. Consequence of Non-Compliance Non-compliance should not be taken lightly. Failure to meet the RO-CPD without reasonable excuse may result in: Disciplinary Action : As detailed in the IA's "Penalty Framework for Non-compliance with CPD" (from the circular dated 23 July 2021 ). Impact on Fit and Proper: May question the individual's ongoing suitability to serve as an RO. Increased Scrutiny : IA could apply heightened regulatory oversight to the associated broker company. SIGNIFICANCE: Given the growing complexity of these duties, the IA believes it's essential for ROs to dedicate time to enhancing their skills in management and control functions. This builds on positive feedback from a pilot scheme launched in the 2024/25 assessment period, which was well-received by the industry and successfully raised awareness about RO responsibilities. 3. Anti-Scam Consumer Protection Charter 3.0 In a united stand against rising financial frauds and scams, the Hong Kong Monetary Authority (“ HKMA ”), Securities and Futures Commission (“ SFC ”), the IA, and Mandatory Provident Fund Schemes Authority (“ MPFA ”) have unveiled the Anti-Scam Consumer Protection Charter 3.0 . Effective from 9 July 2025 . Building upon the foundations laid by Charters 1.0 (2023) and Charter 2.0 (2024) , Charter 3.0 expands the fight against scams by forging partnerships with technology and telecommunications firms. This collaborative framework aims to disrupt fraud at its core through six key principles outlined in the annex. These focus areas include: Charter 3.0 Principles include: 1. Reporting Functions for Users Participating Institutions will allow users to file reports related to suspected financial frauds and scams, and will endeavor to address them in a reasonable manner, once found to be in violation of the Participating Institutions’ policies. 2. Reporting Channels for Financial Regulators Participating Institutions will provide a direct and efficient process for the Financial Regulators to report suspected financial frauds and scams, and to follow up on such reports. 3. Checking of Advertisers Participating Institutions will adopt a risk-based approach to facilitate verification, applying measures that are necessary and proportionate. 4. Internal Monitoring Processes Participating Institutions will put in place and update from time to time internal rules, policies, processes, and tools to monitor advertisements and content that promote financial products or services on their platforms, with a view to creating a safe online environment for users. 5. Enforcement of Terms of Service Participating Institutions will enforce their own terms of service by detecting and removing financial scam advertisement or content that violate their platform policies. 6. Collaboration on Public Awareness Participating Institutions will work together with the Financial Regulators and the financial industry on raising public awareness about frauds and scams and promoting cybersecurity. This will include Participating Institutions’ collaboration with the Financial Regulators, financial institutions, or other agencies where appropriate, to launch anti-deception promotional campaigns to educate the Hong Kong public. The launch event featured engaging discussions among executives from regulators, tech giants, and telecom providers on emerging scam trends and joint strategies to protect the public. SIGNIFICANCE: Julia Leung, Chief Executive Officer, SFC: "Charter 3.0 is a meaningful step forward, bringing in major technology and telecommunications companies to join the fight against online scams. It positions Hong Kong as a leader in safeguarding the financial world’s digital future, building a safer, more responsible online landscape." Clement Cheung, Chief Executive Officer, IA: "The Charter 3.0 represents collaborative efforts to forge a robust alliance against financial frauds. The IA will leverage this platform to strengthen public education and empower policyholders against sophisticated swindlers." With scams evolving rapidly in the digital age, Charter 3.0 emphasizes cross-sector collaboration to preempt threats. It aligns with global calls for action and reinforces Hong Kong's role as a secure financial hub. [End of ComplianceOne Insurance 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 - April 2024 The topics discussed in this monthly newsletter are as follows: 1. China considers to limit investment of offshore Chinese municipal bonds by QDLP 2. Asia’s First Spot Virtual Assets ETFs are launched in Hong Kong 3. HKEX announces the development of ORION Derivatives Platform 4. Hong Kong Government extends the subsidiary scheme for OFC and REIT 5. The joint SFC-HKMA thematic review of the distribution of non-exchange traded investment products 6. Climate-Related Disclosure requirements extended to listed companies 7. OSL as the first to be granted the AMLO license MARKET NEWS 1. China considers to limit investment of offshore Chinese municipal bonds by QDLP On 24 Apr 2024, a report from Reuters revealed the incidence of Mainland China to curb the lavish issuances of offshore bonds through the mechanism of Qualified Domestic Limited Partnership (QDLP) from local municipal governments which were already burdened by the huge local debts. The loosely regulated quota-based QDLP had been launched since 2012, and it has recently come to the attention of the central government that the use of such mechanism for local government offshore debts issuances would attenuate the Beijing government’s efforts to tackle the local debt risks. The China Securities Regulatory Commission (CSRC) made queries to asset managers holding the QDLP licenses of their exposure to offshore debts of “local government financing vehicles (LGFVs, also known as 地方政府融資平台 or 城投平台 ), and how the QDLP quotas were used. It was noticed that the total local government bond issuances reached a new high in January 2024 compared to the highest volume in Nov 2022. SIGNIFICANCE: For reason that the process of obtaining QDLP licenses and raising QDLP funds were handled by around 10 local governments (some examples like Tianjin, Liaoning, Guangxi, Chaongqing etc.) rather than the central government which subsequently made the mechanism one of the loose and flexible investment channels to be taken advantage with. The LGFVs were originally introduced to raise funds for infrastructure projects which recently turned out to be over-invested and aggravated by the plummeting property markets. The Beijing government has pushed forward remedial measures to contain the debt risks, and to halt some ongoing state-owned infrastructures projects as imminent solutions. 2.Asia ’s First Spot Virtual Assets ETFs are launched in Hong Kong On 30 Apr 2024, HKEX was pleased to announce the listing of Asia’s first Spot Virtual Asset (VA) (namely, Bitcoins and Ethereums) ETFs, increasing the diversity of products tradeable in the Hong Kong’s markets and further manifesting Hong Kong as the leading ETF marketplace in the region nearby. A snapshot of the Spot VA ETFs is as below: The three ETF issuers are China Asset Management (Hong Kong) Limited , Harvest Global Investments Co., Ltd , and Bosera Asset Management (International) Co., Limited . Following the successful launch of the VA Futures ETF in late 2022, turnover of the total three VA Future ETFs increased a few folds from HKD$8.9 million to HKD$51.3 million in the first quarter of 2024. The parallel launches of spot VAs and VA futures ETFs enhance the liquidity in the ETFs markets and provide more flexibilities to accommodate investors with variegated risk profiles and investment horizons. SIGNIFICANCE: The accesses to spot VAs through exposures in ETF channels provide an alternative to traditional investors, both professional investors and retail investors who are still sceptical and conservative to the new crypto exchanges, by directly participating through the conventional HKEX they are familiar with. Yet, brokers providing accesses to retail clientele should still be mindful of providing sufficient risk disclosure and assessment of the clients' knowledge in the products in a compliant manner as a matter of suitability requirements. Some interesting product features of these Spot VA ETFs from their futures ETF counterparts are that in-kind subscriptions and in-kind redemptions are available which facilitate investors who have already invested in spot VAs to shift to their corresponding proxy, i.e. the ETFs. 3. HKEX announces the development of ORION Derivatives Platform On 18 April 2024, the HKEX announced the development of the Orion Derivatives Platform ( ODP ), offering enhanced trading, clearing and risk management capabilities. This new in-house developed platform is expected to be launched in 2028, which will help elevate the competitiveness of the HKEX in the global derivative marketplace. The HKEx is dedicated to building “future-ready” technology platforms and operations as its priority to advocate the market participants in delivering long-term, sustainable growth and development. The ODP platform will be built on a modular architecture, making it easier to introduce new products, enhance microstructure and add new capabilities to the market. ODP will offer enhanced trading and clearing capabilities to clients, including the potential of near 24-hour trading, additional order types, an industry-standard interface, as well as an enhanced testing and onboarding experience. The launch of ODP demonstrates HKEX’s ongoing strategic commitment to driving innovations in our financial markets through the development of best-in-class technology platforms. SIGNIFICANCE: As the new HKEX Chief Executive Officer, Bonnie Y Chan, has said: “ Developing an in-house platform that is adaptable, efficient, and scalable, and would give us a unique competitive advantage in the global derivatives space. The launch of ODP will strengthen HKEX’s capability to support the needs of global investors, and cement Hong Kong’s leading position as Asia’s risk management centre and an international financial centre .” 4. Hong Kong Government extends the subsidiary scheme for OFC and REIT On 26 Apr 2024, the SFC announced the details of the three-year extension of the Government’s grant scheme to subsidise the setting up of open-ended fund companies (OFCs) and real estate investment trusts (REITs) in Hong Kong. To further attract the set-up of OFCs to be incorporated in or re-domiciled to Hong Kong and the SFC-authorized REITs, the extended scheme covers up to 70% of eligible expenses, subject to a cap of HKD$1 million per publicly offered OFC, HKD$500,000 per privately offered OFC and $8 million per REIT. The grant scheme has been well-received since its inception in May 2021. and the extension by the Government for another three years will definitely help boost Hong Kong’s competitiveness and development as a preferred fund domicile for such a diversified industry regime. Up to end of Apr 2024, there were 86 public OFCs and 877 private OFCs registered under the SFC. The extended scheme will be available for applications from 10 May 2024 to 9 May 2027 on a first-come-first-served basis. Detailed eligibility criteria of the scheme are enclosed in SFC Eligibility criteria of the grant scheme for OFCs and REITs for OFCs opting for it. 5. The joint SFC-HKMA thematic review of the distribution of non-exchange traded investment products On 18 Apr 2024, a thematic review conducted by HKMA and SFC jointly had identified some issues on intermediaries’ practices in performing product due diligence (“PDD”) and suitability requirement (“SBR”); remedial measures by intermediaries are required to address the issues accordingly. Some key findings of the review are as follows: (1) The assignments of risk rating to investment products as part of PDD do not incorporate crucial factors like the leverage deployed, credit events relating to the product issuers, heightened market risks, adverse political environments and the like. (2) Intermediaries were exposed to the risks of making inappropriate recommendations to clients if the risk return profiles of the products were not adequately assessed and accurately reflected in the product risk ratings used for the suitability assessment. (3) Structured products were the most prevalent type of non-exchange traded investment products sold by intermediaries; the risks inherent in the format the products were structured could be unlimited or far beyond what the investors have expected to bear. (4) Some salespersons may not have the required knowledge to explain to the investors the characteristics and risks of the structured products; and it is imperative for the intermediaries to provide adequate training to the relevant staff. (5) Intermediaries are reminded to exercise due skill, care and diligence in selecting investment products for different risk categories of clients and reach an assessment of the products commensurate with the client’s profile. (6) All intermediaries are reminded of their obligations to: (i) give due consideration to all the relevant circumstances specific to a client; (ii) disclose all the relevant information to a client in order that informed investment decisions can be made. 6. Climate-Related Disclosure requirements extended to listed companies On 19 Apr 2024, The Stock Exchange of Hong Kong (SEHK) published its consultation conclusions on the enhancement of climate-related disclosure (“CRD”) requirements for listed companies in HK. The new CRD requirements, effective from 1 January 2025, is the first step to align local sustainability disclosure requirements with the IFRS Sustainability Disclosure Standards . To facilitate the launch, SEHK has also published an Implementation Guidance to assist listed companies to kick off the new regime which will be implemented on a balanced and phased approach. SIGNIFICANCE: As Ms Julia Leung, SFC’s Chief Executive Officer, has said: “ The new regime on climate-related disclosures will give listed companies in Hong Kong a head-start in speaking the common international language of the International Sustainability Standards Board (ISSB) to the investing public and capital markets. ” The vogue for green finance has been sweeping over financial markets across various regions, the SFC has played the pioneer role in formulating guidelines for licensed corporations engaged in funds management to comply with the Climate-Related Risk Disclosure Requirements by the end of Nov 2022. 7. OSL as the first to be granted the AMLO license OSL Digital Securities Limited (“OSL”) is the first service provider to be granted a license under the AML and CTF Ordinances (“AMLO”) by the SFC on 19 April 2024. Up to now, only OSL is the first to be granted two licenses under the new dual licensing regime with both the SFO license (for security tokens) and AMLO license (for non-security tokens) at the same time. SIGNIFICANCE: To facilitate and ensure a seamless regulatory transition, a “dual licensing regime” had been introduced where existing services providers had to submit an application during the transition period from 1 Jun 2023 to 31 May 2024 with deadline for application submission on 29 Feb 2024. Those applicants which could meet the regulatory requirements were deemed to be licensed to operate on or after 1 Jun 2024 until a final decision has been made by the SFC on their license applications. If the SFC considers that some existing service providers (the applicants) cannot meet the relevant requirements of the transitional arrangement, a “No-deeming notice” will be issued to these applicants, together with those services providers which did not submit any applications before the deadline, will have to cease operation by 31 May this year. 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 – Nov 2024 The topics discussed in this monthly newsletter are as follows: 1. SFC concludes consultation on market sounding guidelines 2. The first batch of 14 brokers joining Wealth Management Connect Pilot Scheme 3. SFC hosts AML/CFT Regtech Forum in November 4. Stay aware of the inherent risks in use of Generative AI Language Models 5. SFC bans former RO of Tarascon Capital for false trading of shares 6. SFC commences MMT proceedings against Ding Yi Feng for market manipulation 7. SFC sanctions Zuo Ping for breaches of the Takeovers Code 8. SFC suspends Yuanta’s former employee Wang Shian-tang for violation of employee dealing policy 9. China Forestry’s former chairman and CEO sanctioned for insider trading Market News 1. SFC concludes consultation on market sounding guidelines On 31 October 2024, the SFC published the conclusions of its consultation on the proposed guidelines for market soundings. The guidelines gazetted on 1 November 2024 and will become effective on 2 May 2025. Intermediaries will have a six-month transitional period to comply with the new guidelines, ensuring a smooth implementation process. The guidelines are designed to uphold market integrity by setting protocols for protecting confidential information during market soundings. Respondents generally supported the objectives, providing constructive feedback that led to refinements in the guidelines. To address their comments, the SFC has refined the scope of the guidelines, clarified some requirements, and incorporated respondents’ feedback in the guidelines as appropriate. The SFC has provided practice guidance and examples through frequently asked questions to aid intermediaries. As Ms Julia Leung, the SFC ‘s Chief Executive Officer has said, “ the guidelines tackle the misuse of confidential information during market soundings, and lead to an unfair market, these guidelines will enhance investor confidence in Hong Kong’s capital markets by clarifying regulatory expectations and deterring substandard conduct. “ SIGNIFICANCE: The new “ Guidelines for Market Soundings ” are well complied to provide Four Core Principles, namely, (i) handling of information, (ii) governance, (iii) policies and procedures, (iv) review and monitoring controls; with specific requirements for Disclosing Persons (a sell-side broker) and Recipient Persons (a buy-side firm). 2. The first batch of 14 brokers joining Wealth Management Connect Pilot Scheme On 1 November 2024, the SFC announced the 14 licensed corporations (“LC”s) eligible to participate in the Cross-boundary Wealth Management Connect Pilot Scheme (“WMC”) in the Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”). This initiative aims to enhance connectivity between financial markets in the GBA and foster Hong Kong's wealth management business. The guidelines will be effective immediately . The 14 LCs include: China Galaxy International Securities (Hong Kong) Co., Limited, China Industrial Securities International Brokerage Limited, China International Capital Corporation Hong Kong Securities Limited, China Merchants Securities (HK) Co., Limited, China PA Securities (Hong Kong) Company Limited, China Securities (International) Brokerage Company Limited, CITIC Securities Brokerage (HK) Limited, GF Securities (Hong Kong) Brokerage Limited, Guosen Securities (HK) Brokerage Company, Limited, Guotai Junan Securities (Hong Kong) Limited, Huatai Financial Holdings (Hong Kong) Limited, SDICS International Securities (Hong Kong) Limited, Shenwan Hongyuan Securities (H.K.) Limited, and Zhongtai International Securities Limited. The above-mentioned LCs will work in partnership with their Mainland partner brokers, the list is to be confirmed by the relevant Mainland regulatory authority, namely, the China Securities Regulatory Commission. SIGNIFICANCE: As commented by Ms Julia Leung, the Chief Executive Officer of the SFC, that “T oday’ s announcement marks another significant milestone for the brokerage industry and the WMC scheme in terms of enhancing the connectivity of financial markets in the GBA and fostering Hong Kong’ s wealth management business. “ With respect to the WMC Scheme, a set of guidance (the three Annex ) for LCs have already been posted in January early this year which covered essentially the following items: eligible criteria for participating LCs; eligible criteria for investors; scope of eligible investment products; account opening arrangements; investor quota management; cross-boundary closed-loop fund flow arrangements; and promotion and sales arrangements. 3. SFC hosts AML/CFT Regtech Forum in November On 4 November 2024, Ms Julia Leung, the Chief Executive Officer of the SFC , made a speech in the “SFC Regtech Forum”, main points of the speech are as below. Regtech progress and compliance pain points as its driver (1) A “Report on the Adoption of Regtech for Anti-Money Laundering and Counter-Financing of Terrorism” has been published to highlight use cases as helpful guidelines. (2) Many firms have already adopted the Regtech solutions in their AML processes like name screening, customer due diligence and transactions monitoring. (3) Conventional AML approaches are losing efficacy as bad actors are using novel techniques to launder crime proceeds, the situation is aggravated with increasing number of customers and transaction data faced by the firms. (4) Firms are struggling with backlog of pending reviews due to high volume of false positive alerts from name screening and transaction monitoring. (5) False alerts from traditional rule-based solutions fail to cater for multiple dynamic parameters, providing misleading solutions and causing futile investigations and operational inefficiencies, especially when real red flags are missed. Regtech use cases burgeoning With the advent of Regtech and the application of automation, data analytics and AI, a huge mass of data can be processed swiftly to spot out for suspicious activities. Regtech can now be adopted in many stages throughout the AML process with the use cases conducted by the SFC ranked by the usage rates. (i) Client onboarding: mostly used to authenticate client’s identity and collect digitised customer data for subsequent AML processes. (ii) Name screening: with a usage rate of 92% of the firms with robot process automation (“RPA”) to extract relevant customer information and compare it against the system alerts. (iii) Transaction monitoring: with usage rate of 69% as another important process to detect unusual or suspicious transactions and activities. (iv) Third-party deposit identification and due diligence: with a lower usage rate of 34%, attributed to its late introduction of the relevant guidelines & requirements published in May 2019 and uniqueness of the securities sector. Responsible adoption is key Alike other AML controls, the responsibility are still rested on the licensed firms to regularly review all Regtech solutions including AI models, and protect the customers and transaction data with robust data protection and cybersecurity measures. SIGNIFICANCE: The adoption of technology helps alleviate the repetitive and onerous data processing and analyses routines, and streamline the AML and KYC processes which are particularly crucial amid the sophisticated use of novel technologies by bad actors to circumvent the traditional monitoring tools. 4. Stay aware of the inherent risks in use of Generative AI Language Models On 12 November 2024, the SFC published a circular concerning the use of generative Artificial Intelligence language models (“AI LMs”). There the SFC notes that firms are using the AI LMs in all facets of their services provided including response to client enquiries via public chatbots, generating research reports, identifying investment signals etc. The SFC also pointed out that the use of AI LMs may amplify existing risks and pose additional risks on top of those from traditional AI. The key takeaways are: Risk in relation to AI LMs AI LMs’ output can be inaccurate, biased, unreliable and inconsistent. For instance: (i) AI LMs are prone to hallucinations risk, (ii) bias may exist in data used to train the AI LMs, (iii) there may be heightened risk of cyberattacks and leakage of confidential information, (iv) over-reliance on certain limited number of external service providers. In the light of the increased risks, LCs are advised to make reference to the Appendix which provided a list of non-exhaustive risk factors to be aware of in the process of adopting any AI LMs. Scope of this circular This circular is applicable regardless of whether the AI LM is developed or provided by the LC itself, its group company, an external service provider (Third Party Provider) or comes from an open source. Risk-Based approach An LC may implement the requirements in this circular, including the Core Principles, in a risk-based manner commensurate with the level of risk incurred by the application of the AI LM . It should be noted that an AI LM used by LCs for providing investment recommendations, advice or research to investors or clients are considered as high-risk use cases by the SFC. The FOUR Core Principles are: (1) Senior Management Responsibilities (2) AI Model Risk Management (3) Cybersecurity and Data Risk Management (4) Third Party Provider Risk Management Notification Requirements For LCs which intend to adopt AI LMs in high-risk use cases, they are reminded to comply with the notification requirements under the Securities and Futures (Licensing and Registration) (Information) Rules (Information Rules). SIGNIFICANCE: This circular, together with the Appendix, provide the LCs with a set of fully comprehensive guidance in relation to the use of AI LMs in the provision of their services. LC are strongly advised to seek reference and get acquainted with the requirements before adopting the AI LMs which may be a double-edged instrument if no used properly. Enforcement News 5. SFC bans former RO of Tarascon Capital for false trading of shares On 6 November 2024, the SFC announced that Mr Jonathan Dominic lu Wai Ching (“Iu”) has been prohibited from re-entering the industry for 15 years. Key Findings: Iu, a former responsible officer of Tarascon Capital Management (Hong Kong) Limited, engaged in false trading of shares. lu used the brokerage accounts of a hedge fund and his mother, gaining $5.6 million for his mother’s account. SFC determined that Iu is not fit and proper to be licensed due to his serious and dishonest conduct over two months, violating client trust. This action serves as a deterrent to prevent similar future misconduct. SIGNIFICANCE: This ban highlights the SFC's dedication to maintaining market integrity and enforcing ethical standards. By imposing severe consequences on Iu, SFC aims to deter other practitioners from engaging in dishonest behaviour and emphasizes the importance of trust and compliance in the financial industry. 6. SFC commences MMT proceedings against Ding Yi Feng for market manipulation SFC commenced proceedings in the Market Misconduct Tribunal (“MMT”) against Mr Sui Guangyi (“SUI”), former chairman and non-executive director of Ding Yi Feng Holdings Group International Limited (“Ding Yi Feng”), two corporate entities and 28 other suspects for alleged manipulation of the shares of Smartac International Holdings Limited ( 00395.HK ). The SFC alleged that between 31 October 2018 and 11March 2019, SUI and other suspects manipulated the trading of Smartac shares to push up the price and turnover, creating a false and misleading appearance of active trading. The increase in share price contributed to an investment gain by Ding Yi Feng, which held a 21.68% of the share in its gross assets as of 31 December 2018. The SFC had issued restriction notices to freeze securities accounts linked to the suspected market manipulation of Smartac shares which still remain in force. SIGNIFICANCE: This action by the SFC emphasizes its commitment to combating market misconduct and maintaining market integrity. The proceedings against Mr. Sui and others are a clear signal that the SFC will take stringent measures against manipulative trading practices. Cooperation between the SFC and the China Securities Regulatory Commission underscores the importance of regulatory collaboration in addressing cross-border market manipulation. 7. SFC sanctions Zuo Ping for breaches of the Takeovers Code On 15 November 2024, the SFC publicly censured and imposed a six-year cold shoulder order against Ms ZUO Ping (“ZUO”) for breaching the mandatory general offer obligation under the Takeovers Code. ZUO made a number of acquisitions and disposals of shares in CBK Holdings Limited ( 08428.HK ) on the market between 2 November 2023 and 20 November 2023, and her interest in CBK increased from 0% to 30.22% of CBK’s issued capital on 20 November 2023, triggering a mandatory general offer obligation under Rule 26.1 of the Takeovers Code. Yet ZUO did not make any general offer then. Zuo acknowledged her breach of the Takeovers Code, and agreed to the disciplinary action. SIGNIFICANCE: The SFC emphasizes the importance of adhering to the Codes on Takeovers and Mergers, advising parties to seek professional advice when in doubt. The order denies Zuo access to the Hong Kong securities market from 15 November 2024 to 14 November 2030. 8. SFC suspends Yuanta’s former employee Wang Shian-tang for violation of employee dealing policy The SFC suspended the licence of Mr Wang Shian-tang (“WANG”), a former licensed representative of Yuanta Securities (Hong Kong) Limited (“Yuanta”) for 26 months from 20 November 2024 to 19 January 2027. In the investigation, it was found that WANG entered into a private profit-sharing agreement with a client on discretionary trading services without Yuanta’s knowledge or consent; and WANG would be entitled to 10% of any annual profits made for the client. It was also found that WANG maintained another account with an outside broker for conducting 10 warrant trades with a total transaction value of HKD350,000; yet these were not disclosed to Yuanta which violated the employee dealing policy of the company, depriving the company to monitor his personal dealings. SIGNIFICANCE: With the false and disingenuous representations to the SFC regarding his personal account and trades, the SFC considered WANG had displayed dishonest behaviour that undermined the interests of his then employer and its clients, as well as the integrity of the market. 9. China Forestry’s former chairman and CEO sanctioned for insider trading The Market Misconduct Tribunal (MMT) ordered Mr Li Han Chun (“LI”), the former chief executive officer (CEO) of China Forestry Holdings Company Limited ( 00930.HK ), and his investment vehicle, Top Wisdom Overseas Holdings Limited (Top Wisdom), to disgorge $353,430,000 which represents the loss they avoided by insider dealing of China Forestry’s shares. The MMT also imposed the following orders against LI and Mr Li Kwok Cheong (“LIKC”), the former chairman of China Forestry, for disclosing false or misleading information in China Forestry’s IPO prospectus, annual results announcement, and annual report for the year ended 31 December 2009, inducing transactions in the company’s shares: Disqualification orders for five years Cold shoulder order for five years Cease and desist orders Please see the SFC’s press releases dated 7 August 2024 and 28 June 2018 . And LI, LIKC and Top Wisdom had to pay the costs and expenses incurred by the Government and the SFC as well. SIGNIFICANCE: This case underscores the importance of transparency and integrity in the financial markets, with severe penalties for insider dealing and disseminating false information to maintain market trust and investor confidence. For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Newsletter – September 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES NASDAQ is pioneering in launching tokenization of stocks SFC consults on extending investor identification regime to exchange-traded derivatives in Hong Kong MARKET NEWS Hong Kong’s securities industry saw continued earnings growth and record transactions in first half of 2025 Only a limited number of licenses will be granted by the HKMA amid 77 applications received for Stablecoin Issuers SFC and Dubai Financial Services Authority bolster ties in supervising cross-border investment management SFC and HKMA unveil roadmap to advance Hong Kong’s vision to be global fixed income and currency hub ENFORCEMENT NEWS SFC Bans Former UBS Advisor Suen Kin-wing for Life Over Money Laundering and Contempt Convictions SFC Bans Former Citigroup Executive Richard Charles Heyes for 5 Years Over Serious Misconducts SFC Reprimands and Fines Instinet Pacific Limited $8 Million for Cross Trade Reporting Failures SFC Upholds Fine on RaffAello Capital for Sponsor Failures in Paprika Listing SFC Reprimands and Fines Roofer Securities $2.1 Million for Client Money Mishandling SFC Secures Disqualification Orders Against Five More Former Directors of Superb Summit Due to misappropriate assets SFC Suspends Former Agg. Asset Management RO Chow Tsz Lam for 12 Months Over Fund Mismanagement SFC Pursues Disqualification Orders Against Former Directors of Century Energy International Holdings Limited Regulatory Updates 1. NASDAQ is pioneering in launching tokenization of stocks In less than two years, the tokenized securities market experienced almost “explosive” growth with on-chain stocks surging from less than 5 million dollars starting from 2024 to 0.42 billion, a more than 80 times increase in two years. The driving wave is originated from the collective entry and accelerated layout of enterprises; both crypto-native companies and traditional financial giants are striving to tap the advantage of being the first-mover in the emerging circuit of tokenized stocks. These moves not only set off a race between crypto and traditional finance, but also a potential “revolution” against the traditional exchange model. Nasdaq, being the world’s second-largest exchange, took the initiative to incorporate tokenized stocks attempting to push itself to be the pioneer in the Wall Street. Some key takeaways we need to know about the moves by NASDAQ: Tokenized stocks are not new stuff, they are new “packaging” for the traditional equity, namely, to connect blockchain’s bookkeeping and settlement capabilities on top of existing financial infrastructure. The appeal of tokenization is that it touched several “core pain points” in the capital market and provide quick solution with: (i) settlement efficiency, (ii) transaction time and accessibility, (iii) programmability of assets. With the completion of the Depository Trust Company (“DTC”) upgrade, and the on-chain settlement function early in Q3 next year, there will already be parallel run of cryptocurrency stocks and traditional stocks this year. SIGNIFICANCE: NASDAQ has officially submitted an application for tokenized Stocks trading with the SEC, a “core attempt” by Wall Street in the digitalization process. The core of this proposal is that tokenized stocks should enjoy exactly the same rights and protections as their underlying securities , transaction matching is still carried out in the existing order book, and DTC is responsible for minting equivalent tokens on the chain. As the CEO of NASDAQ has said, “ Blockchain technology offers unprecedented possibilities for shortening settlement cycles, modernizing proxy voting, and automating corporate actions .” To put in simple words, NASDAQ is not trying to do away with the old order, but rather to upgrade the underlying structure of the market with minimal impact and to ensure that the core principles of investor protection and market transparency remain intact . 2. SFC consults on extending investor identification regime to exchange-traded derivatives in Hong Kong The SFC launched a consultation on 22 September 2025 on the proposed investor identification regime for the exchange-traded derivatives market (“ HKIDR-DM ”) which is expected to further consolidate and reinforce the integrity and sustainable development of Hong Kong’s exchange-traded derivatives markets, while a tentative schedule for implementation is in the first quarter of 2028. The proposed HKIDR-DM was established and based on the successful implementation of the similar regime for the securities markets, i.e. the HKIDR-S (the Hong Kong investor identification regime for securities markets). The scope of the HKIDR-DM comprises of order submissions for futures contracts, options contracts and stock options traded on the trading system of the Hong Kong Futures Exchange Limited (“ HKFE ”). Key takeaways are: the regime will apply to Relevant Regulated Intermediaries (“ RRIs ”), i.e., licensed corporations (“ LCs ”) under the SFC and registered institutions (“ RIs ”) under the HKMA that trade (as principal or agent) futures and options contracts; the requirements under the proposed HKIDR-DM are analogous to those currently set out in the HKIDR-S. RRIs will be required to assign a unique “Broker-to-Client Assigned Number” (“ BCAN ”) to Relevant Clients (it basically refers to the immediate client of a RRI who maintains a trading account with the RRI) placing or intending to place orders in the futures market; RRIs must collect and submit up-to-date client identification data (“ CIDs ”) alongside the BCAN in a file (“ BCAN-CID Mapping File ”) to a central data repository maintained by Hong Kong Exchanges and Clearing Limited (HKEX), the same arrangements as the securities side; SIGNIFICANCE: As Mr. Rico Leung, the SFC’s Executive Director of Supervision of Markets has said, “t o keep up with Hong Kong’s fast-growing derivatives market and align with global best practices, the proposed extension of our investor identification regime represents a major stride in detecting irregularities and protecting investors whilst minimizing operational burden on the industry ”; and he further added that, “ our enhanced cross-market surveillance capabilities will help reinforce market integrity and investors’ confidence – both essential in solidifying Hong Kong’s sustainable development as an international financial center. ” Market News 3. Hong Kong’s securities industry saw continued earnings growth and record transactions in first half of 2025 The latest financial review of the industry issued by the SFC demonstrates a robust growth in the earnings of the securities sector with key promising figures as below: a steady growth momentum with a 14% profit increase to HKD28.9 billion amid record high securities transaction value in the first six months of 2025; a total value of transactions of all securities dealers and securities margin financiers reached a record HKD99.2 trillion in the first half of 2025, a recorded increase of 22% from Q2 of 2024 and 57% (year-over-year); the net profits of all the SEHK participants were up 34% during the previous 6 months to HKD15.6 billion. The main driving forces are attributed to the steady growth of trading commission, reduction in overheads and interest expenses; within the revenue side, the net securities income was up 23% to HKD13.6 billion and income from advising on corporate finance was up 33% to HKD2 billion! One point deserves attention is that the net profits of Category C brokers, which cater for general public and small retail investors, doubled to HKD2.5 billion, implying a holistic recovery of the brokerage business rather than being concentrated on the top category brokers. SIGNIFICANCE: As Dr Eric Yip, the SFC’s Executive Director of Intermediaries, said, “ once again, the solid performance of our licensed corporations showcases the strength and agility of our financial industry in a fast-changing business landscape , underscoring their key role in driving Hong Kong’s continued success as a top international financial centre. ” 4. HKMA to grant limited stablecoin licenses amid 77 stablecoin application Main themes of the press are that: the 77 applicants originated from a range of sectors comprising of banking, technology firms, asset manager, e-commerce platforms, payment companies and Web3 startups; only a limited number of stablecoin licenses will be issued in the initial stage; only applicants meeting strict compliance requirements will be granted approvals. Key takeaways readers should know : the Hong Kong Monetary Authority ("HKMA") would not publish the list of entities showing interests or submitting applications; and reiterated that communications with the applicants did not indicate any hints of regulatory approval; the meetings were only meant to help applicants evaluate the necessity and maturity of their issuance plans before making a formal submission; with the stablecoin licensing regime came into effect on 1 August 2025, it serves as a regulatory reference point to develop the virtual asset framework. As only a limited number of licenses will be granted, some applicants either postpone applications, partner with existing licensees or adopt alternative structures to meet the strict compliance thresholds. These adaptive adjustments amid the screening process help shape the evolving regulatory regime of the nascent stablecoin ecosystem. 5. SFC and Dubai Financial Services Authority bolster ties in supervising cross-border investment management The SFC and the Dubai Financial Services Authority (“ DFSA ”), the independent regulator of the Dubai International Financial Centre (“ DIFC ”), today signed a Memorandum of Understanding (MoU) to deepen cooperation on the regulatory oversight and supervision of collective investment scheme managers in each other’s markets to ensure compliance, governance, and cross-border regulatory alignment. Key takeaways of the MOU: underscoring the significance of cross-border regulatory collaboration and Hong Kong’s growing ties with the Belt and Road jurisdictions; establishing a collaborative framework for consultation, cooperation and the exchange of information in order to enhance the regulators’ supervision and oversight of regulated entities which engage in cross-border investment management or advisory activities; signifying the efforts of joint collaboration of the high-level meetings between the SFC and the DFSA over the years. SIGNIFICANCE: As comments from SFC and DFSA officials, the MOU is a consequence of strengthened SFC-DFSA partnership which underscores the shared commitment to mutual benefits of HK and DIFC as internation financial hubs, and efforts towards regulatory excellence, supervision and cross-border innovation between the two jurisdictions. 6. SFC and HKMA unveil roadmap to advance Hong Kong’s vision to be global fixed income and currency hub The SFC and the HKMA jointly announced Hong Kong’s Roadmap for the Development of Fixed Income and Currency (“ FIC ”) Markets (the “ Roadmap ”) on 25 September 2025 to position the city strategically as a global FIC hub by fostering demand, liquidity and innovation. An overview of the Roadmap is outlined as below with FOUR pillars and TEN initiatives: Reinforcing Foundations Pillar 1: Boosting issuance in primary market Initiative 1: Lead by example through government bond issuance Initiative 2: : Promote Hong Kong’s strengths to issuers and investors in target markets Initiative 3: Expand investor base including family offices, funds and corporate treasury centres Pillar 2: Enhancing liquidity in secondary market Initiative 4: Finalize implementation of over-the-counter FIC derivatives regime Initiative 5: Facilitate development of a repo central counterparty Breaking New Ground Pillar 3: Expand offshore RMB business Initiative 6: Broaden offshore RMB usage Initiative 7: Enhance Connect schemes to increase offshore RMB liquidity and RMB-related product offerings Pillar 4: Next-generation infrastructure Initiative 8: Future-proof FIC financial market infrastructure Initiative 9: Support development of next-generation electronic trading platforms Initiative 10: Facilitate market innovation and implementation of use cases for tokenized FIC products SIGNIFICANCE: The Roadmap will guide the policy making and implementation of the SFC and the HKMA in coming years to support the sustainable and diversified growth of Hong Kong’s capital markets. Comments from key officials highlight the significance of the Roadmap: Dr. Kelvin Wong, Chairman of the SFC: “ The Roadmap is poised to guide our marketevolution that will benefit issuers, investors and intermediaries alike for years to come ”. Mr. Eddie Yue, Chief Executive of the HKMA: “ The Roadmap comprehensively set out our work focuses in the near future . We look forward to implementing the initiatives in collaboration with industry stakeholders. ” Ms. Julia Leung, Chief Executive Officer of the SFC: “ The Roadmap reflects our close collaboration and shared commitment with the HKMA, industry partners and other stakeholders to enhance Hong Kong’ s vital role in bridging Mainland and international capital markets .” Enforcement News 7. SFC Bans Former UBS Advisor Suen Kin-wing for Life Over Money Laundering and Contempt Convictions On 2 September 2025, the SFC has imposed a lifetime ban on Mr. SUEN Kin-wing (“ SUEN ”), a former Associate Director at UBS AG (“ UBS ”), preventing him from re-entering the industry. This action follows SUEN's criminal convictions for money laundering and contempt of court, highlighting serious breaches of trust and regulatory standards. Background of the Case SUEN, who served as a Client Advisor at UBS from January 2014 to June 2018, was responsible for Type 1 and Type 4 regulated activities. The issues stemmed from his dealings with two Mainland Chinese clients who held a joint account at UBS. Facing challenges in transferring RMB funds from Mainland China to Hong Kong, the clients entered into an arrangement with SUEN to facilitate cross-border transfers. Under this setup, the clients deposited over RMB132 million into Mainland bank accounts designated by SUEN between November 2016 and February 2018. SUEN provided what appeared to be legitimate transaction confirmations and bank statements showing the funds had reached the joint account. However, the clients later discovered that a substantial portion of the money was missing. Investigations revealed that over HK$134 million had been diverted into two Hong Kong bank accounts controlled by SUEN. The Court determined these funds were proceeds of crime, as SUEN had defrauded or stolen them from his clients. He used the misappropriated money to fund a luxurious lifestyle, including purchases of high-end vehicles and properties in the UK and Mainland China. Legal Outcomes Charge(s) Remarks Case No. Money Laundering Conviction On June 21, 2024, the Court of First Instance sentenced SUEN to 10 years' imprisonment after he pleaded guilty to two counts of dealing with property known or believed to represent proceeds of an indictable offense. HCCC 77/2021 Contempt of Court In July 2018, the clients secured a worldwide freezing injunction against SUEN to recover the stolen funds, prohibiting him from disposing of assets up to HK$130 million. Despite this, SUEN transferred his interests in several UK properties to a British Virgin Islands (BVI) company he owned, violating the order. On 20 December 2023, he was sentenced to six months' imprisonment for contempt. HCMP 633/2019 SIGNIFICANCE: Given the severity of SUEN's actions, which demonstrated a profound lack of honesty and professionalism, the SFC has deemed him unfit and improper to hold any regulated position in the future. SUEN is currently neither registered with the Hong Kong Monetary Authority (“ HKMA ”) nor licensed by the SFC. This case serves as a stark reminder of the consequences of financial misconduct and the SFC's zero-tolerance policy toward activities that undermine market confidence. Industry professionals are encouraged to review internal controls and compliance measures to prevent similar incidents. 8. SFC Bans Former Citigroup Executive Richard Charles Heyes for 5 Years Over Serious Misconducts In a significant move underscoring the importance of senior management accountability, the SFC has imposed a five-year industry ban on Richard Charles Heyes (“ Heyes ”), a former key figure at Citigroup Global Markets Asia Limited (“ CGMAL ”). Effective from 15 September 2025 to 14 September 2030, the ban prevents Heyes from re-entering the financial industry in any licensed capacity. Heyes, who served as a RO, Manager-In-Charge (“ MIC ”) of Key Business Line, board member, and Head of Pan-Asia Equities at CGMAL, has been held accountable for serious regulatory breaches and internal control lapses at the firm. These issues stem from a decade-long period (i.e. 2008–2018) where CGMAL's Cash Equities business disseminated mislabelled Indications of Interest (“ IOIs ”) and made misrepresentations to institutional clients during facilitation trades. Key Details of the SFC's Findings: The SFC's investigation highlighted Heyes' failure to fulfill his supervisory and managerial duties, which directly contributed to CGMAL's violations. Specifically: 1. Mislabelled IOIs Heyes overlooked practices at the Equities Sales Trading Desk where IOIs were falsely labelled to elicit client inquiries. Despite a 2014 SFC review flagging concerns with CGMAL's IOI processes, Heyes did not implement adequate controls. Additionally, between 2017 and 2018, he received reports of client complaints about IOI accuracy but took no action to investigate or halt the misconduct. 2. Misrepresentations in Facilitation Trades In 2014, Heyes attended an SFC roundtable that SFC emphasized the need for explicit client consent and pre-trade disclosures for facilitation trades. However, he failed to ensure CGMAL had proper guidelines or monitoring in place. Emails forwarded to him revealed traders disguising facilitation trades as agency trades to boost market share, but these went unaddressed. These lapses allowed a culture prioritizing revenue over client interests and ethical standards to persist within CGMAL. The SFC emphasized that Heyes' neglect enabled the firm's internal control failures to continue unchecked for over ten years. Factors Influencing the Sanction In determining the five-year ban, the SFC considered: The severity of Heyes' neglect, which enabled prolonged regulatory breaches. His extensive industry experience, which should have ensured higher standards as an RO, MIC, board member, and senior manager. The need to send a strong deterrent message to the industry. Mitigating factors, including Heyes' cooperation with the SFC, withdrawal of his appeal to the Securities and Futures Appeals Tribunal, and his otherwise clean disciplinary record. This action follows prior SFC sanctions against CGMAL itself for the same underlying issues. For more details of the case, please refer to the Statement of Disciplinary Action . SIGNIFICANCE: Christopher Wilson, SFC's Executive Director of Enforcement, stated: "Senior management of a licensed corporation bears primary responsibility for ensuring the firm’s maintenance of appropriate standards of conduct and adherence to proper procedures. By exerting significant pressure on the trading desks to grow CGMAL’s market share while failing to be vigilant for telltale signs that his subordinates were achieving this by dishonest means, Heyes neglected and failed to properly discharge his managerial responsibility." Wilson added that the SFC will actively use the MIC regime to hold senior executives accountable, aiming to foster cultural and behavioral changes among intermediaries. This case serves as a stark reminder for financial institutions in Hong Kong and beyond: Senior leaders must prioritize robust compliance frameworks, vigilant oversight, and ethical practices. With regulators increasingly focusing on individual accountability, firms should review their internal controls, training programs, and escalation procedures to prevent similar failures. 9. SFC Reprimands and Fines Instinet Pacific Limited $8 Million for Cross Trade Reporting Failures The SFC has issued a reprimand and imposed an $8 million fine on Instinet Pacific Limited (Instinet) for non-compliance with reporting requirements for direct business transactions, commonly known as cross trades, to The Stock Exchange of Hong Kong Limited (“ SEHK ”). Key Details of the Case The SFC's investigation uncovered that from December 2012 to March 2018, Instinet failed to report 8,817 pairs of cross trades totalling approximately $25.9 billion in value between its clients and an affiliated company. This breach violated the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. During this period, Instinet lacked any internal policies, procedures, or monitoring mechanisms for reporting cross trades to the SEHK, and it conducted no reviews of its trade reporting processes. Scope of the Breach: The unreported trades spanned over five years and involved significant transaction volumes, highlighting systemic deficiencies in Instinet's compliance framework. Code and Rule Violations: The failures contravened the SFC's Code of Conduct and Rules of the Exchange, which mandates proper cross trades reporting. In deciding the disciplinary sanction, the SFC has taken into account all relevant circumstances, including the duration of Instinet’s failure, the number of unreported cross trades and the sum involved, and Instinet’s initiative to cease the relevant trade flows and cooperation with the SFC in resolving the SFC’s concerns. For more details of the case, please refer to the Statement of Disciplinary Action . SIGNIFICANCE: This enforcement action reinforces the SFC's commitment to upholding market transparency through strict adherence to reporting obligations. Financial institutions must prioritize robust internal controls, regular reviews, and comprehensive policies to monitor trade reporting. Failures in these areas can lead to significant penalties and reputational damage. Firms are encouraged to audit their compliance systems, particularly for cross trades and affiliated transactions, to align with SEHK and SFC standards. 10. SFC Upholds Fine on RaffAello Capital for Sponsor Failures in Paprika Listing In a recent decision, the Securities and Futures Appeals Tribunal (“ SFAT ”) has affirmed the SFC reprimand and $4 million fine against RaffAello Capital Limited (“ RaffAello ”) for shortcomings in its role as sponsor for Paprika Holdings Limited's Paprika listing application. This case underscores the critical importance of rigorous due diligence in Hong Kong's capital markets, highlighting lapses that could undermine investor confidence. Background on the Case RaffAello, a licensed corporate finance advisor, sponsored Paprika's application for listing on the Growth Enterprise Market (“ GEM ”) of the Stock Exchange of Hong Kong Limited ("SEHK"), submitted in June 2017 but withdrawn in April 2018. Paprika, a handbag and accessories retailer, relied heavily on retail sales, accounting for about 90% of its revenue in the two financial years ending March 2017, with over 80% from physical stores. The SFC's investigation revealed that RaffAello failed to conduct reasonable due diligence and lacked professional scepticism when reviewing Paprika's provided information. Key issues centered on suspicious retail transactions and questionable relationships with key business partners. Key Findings Failings in Retail Sales Due Diligence During a sample walkthrough of retail store transactions from 19 February to 13 March 2016, RaffAello uncovered several red flags: Approximately 230 consecutive cash transactions across stores, involving 1,431 handbags, made up 90% of cash sales and 42% of total sales on those dates. Many occurred within 1-10 minutes. Around 240 bulk credit card purchases of 1,860 handbags by individuals, including owners of Paprika's wholesaler and suppliers, accounting for 83% of credit card sales and 45% of total sales. Invoices marked "POS Test" (point-of-sale system testing) were included in sales records. Despite inquiries, RaffAello largely accepted explanations from Paprika and involved parties without deeper scrutiny. The SFC noted overlooked indicators suggesting potential fabrication to inflate sales figures. Inadequate Scrutiny of Key Partners RaffAello also fell short in verifying the independence of Paprika's largest wholesaler, Novi eBusiness Limited (“ Novi ”) (responsible for over 90% of a 96% wholesale revenue surge from 2016 to 2017), and its fifth-largest supplier, API Trading Company Limited (“ API ”) (part of suppliers accounting for 53.4% of 2017 purchase costs). Red flags included: Bovi and API both were former subsidiaries of a company linked to a 15% Paprika shareholder. Acquisitions facilitated by Paprika's founder, Chairman, and CEO, Mr. Samuel Leung ("Leung"). Novi's owner partnered with Mainland Chinese firms tied to Leung's authorized payment recipients. Owners of both entities made repeated bulk purchases from Paprika stores. Additionally, RaffAello did not sufficiently probe API's business substance, especially after discovering it acted as an intermediary for a pre-existing supplier (i.e. Lung Yiu), with supplies jumping from $41,000 in 2016 to $3.18 million in 2017. SIGNIFICANCE: The SFC initially proposed a $13 million fine but reduced it to $4 million due to RaffAello's financial constraints, a decision the SFAT upheld to avoid liquidation and harm to clients. Chaired by Mr. Michael Hartmann, GBS, the Tribunal emphasized sponsors' duties under the Code of Conduct: when red flags arise, additional due diligence is mandatory, including detailed documentation and consultations (e.g., with reporting accountants) rather than assumptions. The Tribunal noted: "If issues of concern are identified, it is not sufficient for the sponsor simply to investigate the matter, make a bald note of that fact... a coherent note should be made of what has been discovered and what has been resolved." Over-reliance on management's representations was deemed unreasonable. Related actions include a two-year industry ban for Mr. Tsang Kwong Fai , RaffAello's responsible officer overseeing the application. This ruling serves as a stark reminder for sponsors to apply professional scepticism and thorough investigations. It reinforces SFC's commitment to maintaining listing integrity, potentially influencing future due diligence practices in Hong Kong's vibrant IPO market. 11. SFC Reprimands and Fines Roofer Securities $2.1 Million for Client Money Mishandling The SFC has issued a reprimand and imposed a $2.1 million fine on Roofer Securities Limited ("Roofer") for violations related to the improper handling of client funds. This action highlights the SFC's ongoing commitment to enforcing strict segregation rules to protect investor assets in Hong Kong's financial markets. Case Overview The investigation, initiated following a referral from the Hong Kong Exchanges and Clearing Limited (“ HKEX ”), uncovered 12 incidents between 8 February 2021, and 7 July 2022, where Roofer failed to maintain adequate funds in its segregated client account. In one notable instance, the shortfall reached $15.5 million. These breaches stemmed from several operational lapses: Using client account funds to cover margin calls (actual or anticipated) from HKEX which is not paid in accordance with a written direction or standing authority form the client and/or used to meet the client’s settlement or margin requirement. Failure in client money segregation due to inadequate management of daily online bank transfer limits. Human errors by staff. The SFC determined that these failures violated the Securities and Futures (Client Money) Rules and the Code of Conduct for Persons Licensed by or Registered with the SFC. Mitigating Factors and Sanctions In determining the penalty, the SFC considered various factors, including: No clients suffered financial losses due to the incidents. Roofer promptly rectified the under-segregation in each case and implemented remedial measures, such as strengthening internal controls and processes. The firm's full cooperation with the SFC during the investigation. Roofer's clean prior disciplinary record. For more details of the case, please refer to the Statement of Disciplinary Action . SIGNIFICANCE: This case serves as a reminder to licensed corporations of the critical need for robust internal systems to ensure client money segregation. Failures in this area can erode market trust and expose firms to significant regulatory penalties. The SFC's balanced approach factoring in remediation and cooperation, demonstrates its focus on proportionate enforcement while upholding high standards. 12. SFC Secures Disqualification Orders Against Five More Former Directors of Superb Summit Due to misappropriate assets The SFC has successfully obtained disqualification orders from the Court of First Instance against an additional five former directors of Superb Summit International Group Limited (“ Superb Summit ”), bringing the total number of disqualified directors to 10. This latest action emphasizes the SFC's rigorous enforcement of director duties in cases involving misleading acquisitions and non-existent assets. This follows earlier disqualifications in June 2025 against five other former directors: Mr. Lee Chi Kong (10 years), Mr. Wong Yun Kuen (7 years), and Messrs. Lam Ping Kei, Wong Choi Fung, and Yeung Kwong Lun (5 years each). The SFC's investigations and proceedings against additional former directors and officers of Superb Summit continue. Director(s) involved: Director(s) Disqualifications Mr. Chan Chi Yuen (“ CHAN ”) 4 Years Mr. Law Wai Fai (“ LAW ”); and Mr. Cheng Man (“ CHENG ”) 3.5 Years each Mr. Qiu Jizhi (“ QIU ”) 3 Years Mr. Li Jun (“ LI ”) 2.5 Years Details of the Breaches Superb Summit, listed on the Main Board of The Stock Exchange of Hong Kong Limited from September 2001 until its delisting in June 2020, engaged in two problematic acquisitions: 2007 Acquisition : LAW, LI, QIU, AND CHAN failed to adequately review key documents or critically assess the methodologies and assumptions used by professionals during due diligence on the target company's alleged forestry assets. 2009 Acquisition : LAW, CHENG, AND CHAN neglected to properly verify the ownership of the claimed forestry assets. They also approved a company announcement containing false or misleading information about these non-existent assets. The SFC initiated proceedings under section 214 of the Securities and Futures Ordinance in December 2020. The disqualifications were resolved via the Carecraft procedure, where the court approved orders based on agreed facts and proposed sanctions. Overview of the Disqualifications The affected individuals include three former executive directors, LAW, LI and CHENG and two former independent non-executive directors, QIU and CHAN. The orders, effective immediately, prohibit them from serving as directors or participating in the management of any corporation in Hong Kong or elsewhere for periods ranging from two and a half to four years. Additionally, the former directors have been ordered to cover the SFC's costs in the proceedings. These sanctions follow their admissions of breaching duties and negligence related to Superb Summit's acquisitions in 2007 and 2009, which involved purported forestry assets that proved to be fictitious. **For the detail of judgment and the prior disqualifications, please refer to: - the Judiciary’s website (Case No. HCMP 2305/2020 ); or - the SFC’s press release dated 11 July 2025 ,.** SIGNIFICANCE: These orders reinforce the SFC's stance on accountability for directors, particularly in due diligence and disclosure processes. They highlight the severe consequences of negligence in approving transactions with misleading elements, serving as a cautionary tale for boards in Hong Kong's listed companies to uphold rigorous standards to protect investors and maintain market integrity. 13. SFC Suspends Former Agg. Asset Management RO Chow Tsz Lam for 12 Months Over Fund Mismanagement The SFC has suspended Mr. CHOW Tsz Lam (“ CHOW ”), a former RO and manager-in-charge at the now-dissolved Agg. Asset Management Limited (“ Agg ”), for 12 months effective from 2 September 2025, to 1 September 2026. This disciplinary measure addresses failures in fund management practices that exposed investors to undue risks and conflicts of interest. Investigation Findings The SFC's probe revealed that Agg, acting as investment manager for a Cayman-incorporated fund, allocated up to 100% of the fund's assets into debentures issued by entities controlled by Mr. NG Ka Shun (“ NG ”), Agg's sole shareholder, director, and fellow RO. This approach neglected to mitigate conflicts of interest and adequately manage associated risks (concentration risks and credit risks). Furthermore, Agg directed the fund into two debentures seemingly designed to artificially inflate the fund's net asset value. CHOW, as an RO and senior management member, was found to have fallen short in ensuring Agg operated in the best interests of the fund and its investors, while adhering to regulatory standards. Although primary responsibility lay with NG (who made the investment decisions), CHOW's oversight lapses contributed to these breaches. For more details of the case, please refer to the Statement of Disciplinary Action . SIGNIFICANCE: This case underscores the SFC's emphasis on robust conflict management and risk oversight in asset management, particularly where personal interests intersect with firm operations. It serves as a reminder for ROs and senior executives to prioritize investor protection and regulatory compliance, with self-reporting potentially mitigating penalties. The SFC previously issued a lifetime ban and $1.7 million fine to NG for window-dressing Agg's financial resources and mismanaging two funds (see SFC press release dated 23 December 2024 ). Agg itself faced a restriction notice in April 2020 prohibiting regulated activities, leading to its dissolution in July 2024 and deemed license revocation. 14. SFC Pursues Disqualification Orders Against Former Directors of Century Energy International Holdings Limited The SFC has initiated legal proceedings to seek court orders disqualifying four former directors of Century Energy International Holdings Limited ("CEIHL", formerly known as China Oil Gangran Energy Group Holdings Limited). The action targets individuals accused of misconduct that led to substantial financial losses for CEIHL. Background on CEIHL CEIHL, listed on the Growth Enterprise Market of the SEHK since 18 May 2011, was primarily involved in trading refined oil and methyl tert-butyl ether, as well as manufacturing and selling power and data cords. CEIHL's troubles stem from the loss of control over four major operating subsidiaries in Mainland China, which accounted for over 80% of its total revenue for the year ended 31 March 2018, and more than 40% of its total assets as of that date. These subsidiaries were deconsolidated from CEIHL's accounts effective 1 January 2019, resulting in a staggering loss of $184 million for the fiscal year ended 31 March 2019. Allegations of Misconduct The SFC alleges that these former directors failed to adequately supervise the Mainland subsidiaries and did not act in the best interests of the company. This prolonged lack of oversight contributed to the deconsolidation of the subsidiaries and the ensuing financial losses. Furthermore, Mr. Ho, Ms. Yang, and Mr. Lau are accused of being responsible for the publication of a 2014 circular that contained inaccurate or misleading information about one of the operating subsidiaries. Under section 214 of the SFO , the Court of First Instance may impose disqualification orders preventing individuals from serving as directors or being involved in the management of any corporation for up to 15 years if they are found responsible for conduct involving defalcation, fraud, misfeasance, or other misconduct toward the company or its members. The SFC's proceedings name the following accused directors: Mr. Gregory Ho Chun Kit (“HO”) Former executive director. Mr. Zheng Jian Peng (“ZHENG”) Former executive director, chief financial officer, and company secretary. Ms. Eugenia Yang (“YANG”) Former independent non-executive director. Mr. Vincent Lau Sung Tat (“LAU”) Former independent non-executive director. The SFC alleges that these former directors failed to adequately supervise the Mainland subsidiaries and did not act in the best interests of CEIHL. This prolonged lack of oversight contributed to the deconsolidation of the subsidiaries and the ensuing financial losses. Furthermore, HO, YANG, and LAU are accused of being responsible for the publication of a 2014 circular that contained inaccurate or misleading information about one of the operating subsidiaries. Under section 214 of the SFO , the Court of First Instance may impose disqualification orders preventing individuals from serving as directors or being involved in the management of any corporation for up to 15 years if they are found responsible for conduct involving defalcation, fraud, misfeasance, or other misconduct toward the company or its members. SIGNIFICANCE: This case highlights the SFC's commitment to enforcing corporate governance standards and holding directors accountable for oversight failures in Hong Kong-listed companies. Investors in Hong Kong-listed companies should note the potential risks associated with operations in cross-border subsidiaries and the importance of robust internal controls. 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The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Newsletter – October 2025 The topics discussed in this monthly newsletter are as follows: MARKET NEWS SFC Supports Market’s Initiatives on Regulatory Compliance for Digital Asset Funds and Tokenised Funds Navigating Fast-evolving Capital Markets through Balanced Regulation – the Golden Mean SFC and Québec’s AMF Enhance Regulatory Cooperation on Supervision of Cross-border Investment Management Activity Enforcement News - Intermediary SFC Reprimands and Fines UBS AG $8 million for Professional Investor Misclassification SFC Suspends MTF Securities and its Responsible Officer Over Suspicious Transaction Monitoring Failures SFC Prohibits Ex-Employee of BOCOM Over Undisclosed Nominee Account SFC Suspends Ex-employee of Shanxi Securities Over 945 Unauthorized Trade Orders ENFORCEMENT NEWS - LISTCO SFC Seeks Court Order to Freeze Assets up to $394 Million for Investors Compensation in Suspected Manipulation of Grand Talents Shares Court Penalises AMTD Global Markets Limited for Contempt of Court Due to Non-compliance with SFC Notices and Orders it to Produce Records and Pay Fine Court Order Sentenced Wong Ming Chun to 7 Years and 8 Months' Imprisonment for Money Laundering Related to Misappropriation of Listed Company Funds SFC and HKEX Collaborate in Enforcement Action Against Former Directors of Universal Star for Failure to Disclose Material Loans and Conflicts of Interest in Prospectu SFC Obtains Court Order to Freeze up to $82.4 Million of Assets Belonging to Suspected Manipulators of Smartac Shares Market News 1. SFC Supports Market’s Initiatives on Regulatory Compliance for Digital Asset Funds and Tokenised Funds The SFC showed its support to the market’s initiatives in a seminar organized by the Association of Fund Administrators of Hong Kong and the Greater Bay Area (“ AFA ”) in October for raising industry awareness of regulatory compliance standards in the fast-evolving digital asset sector. During the seminar, the AFA discussed various risk management and control measures to support the management of digital asset funds and tokenized funds. It is worth noted in the discussion of the importance for collaborative efforts within the fund industry to strengthen digital asset-related technical and regulatory compliance capabilities while adopting innovative technologies in fund management. SIGNIFICANCE: Participation of the SFC in the seminar showed its commitment to the industry as its initiative under the Pillar Re ( Re lationship) of the “ ASPIRe ” Roadmap. Dr Eric Yip, the SFC’s Executive Director of Intermediaries, said in the seminar that “b y supporting industry participants in their ongoing efforts to uphold regulatory compliance standards in managing digital asset funds and tokenized funds, we (the SFC) aim to cultivate a safe, reliable, sustainable and competitive digital asset fund ecosystem anchored in robust risk management and investor protection measures . ” 2. Navigating Fast-evolving Capital Markets through Balanced Regulation – the Golden Mean Chairman of the SFC, Dr Kelvin WONG, delivered a speech on 21 October 2025 on the perspective of the SFC in maintaining a balanced regulatory approach, cherished with a mission to ensure that the capital market of Hong Kong would “continue to thrive in a well-regulated environment that upholds integrity.” And he also expressly emphasized that the SFC plays dual roles as both a guardian and a facilitator, and put forward with the following three reflections. Some key takeaways are as follows: (1) Evolving challenges to capital markets: regulator’s perspective There are challenges to market integrity and market stability (1.1) Challenges to market integrity though remains as the world’s top three financial center, with its Fintech ranking jumping to global No.1, Hong Kong is still facing challenges stemming from gatekeeping listed issuers’ quality and forms of misconduct; encountered with increasing demand from international investors for accountability, transparency and strong board leadership given Hong Kong as the world’s top IPO listing center; enhancing listing market quality, particularly the standards of corporate governance, is not without challenges; over the years, there were cases of misconduct, false disclosure or accounting fraud that were jeopardizing the interests of the investors, and damaging public trust; besides, evolving financial fraud, scams and deception cases also pose significant risks. (1.2) Challenges to market stability external risk factors threaten to exacerbate market volatility and systemic vulnerabilities, including geo-economic fragmentation and shifts in monetary policies; our market resilience has stood the test of time as an effective shield against unexpected external shocks when global trade tensions intensified, HK was able to withstand the extreme volatility with no system failure in normal operations; digitalisation, algorithmic trading and heightened market connectedness pose profound risks to systemic stability by amplifying vulnerabilities and accelerating the transmission of shocks; monitoring mechanism and resilience framework to mitigate system risks remain as deep concerns. (2) A balanced regulatory approach in fostering sustainable development In meeting the above challenges, Dr WONG shared his view of “ Golden Mean ” to maintain a balance between competing extremes; and to align the dual roles of investor protection and market development. (2.1) Safeguarding investors by upholding high standards of corporate governance, companies can improve their performance with rigorous internal controls and board oversight; the SFC remains steadfast in delivering high-impact enforcement actions that punish wrongdoings, deter criminality, and restore investor confidence; educating and bringing alert to the public against suspected fraud and suspicious trading platforms or products, while dedicating additional resources to anti-scam publicity campaigns. (2.2) Fostering growth opportunities Hong Kong’s evolving listing regimes and enhancement to IPO price discovery, provided fresh momentum for its listing market growth and diversification from traditional sectors; the second notable achievement is our regulatory regime for digital assets as SFC pioneered itself in adopting robust standards while preserving the long-term potential; (3) Proactive stakeholder engagement as key to balanced regulation engagement is essential to attaining that Golden Mean in the regulatory approach; through open dialogues with the financial industry which enables the SFC to ensure its frameworks effectively address market needs; deepened mutual understanding with industry stakeholders through numerous seminars as regular engagement efforts; SIGNIFICANCE: As Dr WONG has said in the speech, “ For the SFC, our mission is to find that Golden Mean where law, integrity, and development co-exist and reinforce each other. We believe this balanced regulatory approach has underpinned public trust in our markets for decades, and will continue to do so in the future. ” 3. SFC and Québec’s AMF Enhance Regulatory Cooperation on Supervision of Cross-border Investment Management Activity The SFC and the Autorité des marchés financiers (“ AMF ”), the financial regulator of Québec, Canada, have concluded a Memorandum of Understanding (“ MoU ”) to enhance cooperation on the supervision of investment managers of collective investment schemes operating in either market; and the two parties signed the MoU in Madrid, Spain on 27 October 2025. What the MoU has achieved? it provides for a regulatory framework for consultation, cooperation and exchange of information for regulated entities engaging in cross-border investment management services with respect to supervision and oversight; it marks a new chapter in regulatory collaboration between the SFC and the AMF in the realm of asset management; it included Québec of Canada on its list of Acceptable Inspection Regimes which facilitates the AMF-licensed managers in providing investment management services in respect of SFC-authorized funds. SIGNIFICANCE: As Mr. Yves Ouellet, the AMF’s President and Chief Executive Officer has said, “ this MoU reflects our shared commitment to fostering robust, transparent regulatory standards. By strengthening cooperation between Québec and Hong Kong, we are enabling asset managers to access new opportunities, better serve investors, and support innovation, integrity, and resilience in our capital markets . ” Enforcement News - Intermediary 4. SFC Reprimands and Fines UBS AG $8 million for Professional Investor Misclassification On 20 October 2025, the SFC publicly reprimanded and fined UBS AG (“ UBS ”) HK$8 million under section 196 of the SFO for systemic deficiencies in its internal controls, leading to the misclassification of clients as Professional Investors (“ PIs ”) over a 12-year period from 2009 to July 2022. Case Details The breaches stemmed from UBS's automated verification process, which misinterpreted the minimum portfolio requirements under the Securities and Futures (Professional Investor) Rules (“ PI Rules ”) for joint accounts, resulting in non-professional investor (“ Non-PI ”) clients being incorrectly treated as PIs. A UBS look-back review for July 2018 to July 2022 identified 560 misclassified joint accounts (including 135 non-associate and 425 parent-child accounts), with 23 accounts involved in 9,190 securities pooled lending (“SPL”) transactions and 94 accounts in 500 PI-restricted product transactions. This misclassification enabled UBS to provide securities pooled lending services without valid standing authorities or required disclosures, and to sell PI-restricted products (such as Chapter 37 bonds, accumulators, decumulators, and loss-absorption products) to ineligible clients, violating: Securities and Futures (Client Securities) Rules ; Securities and Futures (Contract Notes, Statements of Account and Receipts) Rules ; and Code of Conduct for Persons Licensed by or Registered with the SFC . Remediate Result The SFC noted aggravating factors, including the prolonged duration and a prior 2021 fine of HK$9.8 million for similar issues, but considered UBS's self-reporting (prompted by internal review and HKMA referral), cooperation, remedial enhancements to controls, and implementation of Enhanced Complaint Handling Procedures for affected clients. In result, the SFC issues public reprimand and HK$8 million fine against UBS. For more details of the case, please refer to STATEMENT OF DISCIPLINARY ACTION SIGNIFICANCE: This disciplinary action underscores the SFC's emphasis on robust internal controls for accurate client classification to protect non-professional investors from unsuitable products and services. It highlights recurring compliance risks in automated systems for global firms like UBS, serving as a reminder for licensed entities to regularly review interpretations of regulatory requirements, especially post-amendments, to avoid prolonged breaches and escalating penalties. The case also demonstrates the value of self-reporting and remediation in mitigating sanctions, while reinforcing inter-regulator cooperation in upholding market integrity in Hong Kong's financial sector. 5. SFC Suspends MTF Securities and its Responsible Officer Over Suspicious Transaction Monitoring Failures The SFC has imposed a four-month suspension on Mr. Joey Lo Wai Hon (羅偉漢) (“ Mr. LO ”), effective from 30 September 2025 to 29 January 2026. MR. LO, a former responsible officer (“ RO ”) and manager-in-charge at MTF Securities Limited (泰富證券有限公司) (“ MTF ”) (formerly Magusta Securities Limited), was found to have failed in overseeing credit risk management and suspicious transaction monitoring. Failures in Credit Risk Management MTF granted substantial trading limits to three new clients (Client A, B, and C) shortly after they opened cash trading accounts in January 2021. Each client deposited only HK$10,000, yet MTF approved limits of HK$4 million for Clients A and C, and HK$5 million for Client B—without client applications or adequate due diligence. Notable Red Flags included: Trading limit exceeded client’s declared annual income No records of income proof, bank statements, trading history, or personal reputation checks. Client A ✓ Client B ✓ ✓ Client C ✓ ✓ Mr. LO, as an RO and Credit Committee member, was responsible for assessing creditworthiness and setting limits. However, he approved these at the request of MTF's substantial shareholder without independent scrutiny, potentially risking a liquid capital deficit if the clients defaulted. Suspicious Trading Patterns and Reporting Delays These three clients used nearly all their limits to trade shares of a Hong Kong-listed company (“ Company X ”) between 22 and 27 January 2021, generating profits from HK$3.8 million to HK$5.3 million. The trades exhibited suspicious features indicative of potential market misconduct and money laundering: Clients bought shares at low prices just before a surge, without any apparent positive news. Clients sold at high prices in the first minute of the afternoon session before a 68% price collapse, followed by further declines. The trades accounted for 46%, 52%, and 30% of Company X's daily turnover during the period. Post-trade, clients withdrew nearly all proceeds and conducted no further activity, inconsistent with their financial profiles. The above patterns aligned with AML Guideline indicators (e.g. unusual transaction sizes, rapid withdrawals etc.) Mr. LO did not investigate or report promptly. MTF only filed a suspicious transaction report (“ STR ”) to the Joint Financial Intelligence Unit (“ JFIU ”) in late July 2021, after SFC intervention. For the full details, refer to the SFC's press release dated 2 October 2025 , and Statement of Disciplinary Action . SIGNIFICANCE: The SFC deemed Lo guilty of misconduct, questioning his fitness and properness. Regarding to such matter, Licensed Corporation (“ LC ”) should reference the below table for ensuring its compliance: Due Diligence LC must rigorously assess client financials before granting credit, avoiding undue influence from shareholders. Monitoring Systems Implement effective, ongoing transaction reviews to detect anomalies like unusual price movements or disproportionate trades. Timely Reporting Suspicious activities must be documented, investigated, and reported without delay to authorities like the JFIU and SFC. In June 2025, the SFC also prohibited Ms. WONG Lai Suen, another former MTF RO and executive director, from re-entering the industry for six months. ( See Enforcement News – WONG Lai Suen ) This enforcement action reinforces the SFC's commitment to upholding market standards amid evolving risks. Firms should review their policies against the Code of Conduct, Internal Control Guidelines, and AML Guideline to mitigate similar exposures. 6. SFC Prohibits Ex-Employee of BOCOM Over Undisclosed Nominee Account On 27 October 2025, the SFC prohibited Mr. CHENG Lai Ho (鄭禮豪) (“ CHENG ”), a former licensed representative accredited to: Bank of Communications Co., Ltd. (交通銀行股份有限公司); and Bank of Communications (Hong Kong) Limited (交通銀行（香港）有限公司) (collectively, “ BOCOM ”); from re-entering the securities industry for seven months, from 27 October 2025 to 26 May 2026, pursuant to section 196 of the SFO. Case Details The sanction arises from CHENG's repeated violations of BOCOM's Staff Dealing Policy and Employee Code between April 2017 and April 2022, which aligned with regulatory requirements under paragraph 12.2 of the Code of Conduct for Persons Licensed by or Registered with the SFC. Key breaches included failing to disclose two pre-existing personal securities accounts at other institutions, opening and controlling an undisclosed nominee securities margin account in his mother's name (where he conducted over 260 unreported trades), and violating the minimum 13-trading-day holding period on at least 12 occasions after 15 July 2020. Reasons for the Disciplinary Action The SFC found CHENG's actions wilful and dishonest, as he deliberately used the nominee account to evade BOCOM's monitoring and internal controls, despite attending compliance trainings and signing false declarations. In determining the penalty, the SFC considered the five-year duration of the misconduct, the need for deterrence, CHENG's cooperation, and his clean prior record, noting no harm to clients or the market. For more details, please refer to STATEMENT OF DISCIPLINARY ACTION . SIGNIFICANCE: This disciplinary action underscores the SFC's stringent enforcement of internal compliance policies to mitigate conflicts of interest and maintain the integrity of licensed representatives, serving as a strong deterrent against deliberate evasion of employer monitoring and regulatory standards in Hong Kong's securities sector. It highlights the importance of honest disclosures and adherence to fitness and propriety requirements, potentially influencing firms to strengthen oversight of employee trading activities. 7. SFC Suspends Ex-employee of Shanxi Securities Over 945 Unauthorized Trade Orders On 28 October 2025, the SFC suspended Mr. TANG Wai Choi (鄧偉財) (“ TANG ”), a former licensed representative of Shanxi Securities International Limited (山證國際證券有限公司) (“ SSIL ”), for seven months from 28 October 2025 to 27 May 2026, pursuant to section 194 of the SFO. Case Details The disciplinary action stems from TANG's misconduct between 10 July 2019 and 10 December 2019 (Relevant Period): During which he logged into a client's securities account using the client's password and placed 945 orders via the internet without valid written authorization from the client or SSIL's knowledge, thereby circumventing internal controls and creating a false appearance that the trades were placed directly by the client. Additionally, TANG failed to maintain proper records of the client's order instructions, breaching paragraph 3.9 of the Code of Conduct for Persons Licensed by or Registered with the SFC ( Code of Conduct ), which requires time-stamped records and telephone recordings for agency orders. This exposed the client to risks of unauthorized trading, deprived SSIL of audit trails, and violated General Principle 2 (Diligence) of the Code of Conduct. The SFC deemed TANG guilty of misconduct and not fit and proper to remain licensed, considering the duration and frequency of the breaches, the need for deterrence, and his otherwise clean record. The investigation originated from a probe into a suspected ramp-and-dump scheme involving securities transactions handled by TANG at SSIL. For more details, please refer to STATEMENT OF DISCIPLINARY ACTION . SIGNIFICANCE: This enforcement action highlights the SFC's commitment to upholding professional standards among licensed representatives by addressing breaches that undermine client protections and internal controls, serving as a deterrent against unauthorized account access and inadequate record-keeping that could facilitate market misconduct in Hong Kong's securities industry. It reinforces the importance of compliance with the Code of Conduct to maintain market integrity and prevent risks such as trade disputes or unauthorized activities. Enforcement News - LISTCO 8.SFC Seeks Court Order to Freeze Assets up to $394 Million for Investors Compensation in Suspected Manipulation of Grand Talents Shares On 30 September 2025, the SFC filed an application with the Court of First Instance for an interim order to freeze assets up to $394,067,589. This amount represents the estimated losses suffered by investors affected by an alleged sophisticated ramp-and-dump scheme involving the shares of Grand Talents Group Holdings Limited (廣駿集團控股有限公司) ( 08516.HK ) (“ Grand Talents ”), which was listed on the GEM board of the Stock Exchange of Hong Kong Limited in October 2018. The application is part of broader legal proceedings under section 213 of the Securities and Futures Ordinance (“ SFO ”) against 16 defendants, including suspected masterminds, accused of manipulating Grand Talents shares between June 2021 and June 2022. The SFC aims to prevent the defendants from disposing of their assets in Hong Kong to secure funds for potential compensation to victims. The following table provides a chronological summary of key events in the Grand Talents case (for reference only): Date Remarks Source 25 Apr 2023 The SFC issued a notice under Sections 204 and 205 of the SFO imposing restrictions on four client accounts at Silverbricks Securities Company Limited, totaling HK$94,610,762.71, due to suspected manipulative trading in Grand Talents shares from 24 November 2021 to 14 June 2022, leading to a 93% share price plunge on 15 June 2022. The notice aims to prevent asset dissipation amid investigations into possible false trading, price rigging, and stock market manipulation. G.N. 2821 5 Aug 2025 The SFC issued a notice under Sections 204 and 205 of the SFO prohibiting Tiger Brokers (HK) Global Limited from dealing with assets in a specified account (no. 63820919) linked to suspected manipulative trading in Grand Talents shares from 24 November 2021 to 14 June 2022, which culminated in a 93% share price drop on 15 June 2022. The restrictions are to preserve assets during ongoing investigations into potential violations including false trading and stock market manipulation. G.N. 4982 29 Sep 2025 The SFC applied for an interim court order to freeze assets up to HK$394,067,589 from 16 defendants, including suspected masterminds, in an alleged social media ramp-and-dump scheme manipulating Grand Talents shares from June 2021 to June 2022. The court granted an interim injunction against four defendants, with the matter adjourned for the remaining 12. This action aims to secure funds for investor compensation estimated at the frozen amount. SFC - Press Release Court Orders to the 16 defendants To date, the Court has granted an interim injunction against 4 of the defendants, restraining them from dealing with assets up to $394 million, which remains in force until further order. For the remaining 12 defendants, the Court has issued directions and adjourned the matter to a future date. The SFC has indicated it will refrain from further comments as proceedings are ongoing. SIGNIFICANCE: This enforcement action by the SFC underscores its commitment to combating market manipulation and protecting investors in Hong Kong's financial markets. By seeking asset freezes, the regulator aims to preserve resources for restitution, deterring similar schemes that erode market integrity and investor confidence. It highlights the SFC's proactive use of legal tools to address complex frauds, such as social media-driven ramp-and-dump operations, and reinforces the importance of transparency and accountability in securities trading, potentially setting precedents for future cases involving cross-border or digital manipulation tactics. 9. Court Penalises AMTD Global Markets Limited for Contempt of Court Due to Non-compliance with SFC Notices and Orders it to Produce Records and Pay Fine On 13 October 2025, the Court of First Instance ordered AMTD Global Markets Limited (現稱:奧翱驁集團（香港）證券有限公司, 前稱: 尚乘環球市場有限公司) (“ AMTD ”, formerly known as orientiert XYZ Securities Limited and currently known as oOo Securities (HK) Group Limited) to produce records and pay a fine for contempt of court, following proceedings initiated by the SFC under section 185 of the SFO. The Court ordered AMTD to comply with the outstanding requests by 19 January 2026 and imposed a fine for past non-compliance, with the amount to be determined later. It rejected AMTD's excuses, including changes in ownership, management, and loss of records, deeming them unreasonable. Case Overview: Period/Date Remarks Prior to 2023 SFC issues notices under sections 181, 182, and 183 of the SFO to AMTD, requiring records, documents, and answers related to IPO investigations involving suspected fraud and misleading information. 30 Jan 2023 SFC issues a notice under section 183 of the SFO; Court later finds AMTD not liable for non-compliance with this specific notice. 23 Nov 2023 SFC commences legal proceedings under section 185 of the SFO against AMTD and its former executives (including Lo Chi Hang, Philip Yau Wai Man, and See Hiu Lun) for non-compliance with notices in IPO-related investigations. 13 Oct 2025 Court of First Instance rules AMTD in contempt, orders compliance by 19 January 2026, and imposes a fine (amount to be determined later); rejects AMTD's excuses for non-compliance. Case Number: HCMP 2027/2023 19 Jan 2026 Deadline for AMTD to comply with outstanding SFC notice requests. To be determined Court to decide the amount of the fine imposed on AMTD for contempt. Current Status of the Case The Court ordered AMTD to comply with the outstanding requests by 19 January 2026 and imposed a fine for past non-compliance, with the amount to be determined later. It rejected AMTD's excuses, including changes in ownership, management, and loss of records, deeming them unreasonable. SIGNIFICANCE: The SFC's Executive Director of Enforcement, Mr. Christopher Wilson, stated: “The SFC does not tolerate non-compliance with the SFO. Non-compliance undermines the SFC’s ability to discharge its regulatory functions and erodes the integrity of Hong Kong’s capital markets. The SFC will take robust enforcement action against non-compliance.” This ruling emphasizes the SFC's zero-tolerance approach to non-compliance with investigative notices, highlighting the importance of licensed entities maintaining proper records and cooperating fully to uphold market integrity. It serves as a precedent for robust enforcement against excuses like corporate changes, potentially deterring similar failures in IPO-related probes and reinforcing regulatory oversight in Hong Kong's capital markets, with cross-border cooperation exemplified by the UK FCA's involvement. 10. Court Order Sentenced Wong Ming Chun to 7 Years and 8 Months' Imprisonment for Money Laundering Related to Misappropriation of Listed Company Funds On 22 October 2025, the SFC welcomed the High Court's conviction and sentencing of Mr. WONG Ming Chun (王名俊) (“ WONG ”), the former financial controller and company secretary of Hua Han Health Industry Holdings Limited (華瀚健康產業控股有限公司) ( 00587.HK ) (“ Hua Han ”), for two counts of money laundering. Case Details The case originated from the SFC's investigation into suspected false or misleading disclosures in Hua Han's financial statements from 2013 to 2015, which uncovered the misappropriation of fundraising proceeds. These findings were referred to the Police for further action. Hua Han, listed on the Main Board of The Stock Exchange of Hong Kong Limited since 2002 and delisted in 2020 , was involved in health industry operations, highlighting vulnerabilities in financial controls within sectors that may intersect with insurance and investment products. Enforcement Act and Court Order WONG pleaded guilty to the charges under section 25(1) of the Organized and Serious Crimes Ordinance ( Cap. 455 ), stemming from the misappropriation of funds raised by Hua Han in 2015. He was sentenced to seven years and eight months' imprisonment and disqualified from serving as a director of any Hong Kong company for 12 years without court leave, pursuant to section 168E of the Companies (Winding Up and Miscellaneous Provisions) Ordinance ( Cap. 32 ). [Court Case: HCCC 402/24] SIGNIFICANCE: This conviction emphasizes the critical role of financial gatekeepers, such as controllers and secretaries, in upholding corporate integrity and investor trust. As noted by SFC's Executive Director of Enforcement, Mr. Christopher Wilson, failures in these positions not only breach fiduciary duties but also threaten market stability. For the insurance sector, it serves as a reminder of the need for robust internal controls to prevent similar abuses, particularly in entities handling policyholder funds or linked investments, reinforcing collaborative enforcement efforts between regulators to maintain transparency and deter financial misconduct. 11. SFC and HKEX Collaborate in Enforcement Action Against Former Directors of Universal Star for Failure to Disclose Material Loans and Conflicts of Interest in Prospectus On 23 October 2025, the SFC and the Stock Exchange of Hong Kong Limited (“ HKEX ”) announced a collaborative enforcement outcome resulting in disciplinary action against: Mr. LU Qingxing (呂慶星) (“ LU ”), former non-executive director; and LU’s son, Mr. LYU Zhufeng (呂竹風) (“ LYU ”), former executive director; of Universal Star (Holdings) Limited (星宇（控股）有限公司) ( 02346.HK ) (“ Universal Star ”). Case Details The action stems from: SFC's investigation into the directors' failure to disclose 13 outstanding loans totaling approximately RMB49 million where a Universal Star subsidiary served as co-borrower or guarantor, in the company's May 2019 IPO prospectus. These loans, taken out by LU between April 2017 and April 2019, primarily benefited him personally (with at least RMB44 million paid directly to him and RMB2 million to LYU, who transferred it to the subsidiary). The undisclosed loans represented material financial liabilities, breaching disclosure obligations to the sponsor and other directors. Additionally, post-IPO, the pair caused the subsidiary to pledge its property as security for the loans without the knowledge or approval of other directors, independent shareholders, or the compliance adviser—violating Listing Rules on major and connected transactions. This conduct also involved unmanaged conflicts of interest, as LU personally profited, constituting a breach of fiduciary duties that prejudiced investors. The SFC shared its investigation findings, including loan and pledge evidence, with HKEX, leading to the disciplinary sanctions. Regarding the STATEMENT OF DISCIPLINARY ACTION : HKEX issued a "Prejudice to Investors’ Interests Statement" (PII Statement), indicating that the directors' continued board tenure would have harmed investors, along with a public censure. Both individuals, who resigned in 2021 and 2023 respectively, agreed to settle without contesting the breaches. SIGNIFICANCE: This collaborative enforcement action between SFC and HKEX underscores the regulators' commitment to accountability in corporate governance, particularly for directors of listed entities, to safeguard investor interests and market transparency. The case reinforces the value of inter-regulator cooperation in detecting and addressing misconduct that could erode trust in Hong Kong's capital markets. 12. SFC Obtains Court Order to Freeze up to $82.4 Million of Assets Belonging to Suspected Manipulators of Smartac Shares On 27 October 2025, the Court of First Instance granted an interim injunction order sought by the SFC under section 213 of the SFO against 12 individuals suspected of manipulating shares of Smartac International Holdings Limited (環球智能控股有限公司) ( 00395.HK ) (“ Smartac ”, formerly Smartac Group China Holdings Limited, delisted from the HKEX Main Board on 20 February 2023). Case Details The proceedings form part of broader SFC legal actions against the former chairman and non-executive director of Ding Yi Feng Holdings Group International Limited (renamed Carmen Century Investment Limited on 3 July 2025), along with 28 other suspects and one corporate entity, for their roles in the alleged manipulation. Separately, in September 2025, the SFC obtained a consent order to freeze assets of one additional suspect, while an application for another remains pending. The interim injunction remains in effect until the next court hearing on 27 March 2026. Court Order The Court of First Instance prohibits the suspects from removing, disposing of, dealing with, or diminishing the value of their assets in Hong Kong up to $82.4 million, ensuring sufficient assets are available for potential restoration orders if contraventions of the SFO are proven. This action relates to alleged market manipulation of Smartac shares between 31 October 2018 and 11 March 2019. Enforcement News Consolidate Table: Remarks Source/Linkage SFC issues restriction notices to 14 brokers to freeze client accounts linked to suspected Smartac manipulation. 25 Jun 2019 SFC commences MMT proceedings against Sui Guangyi, two entities, and 28 suspects for alleged Smartac manipulation. 12 Nov 2024 SFC applies for asset freeze up to $82.4m against 14 suspects; obtains consent order for one suspect; hearing adjourned to 24 October 2025. 12 Sep 2025 Scheduled next hearing for the interim injunction order. 27 Oct 2025 SIGNIFICANCE: This court order highlights the SFC's proactive enforcement strategy to preserve assets in market manipulation cases, protecting investor interests and ensuring potential remedies for affected parties. By targeting a group allegedly involved in coordinated misconduct over an extended period, it underscores the regulator's commitment to combating sophisticated financial crimes that undermine market integrity, while the ongoing proceedings may set precedents for handling multi-party manipulations in Hong Kong's capital markets. [End of ComplianceOne Newsletter – October 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 - February 2024 The topics discussed in this monthly newsletter are as follows: 1. SFC welcomes government budget measures 2. SFC reminds transitional arrangement for public VATP application period has ended on 29 February 2024 3. SFC reprimands and fines PICC Asset Management (Hong Kong) Company Limited $2.8 million for fund management failures 4. SFC bans Lam Ching Chiu and Wong Siu Fung for five years for bribery offences 5. SFC secures first criminal conviction of securities fraud via illegal short selling MARKET NEWS 1.SFC welcomes government budget measures On 28 Feb 2024, the SFC announced that its welcome note to the new government budget 2024-2025. Mr. Tim Lui, Chairman of the SFC, said: “ The proposed initiatives will boost Hong Kong’ s competitiveness as a global asset and wealth management hub and fund-raising centre. ” And he further added that: “ Building on a decade of success for our mutual market access schemes, we will continue to deepen connectivity with Mainland markets, especially the Greater Bay Area, as well as consolidate Hong Kong’ s position as a leading offshore renminbi hub and a premier risk management centre. ” On the operation side, Ms Julia Leung, Chief Executive Officer of the SFC also said: “ We will work closely with HKEX to improve the market microstructure, reduce transaction costs and enhance market efficiency. ” It is worth noting that the SFC shares the view of the importance of reducing transaction costs, the minimum bid-ask spread in stock trading which are conducive to improving liquidity in the market. There are also other cost-saving measures and incentives like the extension of the Grant Scheme for Open-ended Fund Companies and Real Estate Investment Trust (REITS), stamp duty waiver for REITS etc. SIGNIFICANCE: It is not hard to notice that a regulatory body as SFC also publicly announces its support to the government even in economic measures intended to serve as catalyst to bolster the economy; the HKSAR government is harnessing strengths and supports from all side to consolidating financial resilience in Hong Kong. 2. SFC reminds transitional arrangement for public VATP application period has ended on 29 February 2024 The SFC announced a reminder note on 1 March 2024 of the deadline (29 February) for virtual asset trading platforms (VATPs) to submit licence applications; and those existing VATPs which do NOT submit applications would have to close down their business by 31 May 2024 pursuant to the transitional arrangement. Investors dealing with VATPs operating in Hong Kong which are not on the “List of licensed virtual asset trading platforms” or on the “List of virtual asset trading platform applicants” are urged to close their accounts with these VATPs or transfer to SFC-licensed VATPs for trading virtual assets. The SFC further reminds the public that the applications submitted by applicants on the “List of virtual asset trading platform applicants” are still being processed and they may – or may not – be approved . Hence, trading on these platforms carries a risk. From the SFC’s List of virtual asset trading platforms up to 1 March 2024, there are 24 applicants on the list, and it is odd that the popular platforms like Coinbase and Kraken are not on the list of 24 applicants. Besides, two applicants - Ammbr, BitHarbour – withdrew their applications and one application from Meex was returned by the SFC. It is also noted that Huobi HK re-submitted its application on 26 February 2024. SIGNIFICANCE: With the JPEX scam still fresh in mind, the SFC strongly urges investors to trade virtual assets only on SFC-licensed VATPs because they may expose themselves to unprotected risk on unlicensed platforms. ENFORCEMENT NEWS 3. SFC reprimands and fines PICC Asset Management (Hong Kong) Company Limited $2.8 million for fund management failures On 5 February 2024, the SFC made an announcement to reprimand and fined PICC Asset Management (Hong Kong) Company Limited (PICC) $2.8 million over its failures to discharge duties as the manager of a Cayman-incorporated fund between May 2018 and May 2020. From investigation of the SFC, it was found that PICC had failed to: (i) properly manage the fund to ensure its investments were in line with the stated investment objectives and restrictions; (ii) implement adequate and effective internal controls to manage the fund from any over-concentration risks of non-compliance in just three stocks; and (iii) supervise the designated investment manager (“IM”) in his investment activities of the fund. SIGNIFICANCE: It is ironical indeed that the fund’ s investment objective was to achieve capital preservation and steady capital appreciation through primarily investing in a diversified portfolio of equity securities; yet what the IM had been doing was to concentrate on a few stocks and not to comply with the stop loss procedures to preserve the capital! The IM was like acting unleashed from the mandate restrictions of the fund at all. 4. SFC bans Lam Ching Chiu and Wong Siu Fung for five years for bribery offences The SFC made an announcement on 6 February 2024 that Mr Lam Ching Chiu and Mr Wong Siu Fung, both former licensed representatives of Nerico Brothers Limited, from re-entering the industry for five years starting from 6 February 2024 following their criminal convictions of bribery offences. Lam and Wong were found guilty in August 2022 at the District Court of paying the then chief executive officer (CEO) of Hong Kong Financial Engineering Company Limited (HKFECL) bribes in relation to utilising a computerised algorithmic programme used for futures trading from late 2014 to early 2015. It was found that the CEO asked Lam and Wong for commission for each profitable transactions through the use of the trading programme where both of them were not alerted if the practices were known or acceptable to HKFECL. SIGNIFICANCE: In deciding the sanctions, the SFC considered that Lam and Wong were not fit and proper persons to be licensed to carry on regulated activities due to their criminal convictions. They were both sentenced to imprisonment, with suspension for two years. 5. SFC secures first criminal conviction of securities fraud via illegal short selling The Eastern Magistrates’ Court on 27 February 2024 convicted Ms Christine Yeung Tak Sum guilty of securities fraud involving illegal short selling in proceedings brought by the SFC. The case was found that Yeung submitted a settlement instruction form to her broker Aristo Securities Limited pretending she had 15 million shares in Aurum Pacific (China) Group Limited (Aurum) in another brokerage firm, and then sold the share which she did not have. After illegal short-selling Aurum shares, she proceeded to buy back the same quantity of shares at a lower price to cover her short-sold positions within the same day, making an illicit profit of about HKD602,600. SIGNIFICANCE: Intermediaries should be aware of their obligation to implement and maintain appropriate measures to comply with the short selling requirements and to be mindful of red flags indicating illegal short selling by its clients, especially clients with no sound rationale for not executing the sell instructions directly through their original brokers. 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 – December 2022 ComplianceOne Newsletter – December 2022 The topics discussed in this monthly newsletter are as follows: 1. Asia's First Crypto Asset ETFs were launched on HKEX 2. SFC reminds the Risks associated with Unregulated Virtual Asset Platform 3. SFC revises Business and Risk Management Questionnaire (BRMQ) 4. SFC to launch investor identification regime (HKIDR) in March 2023 5. MSCI's Report to reveal trends in ESG & Climate for 2023 6. SFC suspends Wang Pei Yi for 10 months for making false declarations 7. SFC fines and suspends Chung Tung Sau for seven months for breach of conflicts of interest 8. SFC bans Sun Yiding eight months for circumvention of personal dealings without approval from employer 9. SFC reprimands and fines Guosen Securities (HK) Brokerage Company, Limited $2.8 million over regulatory breaches MARKET NEWS 1. Asia's First Crypto Asset ETFs were launched on HKEX CSOP Asset Management Limited (“CSOP”) launched the CSOP Bitcoin Futures ETF ( 3066.HK ) and CSOP Ether Futures ETF ( 3036.HK ) on 16 December 2022 which were then traded on the HKEX; the strategy of which was to capture the performance of the actively traded Bitcoin and Ether futures in CME which amount up to 39% and 17% of the total market cap respectively. SIGNIFICANCE: The launch of the two ETFs was marking the first time Asian retail investors can have access to this type of virtual assets with a minimum investment of USD100 traded through the traditional brokerage accounts. The approval from the SFC and the HKEX of two new ETFs based on the CME Bitcoin and Ether futures was an importance benchmark in the development of digital asset trading and an unprecedented step forward to accommodate the robust growth and vehement client demand for exposure to Bitcoins and Ethers, yet traded under highly regulated exchanges like CME where protection of investors can be assured. 2. SFC reminds the Risks associated with Unregulated Virtual Asset Platform The SFC wishes to remind investors of the risks associated with virtual asset (VA) platforms offering VA “ deposits ”, “ savings ”, “ earnings ” or “ staking ” services (VA Arrangements) to investors in Hong Kong in light of their continued prevalence. The SFC has observed that some of these platforms may offer a high “interest rate” on VA “deposits” or a daily generation of additional VA at a guaranteed or fixed rate to investors, and there are significant risks associated with investing in these types of VA Arrangements. Investors may suffer significant or even total loss, especially in the event of fraud or collapse of a VA platform. The SFC has figured out some key features investors have to be aware of: (i) Some VA Arrangements are commonly labelled as “deposits” or “savings” products, while they are NOT regulated and are not the same as ordinary bank deposits; and investors are not ensured with any protection; (ii) A vast majority of VA platforms offering VA Arrangements are unregulated; (iii) VA is exposed to heightened risks like insufficient liquidity, high price volatility or fraud, which may lose the entire value; (iv) Some VA Arrangements could amount to a collective investment scheme (CIS) as defined under the SFO, yet they are not authorized CIS per se and may be highly risky to investors. SIGNIFICANCE: On one hand, the HKSAR Government is keen on developing HK as an international financial hub for virtual asset trading; while on the other hand, the governing regime is still on the stage of coping and catch up with the inherent ever-changing and volatile market scenarios of the trading platforms or channels of these VA products. Currently, most of the VA or VA platforms are not yet regulated to ensure sufficient protection to investors at large which can justify the external potential regulatory risks incurred. The HKSAR Government should endeavour to maintain a balance in launching its financial policies. 3. SFC revises the Business and Risk Management Questionnaire (BRMQ) The SFC published a revised Business and Risk Management Questionnaire (BRMQ) on 23 Dec 2022 for licensed corporations (LCs) and associated entities (AEs). The BRMQ is a supervisory tool adopted by the SFC to collect additional data and information on a variety of functions and business activities to enhance the effectiveness of its risk-based supervision amid the rapidly changing operation and business environment. It is noted that many new questions are incorporated to collect more granular clients and transaction data with focus on analyzing the issues on money laundering and internal risk controls. SIGNIFICANCE: This Circular is published with an aim to allow sufficient preparation time for LCs and AEs, thus the revised BRMQ would be used for financial years ending on or after 30 November 2023. LCs and AEs are urged to review and familiarise themselves with the revised questionnaires, and start gathering, compiling the required information and implementing the system enhancement whatever deemed necessary. One crucial implication of the BRMQ is used as an indicative checklist, though not exhaustive, of the required standards expected by the SFC. It serves as an operational guideline with step by step for the LCs to prepare themselves the details of how the requirements in the guidelines are implemented in real operational routines. 4. SFC to launch investor identification regime (HKIDR) in March 2023 The SFC announced on 12 Dec 2022 that the investor identification regime (HKIDR) for the securities market in Hong Kong will finally be launched on 20 March 2023. Ever since the consultation in 2021, the SFC has been closely monitoring the readiness of the licensed corporations (“LC”) in implementing the HKIDR. The survey and recent rehearsals indicate that some intermediaries may need more time to obtain the client consent which is a prerequisite for the HKIDR to authorize the LC to collect, store and process the personal data of the underlying clients. Investors are also reminded to respond to their relevant brokers in order to facilitate the process. As Mr Ashley Alder, former CEO of the SFC, has said: “The launch of the investor identification regime will be a significant milestone in Hong Kong’s securities market ”. The HKIDR enables more effective market surveillance, reinforce market integrity and promote confidence of the investors, which are the indispensable pillar for Hong Kong as an international financial centre. 5. MSCI's Report to reveal trends in ESG & Climate for 2023 In the MSCI ‘s 11th annual ESG & Climate Trends to Watch Report , it is stated that listed companies will deplete their share of the global emissions budget for limiting temperature rise to 1.5°C by December 2026. Researchers explained in the ESG & Climate Trends to Watch Report that the ongoing war in Ukraine and record levels of inflation globally may limit near-term pressure to reduce global greenhouse-gas emissions as governments around the world are prioritizing energy security and affordability on their to-do-list. However, MSCI ESG data also reveals that major power companies are keeping their eyes on longer-term decarbonization trends and expanding deployment of renewables. Amid the above changes, investors continue to evaluate how the climate crisis will impact their portfolio in 2023. As Meggin Thwing Eastman, Managing Director and Global ESG Editorial Director at MSCI, has said: “ ESG risk is financial risk , and the ESG and climate research showcased in today’s report was conducted to support investor needs to synthesize previously unseen risks and incentivize companies to better manage both emerging issues and the longstanding, expansive threat of the climate crisis. ” SIGNIFICANCE: It is expected that ESG and climate-related risks remain and continue to remain as dominant factors of consideration for investors in constructing their portfolios. Apart from diverting resources to comply with the EGS standards which definitely incurs additional costs, it is still of paramount importance for companies to explore business opportunities upon this decarbonization transition; or otherwise, they will not be able to weather the storm in this global trend. ENFORCEMENT NEWS 6. SFC suspends Wang Pei Yi for 10 months for making false declarations The SFC has suspended Ms Wang Pei Yi, a former licensed representative of SinoPac Securities (Asia) Limited (SinoPac), for 10 months for making false declaration in the account opening forms of three corporate clients between June 2015 and April 2017. Wang had falsely declared that she had met and witnessed the signing of forms of the clients; and provided them with relevant risk disclosure statements. Her failure to take all reasonable steps to establish the true and full identity of the clients definitely violated the principles to act honestly, with care and diligence, and best interest of the clients themselves. 7. SFC fines and suspends Chung Tung Sau for seven months for breach of conflicts of interest The SFC has suspended Mr Chung Tung Sau, a former licensed representative of Quam Securities Company Limited (Quam), for seven months from 15 and fined him $60,000. It was found that between 1 and 11 August 2017 Chung had traded in the shares of a listed company (Company A) for himself while executing a client’s good-till-cancel buy order for the same shares (GTC Order). Chung deliberately arranged matched trades between the GTC orders of the client and his own selling orders, resulting in a profit of approximately $60,000 from these transactions. The SFC considers Chung’s conduct has called into questions his fitness and properness as a licensed person, in particular, his failure to: (i) take reasonable step to avoid the conflicts of interests between himself and the client; (ii) comply with the staff dealing policy of Quam; (iii) execute the GTC Order in best available price for the client. 8. SFC bans Sun Yiding eight months for circumvention of personal dealings without approval from employer The SFC has prohibited Ms Sun Yiding from re-entering the industry for eight months from 15 December 2022 to 14 August 2023. It was found in an investigation that between July 2019 and July 2020, Sun failed to obtain her then employer’s approval to open a securities trading account with an external brokerage firm and conducted 829 personal trades in the account unbeknownst to it. She also traded in three stocks on her then employer’s restricted list and sold certain stocks within 30 days of purchase without its pre-approval. SIGNIFICANCE: The same scenario as the case before, the SFC has demonstrated to the licensed persons that "fitness and properness" remain as crucial elements in assessing the integrity of a licensed person; and bear the same material weight as any breach of other market misconducts. 9. SFC reprimands and fines Guosen Securities (HK) Brokerage Company, Limited $2.8 million over regulatory breaches The SFC has reprimanded and fined Guosen Securities (HK) Brokerage Company, Limited (Guosen) $2.8 million for regulatory breaches in relation to the handling of client assets and the provision of client account statements. The SFC’s investigation found that: (i) between 1 January 2021 and 7 March 2021, Guosen relied on expired standing authority of 1,009 clients to obtain financial accommodation by repledging their securities collateral with a bank as collateral; (ii) from May 2020 to November 2020, Guosen had provided monthly statements with incomplete and incorrect information to 930 clients. Guosen’s failures constitute breaches of the Securities and Futures (Client Securities) Rules (CSR), the Securities and Futures (Contract Notes, Statement of Account and Receipts) Rules (CNR) and the Code of Conduct. SIGNIFICANCE The case is an excellent example of lack of internal controls and operation deficiency in fulfilling the annual routines in a timely manner. It also reveals the facts that some staff may be incompetent in fulfilling their obligations for providing statements which should be precisely reconciled. 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 ”.