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The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Insurance Newsletter – September 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES Latest 'Conduct In Focus' Edition Highlights Key Regulatory Insights and Industry Trends MARKET NEWS Captive Insurance Highlighted as Risk Tool at Belt and Road Summit Hong Kong Green Week Spotlights Insurance's Vital Role in Climate Resilience ENFORCEMENT NEWS IA Imposes 50-Month Ban on Insurance Intermediary for Misconduct ENFORCEMENT NEWS New TV Drama 'IA Files' Spotlights IA's Regulatory and Enforcement Role Regulatory News 1. Latest 'Conduct In Focus' Edition Highlights Key Regulatory Insights and Industry Trends On 30 September 2025, the IA has released the newest edition of Conduct In Focus , a valuable resource for insurance practitioners and policyholders alike. This publication delivers the latest complaints statistics alongside in-depth regulatory insights and observations on conduct-related matters, aimed at fostering a more transparent and ethical insurance landscape. Key Highlights: Additional Topics Explored The publication also addresses several emerging issues: Run-Off Portfolios Management: Regulatory considerations for insurance agencies specializing in managing run-off portfolios, highlighting opportunities and compliance requirements in this growing niche. Broker Disclosures for Offshore Products: The essential role of brokers in transparently disclosing risks and limitations when sourcing offshore insurance solutions for clients, to safeguard informed decision-making. Impact of MPF Telemarketing Cessation: Implications for cold-calling practices within the insurance sector following the recent halt of Mandatory Provident Fund (MPF)-related telemarketing, urging a review of sales strategies. SIGNIFICANCE: This edition of Conduct In Focus serves as a timely guide for navigating regulatory expectations and adopting best practices. Insurance professionals are encouraged to review the full publication for actionable insights that can strengthen their operations and client relationships. Market News 2. Captive Insurance Highlighted as Risk Tool at Belt and Road Summit On 10 September 2025, the IA took center stage today at the prestigious Belt and Road Summit , hosting a dedicated breakout session on the pivotal role of captive insurance in bolstering risk management for enterprises engaging in Belt and Road Initiative (“ BRI ”) projects. This session underscored Hong Kong's emerging status as a premier captive domicile, equipped to support participants in tackling the multifaceted challenges of international expansion. Key Highlights from the Session The discussion, moderated by Mr. Clement Lau, Executive Director of Policy and Legislation at the IA, emphasized the need for innovative risk strategies amid the BRI's vast scope. "The extensive scale of the Belt and Road Initiative entails a wide range of complex and diverse risks, requiring participants to adopt innovative and comprehensive risk management strategies where captives can be a valuable option," Mr. Lau remarked. He further highlighted Hong Kong's commitment: "By fostering a vibrant captive ecosystem in Hong Kong, we stand ready to support Belt and Road participants in venturing abroad and exploring new markets." Panelists included CEOs from two Hong Kong-domiciled captive insurers, one established by a Mainland enterprise and another by a multinational conglomerate. They shared how these captives have empowered their parent companies to effectively manage intricate risk landscapes and emerging threats. Experienced professional service providers also contributed, detailing the comprehensive support they provide for establishing and operating captives, from regulatory navigation to ongoing management. SIGNIFICANCE: The session delved into Hong Kong's unique advantages as a captive insurance center, including its strategic location, robust regulatory framework, and facilitative measures introduced by the IA. Attendees gained insights into the future trajectory of the Hong Kong captive market, positioning it as a leading global hub for BRI participants seeking tailored risk solutions. This event aligns with the broader goals of the Belt and Road Summit, highlighted how captive insurance offers enterprises a customized approach to risk transfer, cost efficiency, and enhanced control over insurance programs, essential for the high-stakes, cross-border nature of BRI projects. 3. Hong Kong Green Week Spotlights Insurance's Vital Role in Climate Resilience On 12 September 2025, the IA and the Hong Kong Federation of Insurers (“ HKFI ”) joined forces today to co-host a landmark event as part of the Hong Kong Green Week . Themed "Bridging Finance and Future: The Insurance Industry as a Pillar of Climate Resilience," this featured seminar brought together over 180 insurance practitioners and stakeholders both in-person and online to explore how the insurance sector can drive climate adaptation and sustainability. The event featured expert speakers from the insurance industry, government, academia, and the commercial sector, fostering discussions on navigating climate risks and identifying opportunities for innovation. Spotlight on the Climate Modelling Project A key highlight was an overview of the Climate Modelling Project, a collaborative effort led by the IA in partnership with the HKFI's Task Force on Green Insurance and the Hong Kong University of Science and Technology (“ HKUST ”). Representatives including Mr. Clement Lau, Executive Director of Policy and Legislation at the IA; Mr. Eric Hui, Chairman of the HKFI Task Force on Green Insurance; and Professor Alexis Lau from HKUST shared how this initiative leverages insurers' claims data to enhance underwriting capabilities, spur product innovation, and improve climate risk assessments aligned with sustainability objectives. This regulator-industry-academia collaboration aims to translate advanced research into practical tools for the sector, empowering insurers to better support Hong Kong's green transition. SIGNIFICANCE: As part of the broader Hong Kong Green Week initiative, this event underscores the city's commitment to sustainable development. Mr. Stephen Yiu, Chairman of the IA, stressed the urgency of multi-stakeholder engagement in addressing climate challenges. "Given the scale and complexity of climate-related risks, it is incumbent upon regulators and policymakers to engage proactively with the insurance industry, to strengthen our city’s climate resilience through robust risk assessment, improved risk management frameworks underpinned by a deeper understanding of the social value of insurance," he said. Enforcement News 4. IA Imposes 50-Month Ban on Insurance Intermediary for Misconduct On 25 September 2025, the IA has taken decisive action by banning Ms. SO Yuen Wa (Licence number: IG3140) (“ Mr. SO ”) from acting as an insurance intermediary for a period of 50 months. This enforcement measure underscores the IA's commitment to upholding ethical standards and safeguarding policyholders' interests in the industry. Details of the Case Ms. SO engaged in deceptive practices by providing misleading advice to two clients, falsely claiming that her appointing insurer would acquire their existing policies. This inducement led the clients to surrender three critical illness and long-term savings policies in favor of purchasing eight new ones through her. Key violations included: Failing to disclose that the transactions constituted de facto policy replacements. Impersonating one client to inquire about her policies. Pocketing the surrender value instead of applying it to the new policies. Although Ms. SO later repaid nearly all the funds involved, the harm to the clients was significant. They were left without the protection of their original policies and lost the chance to reinstate them, highlighting the irreversible consequences of such actions. SIGNIFICANCE: Policy replacement is a critical decision with profound effects on policyholders' financial security and coverage. The IA emphasizes that deceptive or unethical practices in this area will not be tolerated and will result in severe penalties. The public is strongly advised to exercise caution when considering surrendering existing policies. Insurance intermediaries are reminded to adhere strictly to ethical guidelines to avoid similar repercussions. Miscellaneous 5. New TV Drama 'IA Files' Spotlights IA's Regulatory and Enforcement Role On 23 September 2025 , the IA and Radio Television Hong Kong (“ RTHK ”) are set to launch "IA Files" (“保監有道” in Chinese), a compelling four-episode TV drama series premiering on RTHK TV31 on 27 September 2025. Drawing from real-life cases, the series aims to illuminate the IA's regulatory, investigative, and enforcement activities while delivering essential educational messages on insurance practices. Alan Wu, Acting Head of Conduct Supervision at the IA, elaborated on the content: "The stories in the drama series are based on real-life complaints and investigation cases, covering issues such as failure to explain key policy features to customers, inducement of policy replacements, unlicensed selling, and misappropriation of premiums. The IA places strong emphasis on the industry’s adherence to the principle of ‘treating customers fairly’, and it is vital for intermediaries to act in the best interests of their clients in their dealings." Broadcast Details IA Files will air on Saturdays at 7pm for four weeks starting from 27 September on RTHK TV31. The episodes will also be streamed simultaneously on the RTHK website and “RTHK TV” mobile app. The programme will later be available for viewing on the IA’s YouTube channel. Please see the series synopsis in the annex (Chinese only). 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證監會對期貨經紀行的新風險管理指引即將於2024年2月25日起生效，我們準備了以下快速指南以方便期貨經紀行能快速理解是次指引的重點及待辦事項。 適用於從事期貨合約交易持牌人的風險管理指引 (快速指南) [Feb 2024] A. 引言 1. 證券及期貨事務監察委員會（證監會）根據《證券及期貨條例》第 399 條於2023年8月25日發表了《適用於從事期貨合約交易的持牌人的風險管理指引》（下文簡稱“ 指引 ”）的諮詢總結，其旨在對適用於從事期貨合約交易的持牌人的現行監控規定作出補充。 2. 指引應與適用於期貨經紀行 [ 第 2 類受規管活動（期貨合約交易）持牌人] 的所有相關法律、法例、守則、規例或其他指引一併閱讀，並在不損害該等法律、法例、守則、規例或其他指引的原則下應用。 3. 指引於 2024年2月25日起生效 ，而 其後起計 12 個月的期間內為 過渡期的安排 。 過渡期的安排主是要給予期貨經紀行額外時間去完成相關系統的開發，例如： (a) 將客戶風險限額納入其風險管理系統、交易指示管理系統或交易平台之內，以識別或防止任何風險限額被突破；及 (b) 採用的假設的壓力情境應包括該行或其客戶交易的期貨合約出現極端但可能發生的價格變動或波幅變化的情境等。 如期貨經紀行未能於 2024年2月25日前 完成相關系統的開發便應採取其他臨時補償措施 (可參考以下列表的“參考 / 補償措施”一欄），這些措施可包括以人手方式監察風險限額的遵守情況，及使用審慎的簡化壓力情境來進行壓力測試以符合以上(a)或(b)所述的規定的風險管理目的等等。 我們準備了以下清單列表以方便期貨經紀行能快速理解是次指引的重點及待辦事項，建議期貨經紀行可根據以下清單去檢查是否已完成證監會最新的風險管理指引要求。我們以 藍色及底線標示的為是次證監會新指引中的重要項目及重點 ，需要特別關注。若期貨經紀尚未完成相關的待辦事項，便應從速處理並落實執行。 另外，由於指引較為繁複，且某些詞匯的定義亦必須參考回指引，我們亦建議客戶細閱指引原稿以作更深入的了解。 4. 我們準備了以下清單列表以方便期貨經紀行能快速理解是次指引的重點及待辦事項，建議期貨經紀行可根據以下清單去檢查是否已完成證監會最新的風險管理指引要求。我們以 藍色及底線標示的為是次證監會新指引中的重要項目及重點 ，需要特別關注。若期貨經紀尚未完成相關的待辦事項，便應從速處理並落實執行。 另外，由於指引較為繁複，且某些詞匯的定義亦必須參考回指引，我們亦建議客戶細閱指引原稿以作更深入的了解。 B. 定義 “指引” 指證監會於2023年8月發出的 《適用於從事期貨合約交易的持牌人的風險管理指引》。 “關連客戶組別” 根據 指引 中第20段註釋1的(a)至(f)的定義。 “聯屬客戶” 指與該期貨經紀行屬同一公司集團之內的任何公司。 “優惠保證金待遇” 指期貨經紀行與客戶之間就期貨合約作出的一種安排， 如客戶符合執行或結算有關期貨合約的交易所或結算所的規則所訂明的資格準則，則客戶無須遵守該等規則所訂明的預繳抵押品規定。 “資金流動性風險” 指期貨經紀行在某期貨合約到期時未能履行其在該合約下的財務責任的風險。 “保證金短欠＂ 指當客戶帳戶的權益淨額結餘低於期貨經紀行就有關帳戶內的未平倉持倉而設定的保證金規定時，便產生“保證金短欠＂。 “權益淨額結餘” 指在該帳戶內持有的抵押品、在該帳戶內的未平倉持倉的浮動利潤及記入該帳戶內的收入的總和，減去在該帳戶內的未平倉持倉的浮動虧損及從該帳戶扣除的費用、佣金、徵費及其他收費。 “貫徹符合保證金規定” 指有關客戶在下列期間: (a) （如有關帳戶開立達一年或以上）最近至少一年的期間內; 或 (b) （如有關帳戶開立少於一年）自帳戶開立日期起計，並至少三個月的期間內; 並無不符合保證金規定、被強制平倉或遭退回支票的紀錄。 “客戶保證金短欠數額” 指客戶分類帳內該帳戶的期貨合約買賣所須的保證金金額中，超出該帳戶內權益淨額結餘的數額。 “速動資金盈餘” 指根據《財政資源規則》，其速動資金減去規定速動資金後的數額。 “客戶分類帳” 指就“期交所交易”及“非期交所交易＂設有獨立分類帳的規定 “可用資金” 指由該行實益擁有的沒有產權負擔現金與其分配作期貨合約交易用途的未提取銀行信貸額的總和。 “ 量化基準 ” 設定為該行的速動資金盈餘與可用資金中較高者的 50% “超蝕款項” 指一個客戶帳戶的交易虧損超逾該帳戶的權益淨額結餘的任何金額。 “預計超蝕款項” 就某客戶帳戶而言，指任何預計虧損超逾該帳戶的權益淨額結餘的金額。 C. 清單列表 類別 指引下期貨經紀行應具備的政策/ 待辦事項清單 Checkbox 備註 參考 / 補償措施 1. 自營買賣及客戶買賣期貨合約所產生的風險管理 (1) 應建立有效的風險管治框架，以管理其本身及其客戶所承擔的風險，應將風險管理責任授予具備經驗及專業知識且擁有足夠權限以 實施政策及程序 的高級管理層。 ☐ 應確保其風險胃納及風險限額與其策略目標相符並與其財政及管理能力相稱。 (2) 就(1)的政策及程序實施持續風險監察、監控和匯報。 ☐ 須要制定風險限額及偏離 (deviation policy)的政策和匯報程序。 (3) 就(1)的政策及程序進行壓力測試及實施應變計劃。 ☐ 須要考慮如何建立/設計切實並可行的壓力測試場境及相關條件。 2. 市場價格水平或波幅出現不利變動而招致損失的風險（ 只適用於有參與自營買賣的期貨經紀行 ） (1) 確保期貨合約的自營買賣持倉均應以實時方式按市值計算。 ☐ 自營買賣持倉的日終重新估值應以獨立於前線部門的來源取得或經獨立核實的資料來源。 (2) 應定期將估計的自營買賣持倉的 實際及假設回報進行比較 。 ☐ 當發現估值誤差時須要進行調查及檢討 。 (3) 釐定與其財政及管理能力相稱且審慎的市場風險限額。 ☐ 採用的市場風險限額必須獲得其高級管理層及董事會妥為批准，出現違反限額的情況時應予及時上報。 3. 商品期貨買賣風險 (1) 備存獲得其高級管理層批准的一份＂ 其可 交易的商品期貨清單 ＂。 ☐ 當交易的商品期貨須要以實物交收時，須先制定／計劃清楚所附帶的運送，存倉及交付安排。 4. 客戶信貸風險 (1) 以單一客戶而言 ，為每名客戶制定審慎的交易限額及持倉限額； (2) 以每個關連客戶組別而言 ，從整體角度顧及該組別內所有客戶而設的合計基準風險限額，期貨經紀行可參考指引中第21段(c)的風險項目。 ☐ 言 ，為每名客戶制定審慎的交易限額及持交易限額及持 ☐ 設定(1)、(2)條件的目的在於防止任何違反適用的法定或監管持倉限額（如結算代理人或交易所的持倉限額）。 (3) 需設有識別關連客戶組別的措施，及評估相關組別的財務及信貸資料， 特別是如何識別相關帳戶的實益擁有人。 ☐ 為確定兩名或以上屬自然人（配偶除外）的客戶是否屬某個關連客戶組別， 期貨經紀行無須主動查核該等客戶的帳戶的實益擁有人 ，但當有跡象顯示某客戶並非為其本身行事時，便應作出適當查詢。 (1) 以聯屬客戶而言 ，須要考慮的風險項目與(1)、(2)類別大致相同，詳情可參考指引中的第22段(c) 。 ☐ 定期檢視該聯屬客戶及時向該期貨經紀行履行交收責任的能力，包括其交易模式，風險胃納給管理政策，財務狀況及分配作期貨合約交易用途的資金資源等。 5. 收取客戶基本保證金 (1) 除非客戶已提供充足的抵押品以符合其保證金規定，否則不應為該客戶買賣期貨合約。 (2) 對客戶施加保證金規定（可能包括開倉保證金規定及維持保證金規定） 不得低於其對手方所設定的金額 ， 不應向任何客戶授出任何信貸融通 或貸款或作出任何其他安排，以便任何客戶得以符合保證金規定。(例如，期貨經紀行不應向其聯繫公司提供財政支持，以便後者向該行的客戶授出信貸融通的安排。) ☐ 已提供充足的抵押品以符合其保證金規定，否則不應為該客戶買賣期則不應為該客 ☐ 施加保證金規定（可能包括開倉保證金規定及維持保證金規定） 不得低於其對手方所設定的金額 ， 不應向任何客戶授出任何信貸融通 或貸款或作出任何其他安排，以便任何客戶得以符合保證金規定。(例如，期貨經紀行不應向其聯繫公司提供財政支持，以便後者向該行的客戶授出信貸融通的安排。) i. 享有優惠保證金的客戶除外； ii. 期貨經紀行經考慮客戶及其自身的情況後，可向客戶施加較其對手方 (或交易所) 所設定的金額為高的保證金規定。 (3) 制定特殊保證金安排 ，以紓減因市場波動及公眾假期情況而可能引致的客戶信貸及資金流動性風險。 ☐ 可不時按市場情況暫時調高保證金規定或在公眾假期前席收取額外保證金。 6. 客戶出現保證金短欠 (1) 就以香港為基地的客戶而言，在發出追繳保證金通知起計 一個營業日內 向客戶收取任何到期應付的保證金數額； (2) 向每名客戶發出的追繳保證金通知備存詳細的紀錄，當中包括每項追繳保證金通知涉及的金額及發出的時間； (3) 嚴格執行其保證金和強制平倉的政策及程序。 ☐ 客戶而言，在發出追繳保證金通知起計 一個營業日內 向客戶收取任何到期應付的保到期應付的保到期應付的 ☐ 追繳保證金通知備存詳細的紀錄，當中包括每項追繳保證金通知涉及的金額及發出的金額及發出的金額及發 ☐ i. 須保存記錄關於客戶的回應和清繳詳情，以及就未清繳追繳保證金所採取的任何跟進行動。 ii. 評估在上一次向其客戶發出追繳保證金通知和下一次發出追繳保證金通知 之間的期間內的風險承擔 。 根據證監會諮詢總結第13段， 期貨經紀行要求在授出寬免方面享有較大的靈活性，證監會已修改了《指引》， 將焦點集中於所授出的寬免是否適當之上。 (4) 高級管理層須具有適當的充分理由，包括批准人 合理地信納有關偏離或寬免不會影響期貨經紀行的財務穩健性( 例如，在《財政資源規則》下的速動資金規定)，否則不應授予批准。 ☐ 當出現以下情況須取得高級管理層的批核 -偏離該政策的情況； -對追繳保證金或強制平倉的寬免。 具體而言，對於偏離或寬免期貨經紀行的保證金及強制平倉政策的情況，除非高級管理層具有適當的充分理由， 否則不應授予批准。 7. 給予優惠保證金待遇予客戶 (1) 如符合下列要求，期貨經紀行可就某客戶在期貨市場進行的買賣給予優惠保證金待遇 ： i. 該客戶有 貫徹符合保證金規定的紀錄 ，並維持著穩健的財務狀況，以及符合相關交易所或結算所的規則下就優惠保證金待遇所訂明的資格準則； ii. 期貨經紀行嚴格遵守該交易所或結算所規則中的所有要求； iii. 期貨經紀行具備充足的流動資金及財政能力， 以符合其對手方就所有獲得優惠保證金待遇的客戶的期貨合約買賣所施加的保證金規定。 備註: “ 貫徹符合保證金規定 ”指有關客戶在最近至少一年的期間內；或自帳戶開立日期起計， 並至少三個月的期間內，並無不符合保證金規定、被強制平倉或遭退回支票的紀錄。 (1) 如符合下列要求，期貨經紀行可就某客戶在期貨市場進行的買賣給予優惠保證金待遇惠保證金 ☐ 如符合下列要求，期貨經紀行可就某客戶在期貨市場進行的買賣給予優惠保證金待遇惠保證金 如符合 下列要求，期貨經紀行可就貨經紀行可紀行可就貨經紀 ☐ 當市況出現大波動， 享有優惠保證金優惠的 優惠的客戶出 ☐ 當市況出現大波動， 享有優惠保證金優惠的客戶出現追加保證金時的處理方案。 (2) 以個別客戶而言， 為每名獲得優惠保證金待遇的客戶訂立一個審慎的交易限額 。期貨經紀行應充分考慮其財政能力及該客戶的具體情況， 並避免訂立過高的交易限額 。 ☐ 定期檢視獲得優惠保證金待遇的客戶的財務狀況、清繳紀錄、投資目標、風險胃納和交易模式或策略; 以釐定相稱的交易限額。 (3) 當 客戶分類帳 內出現“客戶保證金短欠數額”須要計算時， 可參照以下其中一項： i. 存放於其對手方的保證金總額；或 ii. 客戶須存放於該經紀行的保證金總額。 ☐ 如期貨市場的某個交易時段的 交易時間跨越該交易日的午夜 ，期貨經紀行便無須將在該交易時段內的期貨合約買賣計算在內。 (4) 期貨經紀行應計算截至每個交易日結束時所有獲得優惠保證金待遇的客戶的分類帳內的客戶保證金短欠數額的總額，及將該總額與量化基準 （ 設定為該行的速動資金盈餘與可用資金中較高者的50%）進行比較。當發現超出量化基準時， 應確保不會出現過度風險承擔及採取及時及適當的行動，並在下一個交易日及時向證監會作出匯報。 ☐ 期貨經紀行應具備充足的速動資金盈餘與可用資金，並衡量其可承受的風險，及其對財政能力的影響。可使用 i. 其最近期的速動資金盈餘或可用資金的金額；或 ii. 其在向證監會提交的最近期的財務申報表中所匯報的速動資金盈餘或可用資金的金額，以進行(4)的比較。 跟據證監會諮詢總結第15段， 證監會不會強制規定超逾該限額的期貨經紀行須在下一個交易日糾正有關情況，但它們仍須及時向證監會作出匯報。 8. 資金流動性風險 (1) 應實施相應措施審慎管理現金流，及確保其持有的客戶款項或抵押品具備充足的流動性，以代表客戶為期貨合約買賣符合其對手方的保證金規定。 ☐ 具備可行的壓力測試環境； 在某些情況下，期貨經紀行或許未能在限期前履行其對手方就有關期貨合約發出的追繳保證金通知，原因可能是相關客戶沒有及時履行該行的追繳保證金通知 (例如本地農歷新年假期間)，以及該行並無充足資金代該客戶清繳該追繳保證金。 (2) 應定期評估其在承受影響全個市場的壓力或影響特殊情況的壓力時的流動資金需要，及 制定適當的緊急融資方案 。 ☐ (3) 在緊急情況下如何可獲取足夠的新資金，應 避免依賴單一資金來源 。 ☐ 9. 委聘執行或結算代理人為客戶執行或結算期貨合約 (1) 制定書面政策及程序，以確保該行及其客戶對該代理人的風險承擔獲得妥善管理； ☐ 有關建議沒有規定期貨經紀行必須與後備代理人訂立正式協議或開立帳戶， 與該候選代理人就後備安排確立和維持相互諒解便已足夠。 就客戶保證金溢差(client margin excess)的建議限額及分隔規定(segragation requirements)所識別出的實際問題 (2) 在該代理人並非持牌法團、註冊機構、認可交易所的交易所參與者或認可結算所的結算所參與者的情況下，須定期對該代理人進行盡職審查覆核並評估該代理人的能力； ☐ 期貨經紀行可以設下一個特定時段（例如一個月以25個交易天為樣本），估算主要活躍客戶在這個時段內的平均交易量和平均持倉量的保證金要求，並以此作為參考標記。 (3) 實施適當的安排和後備措施，物色至少一名後備執行或結算代理人的候選人 ，並盡可能就後備安排與該候選人確立和維持相互諒解或正式協議。 ☐ 並根據此參考標記的成交量和持倉量的波動情況，設定上下120%-80%的緩衝區。 當存放於結算代理人的客戶保證金超出參考標記的120%時，期貨經紀行向結算代理人執行提取超額的保證金。如果保證金低於 80%時，則可向結算代理人存入額外保證金以維持至 100% 的平均水平（參考標記），以方便客戶隨時建立任何新倉的保證金要求。 10. 因委聘執行或結算代理人而產生保障客戶資產風險 (1) 應確保在其於對手方開立的帳戶內，客戶的期貨合約持倉及該等持倉的相關保證金是與期貨經紀行自營買賣持倉及該等持倉的相關 保證金分開記帳的; ☐ 自營資金與客戶資金必須完全分隔。 (2) 不應使用屬於某客戶的資產為另一客戶的交易提供保證或進行交收; ☐ 某客戶帳戶的資產 不能被用於抵銷 或清繳另一客戶帳戶的“超蝕款”。 (3) 當期貨經紀行在於某對手方（代理人）開立的綜合帳戶內持有客戶持倉及資產，便應採取合理步驟， 防止屬於某客戶帳戶的資產被用於抵銷或清繳另一客戶帳戶的“超蝕款項” 。 ☐ (4) 若出現以上(3)的情況，應盡快將其收到用來清繳出現超蝕款項的客戶帳戶的追繳保證金的任何資產， 以及一筆數額相等於上述追繳保證金尚未獲清繳的金額的自身現金 ，存入該綜合帳戶或指定的信託銀行帳戶或獨立帳戶內， 以彌補因該抵銷而令其他客戶帳戶的資產出現的短欠。 ☐ 使用自身資金時， 須要計算速動資金盈餘或可用資金的金額。 11. 進行壓力測試環境下所產生的潛在虧損風險 (1) 制定妥善的壓力測試政策及程序，清楚地列明壓力測試的方法和頻密程度，以及檢討和匯報機制。這些政策及程序應獲高級管理層批准。 (2) 自行進行壓力測試應至少每周及在市況波動時進行壓力測試 。 特別安排： (3) 若客戶屬i. 持牌法團，ii. 註冊機構；或iii. 在香港以外地方的期貨交易商，其帳戶內的持倉是由該金融機構代其客戶持有的， 可將該帳戶內的任何持倉排除在根據本“指引”進行的壓力測試的範圍之外。 ☐ 的壓力測試政策及程序，清楚地列明壓力測試的方法和頻密程度，以及檢討和匯報機制。這些政策及程序應獲高級管理層批 准。 獲高級管理層批 ☐ 行壓力測試應至少每周及在市況波動時進行壓力測試 。 波動時進行壓力動時進行壓力 ☐ i. 應採用與其自營或其客戶買賣的產品的風險特性相稱的適當壓力測試方法。 ii. 預計 每個客戶帳戶 在 該壓力測試假設的壓力情境（假設的壓力情境）下可能產生的虧損金額（預計虧損）， 並估計 客戶帳戶的大額 預計超蝕款項 對期貨經紀行的速動資金盈餘及可用資金造成的影響。 iii. 預計期貨經紀行的 自營買賣持倉 在該假設的壓力情境下可能引致的交易虧損及追繳保證金金額， 並估計該等預計交易虧損及追繳保證金的總額 對其速動資金盈餘及可用資金造成的影響。 當擬備本“指引”時， 壓力測試中採用的假設的壓力情境在期交所買賣的指數期權的相關價格變動 被假設為±20%。 (4) 在其 壓力測試中採用的假設的壓力情境 應包括該行或其客戶交易的期貨合約 出現極端但可能發生的價格變動或波幅變化(期權合約的持倉)的情境， 並應參考或基於下列因素來釐定有關情境： i. 過去的期貨市場受壓事件；及 ii. 其對潛在且令期貨合約的價格或波幅產生重大影響的風險所作出的評估。 (4) 在其 壓力測試中採用的假設的壓力情境 應包括該行或其客戶交易的期貨合約 出現極端但可能發生的價格變動或波幅變化(期權合約的持倉)的情境， 並應參考或基於下列因素來釐定下列因素來 ☐ 去的期貨市場受貨市壓事件；及 ☐ 若期貨經紀行為某交易所或結算所的會員或參與者 ， 便應確保為在該交易所或結算所買賣或結算的期貨合約持倉進行的壓力測試所採用的 假設的壓力情境， 至少與該交易所或結算所為其會員或參與者指明或建議的假設的壓力情境同等嚴謹。 期貨經紀行在預計虧損應出現極端但可能發生的價格變動或波幅變化的假設來進行估算，或以 “替代方案”假設為相等於期貨經紀行的對手方所設定的保證金規定的 200%。 (5) 在 集團層面集中進行的壓力測試 : i. 已考慮到該期貨經紀行的風險承擔及財務狀況，並適當地預計壓力情境對該行的速動資金盈餘及可用資金造成的影響； ii. 採用的方式與自行進行壓力測試所載列的規定大致上一致或在嚴謹程度上高於該等規定； iii. 在證監會提出要求時，向該會提交有關其集團層面壓力測試的報告。 (5) 在 集團層面集中 (5) 在 ☐ 考慮到該期貨經紀行的風險承擔及財務狀況，並適當地預計壓力情境對該行的速動資金盈餘及可用資金 ☐ 用的方式與自行進行壓力測試所載列的規定大致上一致或在嚴謹程度上高一致或在嚴謹程 ☐ (6) 及時和勤勉盡責地評估壓力測試結果，以識別任何對其財政穩健性構成的潛在威脅 ，以及採取及時的跟進行動。進行評估的最低要求： a. 將客戶帳戶的預計虧損總額及自營帳戶的預計交易虧損總額 與過往的壓力測試結果進行比較 ， 並識別： i. 預計超蝕款項超逾該行的速動資金盈餘或可用資金的30% 的任何客戶或關連客戶組別； ii. 該行認為 使其承擔過高風險 的任何其他客戶或關連客戶組別； b. 評估該行的速動資金盈餘或可用資金是否足以承受帳戶內有著最大金額的預計超蝕款項的兩個客戶或關連客戶組別的預計超蝕款項造成的綜合影響。 特別安排： 根據以上(6)的條件， 具有貫徹符合保證金規定的紀錄或維持著相對其投資組合及交易規模而言屬穩健的財務狀況的客戶或關連客戶組別 可被排除在外。 (6) 及時和勤勉盡責地評估壓力測試結果，以識別任何對其財政穩健性構成的潛在威脅 ，以及採取及 以及採取及 及 以及採取及 及 以及採 ☐ 戶帳戶的預計虧損總額及自營帳戶的預計交易虧損總額 與過往的壓力測試結果進行比較 ， 並識結果進行比 ☐ 計超蝕款項超逾該行的速動資金盈餘或可用資金的30% 的任何客戶或關任何客戶或關 ☐ 行認為使其承擔過高風險的任何其他客戶或關其他客戶或關 ☐ (7) 當在壓力測試下可能出現威脅時的應變措施: i. 採取及時和有效的跟進行動，例如調整其風險管理措施； ii. 擬備詳細的應變計劃，以免在市場受壓的情況下出現交收失敗、無力償債；或 iii. 避免違反《財政資源規則》下的最低速動資金規定的情況 。 (7) 當在壓力測試下可能出現威脅時的出現威脅時的 ☐ 取及時和有效的跟進行動，例如調整其風險管理措 ☐ 備詳細的應變計劃，以免在市場受壓的情況下出現交收壓的情況下出現交收 ☐ 免違反《財政資源規則》下的最低速動資金規定的情況 。 應確保應變計劃採用的假設能切合付諸實行。 (8) 壓力測試的文檔記錄包括： i. 所進行的每個壓力測試的詳情，包括該壓力測試所採用的方法、數據來源、數據紀錄、假設和假設的壓力情境； ii. 每個壓力測試的結果，包括但不限於每個客戶帳戶的預計虧損金額及預計超蝕款項，及其每個自營帳戶的預計交易虧損； iii. 就壓力測試結果進行的評估的結果；及 iv. 就評估結果採取的任何跟進行動。 (8) 壓力測試的文 (8) 壓力測試的文 ☐ 進行的每個壓力測試的詳情，包括該壓力測試所採用的方法、數據來源、數據紀錄、假設和假據紀錄、假設和假 ☐ 個壓力測試的結果，包括但不限於每個客戶帳戶的預計虧損金額及預計超蝕款項，及其每個自營帳戶的計交易易 ☐ 壓力測試結果壓力測試結果壓力測 ☐ 評估結果採取的任何跟進行動。 12. 風險披露及聲明 期貨經紀行應在客戶協議內披露以下重要事項： (1) 期貨經紀行 就其代理人之綜合帳戶內持有的客戶資產 而向有關客戶負上法律責任的範圍，及客戶在綜合帳戶內的資產的權利； (2) 客戶享有其對持有在期貨經紀行於 某結算所開立的綜合帳戶 內的資產的權利； (3) 為客戶提供在香港以外地方的期貨市場買賣或結算服務時， 其海外對手方及該期貨市場不受證監會所規管及可能受到有別於《證券及期貨條例》及據此訂立的規則和規例的法律及規例所規管，而因此 客戶在海外進行交易所存放款項可能無法享有在香港期貨市場進行交易所獲賦予的相同保障。 期貨經紀行應在客戶協議內披露以下重要披露以下重要 ☐ 貨經紀行 就其代理人之綜合帳戶內持有的客戶資產 而向有關客戶負上法律責任的範圍，及客戶在戶負上法律責任的範圍 ☐ 戶享有其對持有在期貨經紀行於 某結算所開立的綜合帳戶 內的資產的權 ☐ 客戶提供在香港以外地方的期貨市場買賣或結算服務時， 其海外對手方及該期貨市場不受證監會所規管及可能受到有別於《證券及期貨條例》及據此訂立的規則和規例的法律及規例所規管，而因此 客戶在海外進行交易所存放款項可能無法享有在香港期貨市場進行交易所獲賦予的相同保障。 13. 通知規定 (1) 當察覺到任何以下事宜起的 一個營業日內給予證監會書面通知 ： i. 每個交易日結束時所有獲得 優惠保證金待遇 的客戶的分類帳內的 客戶保證金短欠 數額的總額， 超逾量化基準 （設定為該行的速動資金盈餘與可用資金中較高者的50%）; ii. 在期貨經紀行及時和勤勉盡責地評估壓力測試結果時，所識別“超逾該行的速動資金盈餘或可用資金的30%”的任何客戶或關連客戶組別可能無法清繳其預計超蝕款項； iii. 該行的速動資金盈餘或可用資金將不足以承受最大金額的預計超蝕款項的兩個客戶或關連客戶組別的預計超蝕款項，及該行自營帳戶的預計交易虧損； iv. 該行無法或將無法履行任何對手方發出的任何追繳保證金通知。 (1) 當察覺到任何以下事宜起的 一個營業日內給予證監會書日內給予證監 ☐ 個交易日結束時所有獲得 優惠保證金待遇 的客戶的分類帳內的 客戶保證金短欠 數額的總額， 超逾量化基準 （設定為該行的速動資金盈餘與可用資金中較高可用資金中較高 ☐ 期貨經紀行及時和勤勉盡責地評估壓力測試結果時，所識別“超逾該行的速動資金盈餘或可用資金的30%”的任何客戶或關連客戶組別可可用資金中較高可用資金中較高 ☐ 行的速動資金盈餘或可用資金將不足以承受最大金額的預計超蝕款項的兩個客戶或關連客戶組別的預計超蝕款項，及該行自營帳戶的預計可用資金中較高 ☐ 行無法或將無法履行任何對手方發出的任何追繳保證金通知。 (2) 當出現以上(1)的情況向證監會提交通知時， 須要列明有關事宜的全部詳情， 包括: i. 超逾基準的原因及就享有優惠保證金待遇的客戶持倉而承擔的風險； ii. 根據以上(1)情況的相關壓力測試結果，及該等客戶或關連客戶組別在出現該等預計超蝕款項時是否有能力清繳該等虧損進行的相關評估結果；及 iii. 已採取、正採取或將採取的任何風險紓減措施，以減低就享有優惠保證金待遇的客戶持倉而承擔的任何過高風險； iv. 已採取、正採取或將採取的任何跟進行動，以防止出現交收失敗或違反《財政資源規則》下最低速動資金規定的情況； v. 無法或將無法履行任何對手方發出的任何追繳保證金通知的理由， 以及其為糾正或防止有關無法履行有關追繳保證金通知的情況而已採取、正採取或將採取的任何措施。 (2) 當出現以上(1)的情況向證監會提交通知時， 須要列明有關事宜的全部詳 可用資金中較高 ☐ 逾基準的原因及就享有優惠保證金可用資金中較高可用資金中較高 ☐ 據以上(1)情況的相關壓力測試結果，及該等客戶或關連客戶組別在出現該等預計超蝕款項時是否有能力清繳該等虧損進行的相關評估結損進行的相關 ☐ 採取、正採取或將採取的任何風險紓減措施，以減低就享有優惠保證金待遇的客戶持倉而承擔的可用資金中較高 ☐ 中較高可用資金中較高可用資金中較高可用資金中較高可用資金中較高可用資金中較高可用資金中較高用資金中較 ☐ 法或將無法履行任何對手方發出的任何追繳保證金通知的理由， 以及其為糾正或防止有關無法履行有關追繳保證金通知的情況而已採取、正採取或將採取的任何措施。

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

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 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. [End of ComplianceOne Newsletter – September2025] 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 – Feb 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES 1. SFC convenes inaugural VA Consultative Panel meeting 2. SFC sets out ASPIRe roadmap as blueprint to navigate Hong Kong as a global virtual asset hub 3. Hong Kong's market watchdog reviews 8 brokerages amid IPO oversubscription frenzy 4. SFC Supports Listing of Alternative Funds to Boost Investor Options 5. SFC Leads Regional Consensus on Sustainability, Tech, and Investor Protection 6. SFC proposes to relax position limits for key exchange-traded derivatives 7. SFC flags cybersecurity incidents in a thematic review report MARKET NEWS 8. SFC supports government budget measures 9. HashKey Capital is granted approval for VA discretionary accounts management services ENFORCEMENT NEWS 10. SFC Imposes Restriction Notices on Money Concepts Entities 11. SFC Launches Insider Dealing Case Against Wong Pak Ming Regulatory Updates 1. SFC convenes inaugural VA Consultative Panel meeting Earliest on 14 FEB, the SFC had convened an inaugural meeting of the Virtual Asset Consultative Panel (“ VACP ”) for the licensed virtual asset trading platforms (“ VATP ”s). Chaired by the SFC’s Executive Director of the Intermediaries Dr Eric Yip, the VACP comprises all the licensed VATPs represented by members of their senior management, and is expected to provide invaluable contribution to the SCF’s formulation of regulatory policy to further facilitate the development of a sustainable and resilient virtual asset ecosystem. Members of the VACP will collaborate towards the aim of identifying policy priorities, paving way for market and regulatory developments. As added by Dr Eric Yip, “The SFC looks forward to close collaboration with the members to encourage and develop innovation while ensuring adherence to regulatory standards in this rapidly changing landscape”. SIGNIFICANCE: The VACP is a good example of SFC’ s proactive engagement with the licensed VATPs in addition to its previous engagement in launching the swift licensing process for new VATP applicants with a streamlined approach. 2. SFC sets out ASPIRe roadmap as blueprint to navigate Hong Kong as a global virtual asset hub The SFC outlined 12 major initiatives to enhance the security, innovation and growth of Hong Kong’ s virtual asset (“ VA ”) market under a five- pillar “ ASPIRe ” roadmap, which stands for Access, Safeguards, Products, Infrastructure and Relationships. A snapshot of the pillars and initiatives: FIVE-pillars (incorporating the TWELVE initiatives) “ A-S-P-I-Re ” Roadmap for a Resilient Virtual Asset Ecosystem (1) Pillar A (Access) – Streamline market entry through regulatory clarity Key objectives: (i) Expand market accessibility (ii) Encourage responsibility participation (iii) Enhance investor opportunities Initiative 1 : Establish licensing regimes for OTC trading and custody services Initiative 2 : Attract global platforms, order flows and liquidity providers (2) Pillar S (Safeguards) – Optimising compliance burdens without compromising security Key objectives: (i) Align compliance requirements (ii) Adopt risk-proportionate oversight (iii) Promote regulatory clarity Initiative 3 : Explore adopting a dynamic approach to custody technologies and storage ratios Initiative 4 : Enhance insurance and compensation frameworks Initiative 5 : Clarify investor onboarding and product categorization (3) Pillar P (Products) – Expand product offerings and services based on investor categorisation Key objectives: (i) Enable risk-appropriate investment tools (ii) Safeguard retail investors (iii) Mitigate potential risks Initiative 6 : Explore regulatory framework for professional investor-exclusive new token listings and virtual asset derivative trading Initiative 7 : Explore virtual asset margin financing requirements aligned with securities market risk management safeguards Initiative 8 : Consider allowing staking and borrowing/lending services under clear custody and operational guidelines (4) Pillar I (Infrastructure) – Modernise reporting, surveillance and cross-agency collaboration Key objectives: (i) Strengthen market-wide oversight capabilities (ii) Early detection of illicit activities and misconduct (iii) Safeguard investor assets Initiative 9 : Consider solutions for efficient regulatory reporting and deploy advanced surveillance tools to detect illicit activities Initiative 10 : Strengthen local cross agency collaboration and promote cross border cooperation with global regulators (5) Pillar Re (Relationships) – Empower investors and industry through education, engagement and transparency Key objectives: (i) Enhance investor understanding (ii) Foster industry participation (iii) Promote fit-for-purpose policy making Initiative 11 : Consider regulatory framework for financial influencers (Finfluencers) to address new investor engagement channels Initiative 12 : Cultivate sustainable communication and talent network SIGNIFICANCE: Encountered with the ever-changing VA ecosystem, market participants are facing challenges from all edges: institutional-retail bifurcation, fragmented liquidity, and regulatory arbitrage risk due to discrepancies in development of VA regulatory regimes across regions; the SFC is pioneering itself with a pragmatic ASPIRe roadmap to secure and gradually materialize the mission of positioning Hong Kong as an international VA hub. 3. Hong Kong's market watchdog reviews 8 brokerages amid IPO oversubscription frenzy On 14 February 2025, a press release showing the SFC’s explicit concern with the oversubscription frenzy in IPO offering observed recently from eight brokers. Some key points are worth noted: the SFC will examine the brokers IPO financing policies, and advise that brokers should take into consideration the clients’ repayment ability, and set appropriate loan limit to avoid overfinancing; in November 2023 a couple of years ago, a circular form the SFC had been posted to remind brokers of the need to adopt a prudent risk management policy in providing IPO subscription services to its clients, in particular after the launch of FINI on 22 November then; since under the new FINI settlement, brokers are only required to pay for the maximum number of shares allotted in the IPO instead of the “full amount” of the subscriptions, thus allowing opportunities to further scale up the leverage offered to the clients. It is observed that some brokers tend to accept large subscription orders without collecting sufficient initial subscription deposits from clients as minimum upfront payments; brokers tend to take advantage of “the exemption to pay the full amount” to grant more IPO loans to the clients with larger multiples which further add fuel to boost up the oversubscription frenzy. SIGNIFICANCE: The FINI mechanism shortens the settlement period from “t+5” to “t+2” while at the same time alleviating the financial costs burden of having to pay the full amounts of subscription in previous arrangements. Though initial intention of the FINI is to streamline the IPO settlement process, it unexpectedly allows the possibility for more speculative IPO overfinancing activities. Market participants also expect the SFC to provide more clear guidelines on the margin-financing policies, not only as reference for prudent risk management, but also as a note of reminder to brokers of the potential risk of breaching the financial resources requirements amid the vehement buoyancy of IPO offerings. 4. SFC Supports Listing of Alternative Funds to Boost Investor Options The SFC of Hong Kong has issued new regulatory circular to encourage the listing of closed-ended alternative funds on the Stock Exchange of Hong Kong Limited (“ SEHK ”). Announced on 17 February 2025, this move aligns with the HKSAR Government’s 2024 Policy Address to expand private equity fund distribution and solidify Hong Kong’s position as a global asset management hub. Key takeaways: Funds already listed on recognized international exchanges may also qualify, subject to comparable regulations. Size & Scale: Funds must be sizeable (HK$780 million market cap), with management companies managing at least HK$780 million in alternative assets. Diversification: Funds should invest in well-balanced portfolios, with borrowing capped at 30% of net asset value (NAV). Transparency: NAV must be published quarterly, and offering documents must detail investment strategies, risks, and valuation methods. Investor Education: Management companies are urged to educate investors before launching these funds in Hong Kong. SIGNIFICANCE: “We’ve always welcomed closed-ended alternative funds,” said Ms. Christina Choi, SFC’s Executive Director of Investment Products. “This clarity will help investors tap into opportunities managed by top-tier asset managers.” This initiative broadens Hong Kong’s investment landscape, offering sophisticated investors access to alternative assets while maintaining robust safeguards. The SFC aims to balance innovation with investor protection, reinforcing the city’s financial competitiveness. 5. SFC Leads Regional Consensus on Sustainability, Tech, and Investor Protection The SFC has taken a pivotal role in shaping the future of capital market regulation across the Asia-Pacific, forging a united front with regional counterparts at the International Organization of Securities Commissions (“ IOSCO ”) Asia-Pacific Regional Committee (“ APRC ”) meetings held from 19 Feb 2025 to 21 Feb 2025, in Da Nang, Vietnam. Key takeaways: Collaborative Roadmap: Chaired by SFC CEO Ms. Julia Leung, the APRC brought together over 70 regulators from 19 jurisdictions to align on tackling scams, online harm, and investment fraud, while leveraging technology for regulatory innovation. Supervisory Cooperation: Vietnam’s State Securities Commission (“ SSC ”) joined as the 14th signatory to the APRC Multilateral Memorandum of Understanding (“ SMMoU ”), a milestone witnessed by Vietnam’s Finance Minister Mr. Nguyen Van Thang and celebrated during a signing ceremony. Global Dialogue: Ms. Leung co-chaired the EU-Asia-Pacific Forum on Financial Regulation, driving discussions on digitalization, fintech, and sustainable finance with European and regional financial leaders. Unified Approach to Emerging Challenges Regulators agreed on strategies to combat scams and harness generative AI and other technologies to enhance oversight. SFC senior executives also contributed to Enforcement and Supervisory Directors’ Meetings, sharing insights on enforcement trends, virtual asset safekeeping, and tech-driven supervision. Ms. Leung, in her keynote at the SSC Vietnam Symposium, underscored the APRC’s role: “This platform fosters collaboration essential for trust in our growing markets. Together, we can navigate emerging trends and risks effectively.” SIGNIFICANCE: As capital markets evolve with technology and sustainability at the forefront, the SFC’s leadership in the APRC reinforces Hong Kong’s role as a regulatory hub. This consensus sets the stage for stronger investor protection and innovation-friendly frameworks across the region. On the sidelines, Ms. Leung met with SSC Chairwoman Ms. Vu Thi Chan Phuong to deepen supervisory ties, focusing on crypto regulation and shared capital market priorities. Vietnam’s SMMoU entry marks a step forward in regional cooperation, enhancing information-sharing among Asia-Pacific regulators. For Ms. Leung’s full speech and more details, visit the SFC website . 6. SFC proposes to relax position limits for key exchange-traded derivatives On 27 February 2025, the SFC launched a Consultation proposing to increase the position limits for exchange-traded derivatives based on the three major stock indices in Hong Kong to keep pace with market development. To facilitate hedging activities of market participants, the proposals will lift the current position limits for the futures and options contracts as the table shown below: Underlying Index Existing position limit (net long/short position delta) Proposed position limit (net long/short position delta) Hang Seng Index (HSI) 10,000 15,000 (↑50%) Hang Seng China Enterprises Index (HSCEI) 12,000 25,000 (↑108%) Hang Seng TECH Index (HSTECH) 21,000 30,000 (↑43%) SIGNIFICANCE: These will enable Hong Kong’ s derivatives markets to keep pace with the growth in the market capitalisations of major stock indices and trading volumes of their constituents over the past years, without introducing additional risks to the markets. As Ms Julia Leung said, “ The relaxation of position limits will not only allow market participants to enjoy greater flexibility in managing positions, but also promote the liquidity and efficiency of both the derivatives and broader markets. ” 7. SFC flags cybersecurity incidents in a thematic review report Material cybersecurity incidents in recent years involving cyberattacks against licensed corporations (“ LC ”s) aroused attention of the SFC as LCs were vulnerable to significant business disruptions or hacking of client accounts. A Report on the 2023/24 Thematic Cybersecurity Review of Licensed Corporations (“ Report ”) was issued by the SFC on 6 February 2025 where eight incidents of material cybersecurity breach were reported to SFC between 2021 and 2024, examples identified are: unauthorized access to trading in clients’ account through loopholes in the network security of the LCs; end-of-life (“ EOL ”) software and weak algorithm for encrypting client data. In the light of these insufficient management oversight and inadequate controls on cybersecurity measures, the SFC has set out in the Report some standard of conduct expected of the LCs in relation to phishing detection and prevention, EOL software management, remote access control, third-party IT service providers management and cloud security. SIGNIFICANCE: As emphasized by Dr Eric Yip, the SFC’ s Executive Director of Intermediaries, that the LCs should take all necessary measures to tackle the sophisticated and prevalent cyberattacks, and failure to address these threats would cause detrimental influence on the LCs, their clients as well as the entire financial system in such a highly interconnected and digitalised world. Senior management should recognize the critical importance of safeguarding from and mitigating the cybersecurity risks by making reference to the Report for details. Market News 8. SFC supports government budget measures The SFC has expressed strong support for the Hong Kong government’s 2025-2026 budget measures, unveiled by Financial Secretary Paul Chan on 26 February 2025. These initiatives aim to solidify Hong Kong’s status as a leading international financial hub. Key takeaways: Boosting Securities and Derivatives Markets: SFC Chairman Dr. Kelvin Wong praised the budget for advancing Hong Kong’s securities, derivatives, and asset management sectors, reinforcing its competitive edge. Tech-Focused Listing Channel: The SFC will collaborate with Hong Kong Exchanges and Clearing Limited (“ HKEX ”) to launch a "technology enterprises channel," streamlining listings for tech and biotech firms. Listing Regime Refinement: A comprehensive review of listing rules, vetting processes, and market structures is underway, including exploring post-delisting trading mechanisms and optimizing dual/secondary listing thresholds. Risk Management Enhancements: The SFC will soon consult on raising position limits for key index derivatives to better serve investors. RMB Bonds and Fixed Income Hub: Partnering with the Hong Kong Monetary Authority, the SFC is crafting a roadmap to develop primary and secondary bond markets, alongside hosting a flagship forum in late 2025 to highlight Hong Kong’s strengths. Virtual Assets and Fintech: Following a mid-February regulatory roadmap, the SFC will guide the sustainable growth of Hong Kong’s virtual asset market, aligning with the government’s upcoming policy statement on blending traditional finance with innovative tech. SIGNIFICANCE: SFC CEO Ms. Julia Leung emphasized ongoing collaboration with regulators and stakeholders to strengthen Hong Kong’s role as a fixed income and currency hub, advance virtual asset markets, and deepen ties with Mainland China and global markets. The SFC’s proactive stance signals a dynamic year ahead for Hong Kong’s financial ecosystem. 9. HashKey Capital is granted approval for VA discretionary accounts management services Following the approval from SFC, Hashkey Capital is now able to offer discretionary account management services for virtual assets to professional investors (“ PI ”s) subject to type 9 license. This approval enables HashKey Capital to deliver customised services to professional investors subject to a pre-approved list of exchanges across the entire investment lifecycle ranging from: (i) tailored investment mandates: from spot investments to OTC trading and derivatives; (ii) flexibility in trading platforms: to offer discretionary account management service across a multiple of exchanges available to the clients taking into consideration the issues of compliance, operational efficiency; (iii) seamless strategy execution: providing a full-fledged discretionary account management from buying, selling, asset allocation, monitoring, rebalancing and final reporting. SIGNIFICANCE: Hindered by the complex virtual assets landscape, investors are always averse to the unforeseeable risks beyond their investment perspectives; discretionary account management services offer a bespoke solution by shifting the burden of regulatory and technical complexities from investors to professional market practitioners who are more conversant in the newly evolving regime. Enforcement News 10. SFC Imposes Restriction Notices on Money Concepts Entities The SFC took decisive action on 18 February 2025, issuing restriction notices to Money Concepts (Asia) Holdings Limited (“ MCAH ”) and its subsidiary, Money Concepts Asset Management Limited (“ MCAM ”). The SFC cited potential risks to the investing public and the broader public interest as key drivers for the restrictions. Restriction in Place: Both firms are barred from engaging in any licensed regulated activities—directly or via agents—without prior SFC approval, until further notice. SIGNIFICANCE: The move stems from concerns over their honesty, reliability, integrity, and competence in conducting regulated activities, raising doubts about their fitness to remain licensed. 11. SFC Launches Insider Dealing Case Against Wong Pak Ming The SFC kicked off criminal proceedings against businessman Wong Pak Ming on 27 February 2025, at the Eastern Magistrates’ Court. Wong, former chairman and controlling shareholder of Transmit Entertainment Limited (formerly Pegasus Entertainment Holdings Limited), faces charges of insider dealing tied to the company’s shares. Case Details Allegations : Wong is accused of counselling or procuring someone to trade Pegasus shares between 25 August 2017 and 17 October 2017, while possessing inside information about the company. Background : Pegasus, listed on Hong Kong’s Growth Enterprise Market in 2012 and later moved to the Main Board in 2015, was renamed Transmit Entertainment in March 2018 after Wong sold his controlling stake. Legal Basis : Insider dealing violates section 291 of the Securities and Futures Ordinance (“ SFO ”) . SIGNIFICANCE: No plea has been entered yet. The case is adjourned to March 27, 2025. Wong was released on $200,000 cash bail with conditions to stay at his provided address, notify police of any residence change, and inform the SFC 24 hours before leaving Hong Kong.This prosecution highlights the SFC’s ongoing efforts to combat market misconduct. [End of ComplianceOne Newsletter –February 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 - March 2024 The topics discussed in this monthly newsletter are as follows: 1. Reminder to submit audited accounts and BRMQ 2023. 2. Hong Kong sees surge in investment fund net inflows: SFC Quarterly Report 3. Circular to licensed corporations and management companies of SFC-authorized funds-Shortening of the US securities transaction settlement cycle to T+1 4. Insurance Authority signs Memorandum of Understanding with the Hong Kong Police Force to strengthen collaboration MARKET NEWS 1.Reminder to submit audited accounts and BRMQ 2023 We would like to remind you, our valued clients, that pursuant to section 156(1) of the Securities and Futures Ordinance (Cap. 571, laws of Hong Kong), licensed corporations and associated entities of intermediaries (the “Companies”) are required to submit their audited accounts and the BRMQ within 4 months after the end of each financial year to Securities and Futures Commission. The submission deadline for those Companies with financial year end on 31 December 2023 is 30 April 2024. Please prepare sufficient time to fill in the new version of BRMQ2023 which necessitates more preliminary readiness for completion. SIGNIFICANCE: Having noted that the SFC had published a circular dated 23 Dec 2022 as a reminder to the licensed corporations and their associated entities that a revised BRMQ would be adopted. The reminder explicitly stated " LCs and AEs are urged to review and familiarise themselves with the revised questionnaires, which are included in Annex 1 and Annex 2 to this circular, start gathering the newly required data and information and make system enhancements where necessary. " Therefore, the LCs should take a pragmatic and serious attitude to this revised BRMQ, and spare more time than before in order to prepare and consolidate the relevant documentations in fulfilling the stated requirements. 2. Hong Kong sees surge in investment fund net inflows: SFC Quarterly Report On 8 March 2024, the SFC published its latest Quarterly Report to provide operational and financial highlights for the quarter ending 31 December 2023. Key summaries of the Report are as follows: (1) For the asset management regime: there recorded a 92.9% increase year-on-year (YOY) in 2023 with inflows of funds up to HKD87.1 billion into Hong Kong. As at 31 December, the assets under management of the 914 Hong Kong-domiciled funds increased 4.9% YoY as well. (2) For Mainland-Hong Kong Stock Connect: the average daily northbound trading rose 8% YoY in 2023 whilst average daily southbound trading remained steady. Shares traded in both Mainland and Hong Kong stock markets showed increases in 2023 with both northbound and southbound trading recorded with net buys last year, amounting to RMB43.7 billion and RMB292.9 billion. (3) For listing market: the SFC approved rules amendments for GEM listing reforms by introducing a new route for GEM listing and a streamlined mechanism for Main Borad transfer. A total number of 270 listing applications were processed for 2023, with average processing time reduced by 11% YoY to 108 business days. (4) For the SFC license regime: licence applications received rose 16% YoY for the whole year. Of the 56 licensed corporation applications approved by the SFC in the last quarter 2023, Type 9 (asset management) and Type 4 (advising on securities) regulated activities accounted for 88% and 66% (because a licensed corporation may have multiple SFC licenses). And six VATPs applications were received during the quarter. (5) For combating fraudulent activities, the SFC has also established a joint working group with the Hong Kong Police SIGNIFICANCE: Despite the deemed atmosphere from successive news of closures of licensed corporations, findings of the quarter reports though suggest the pessimism pervading through the year is a bit exaggerated. As mentioned in the previous Newsletters, it is not hard to notice that the HKSAR government, the regulatory bodies and the financial institutions all collaborated to preserve the status of Hong Kong as an international financial centre, particularly in its devotion to stay ahead in the development of virtual assets regimes while other competitors are still hesitant. 3. Shortening of the US securities transaction settlement cycle to T+1 A circular was published on 27 March 2024 that effective from 28 May 2024, the standard settlement cycle for transactions in US securities will be shortened from two business days after the trade date (T+2) to one business day after trading (T+1) (the Transition). Since the timeline for completing post-trade settlement process will be compressed, the SFC is of the view that the impact of the Transition may be particular significant for market participants in Hong Kong due to time zone differences. The SFC has notes of reminder to the following entities: Licensed corporations (LCs): (1) Be aware of the cross-currency transaction: since the standard settlement cycle for foreign-exchange transactions remains at T+2, the LCs should be aware of the potential liquidity mismatches and settlement failure from such difference in settlement cycles; (2) To ensure the availability of staff to complete the post-trade settlement processes within the shortened timeframe; (3) To proactively communicating with the clients who are potentially affected by the Transition in order to raise their awareness and facilitate their preparation for a smooth transition. Management companies of the SFC-authorised funds (Funds): (1) The Funds should pay attention to such transition if they have considerable exposures to US securities; (2) Carefully assess the impact of the Transition including any potential mismatches in settlement cycles relating to the arrangement of subscription money from non-US markets to purchase US securities; (3) Making appropriate arrangement such as expanding pre-funding facilities and allocating additional staff to handle the compressed settlement timeline; (4) Give early alerts to investors about any intended changes arising from the Transition which may have material influence on the Funds and investors, and to take remedial actions accordingly. SIGNIFICANCE: The amendment was proposed in February 2023 in the Securities and Exchange Commission (SEC) in US under “ Amendment to Rule 15c6-1 " where it stated that standard settlement cycle for most broker-dealer transactions be shortened from T+2 to T+1, and would be effective on 28 May 2024; obviously it takes more than two years for the brokers to equip themselves in business operation and settlement process in order to ensure a seamless transition. Given the scale of the US stocks markets, brokers in Hong Kong should take this Transition seriously to assure themselves of a seamless and secured transition as well particularly in the eyes of other competitors in the vicinity in SEA. 4.Insurance Authority signs Memorandum of Understanding with the Hong Kong Police Force to strengthen collaboration The Insurance Authority (IA) and the Hong Kong Police Force (HKPF) entered into a Memorandum of Understanding (MoU) on 27 March 2024, setting out the framework between the IA and the HKPF to cooperate and provide guidance on matters such as case referrals, joint investigations, mutual investigative assistance and the exchange of information. During the ceremony, the signing of the MoU between the IA and HKPF have affirmed the joint commitment from both organizations to ensuring the insurance market is underpinned with integrity and trust so that it can continue to make contribution to maintaining Hong Kong’s position as a vital international financial centre. The Assistant Commissioner of Police (Crime), Ms Chung Wing-man, expressed in the ceremony the enthusiasm about the milestone collaboration, stating that the power of the alliance extended far beyond the immediate benefits to the two organisations. It will strengthen the resilience of the regulatory framework and hence, the protection of members of the public. SIGNIFICANCE: It is worth noted that the HKPF and the SFC had already entered into a MoU on 25 August 2017 to formalise and further strengthen co-operation in combating financial crime; and another MoU on 16 September 2022 between HKPF and the Financial Reporting Council (FRC) with the aim of enabling full collaboration and co-operation in combating commercial crimes ad illicit activities in relation to financial reporting and audit quality in Hong Kong. The HKPF has demonstrated to the public of its strong determination to ensure collaboration with other regulatory organizations to establish a full-fledged coverage network to combating financial crimes in order to safeguard the status of Hong Kong as a safe international financial centre. 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 – March 2023 ComplianceOne Newsletter – March 2023 The topics discussed in this monthly newsletter are as follows: 1. Hong Kong Regulators Welcomed UBS AG's Acquisition of Credit Suisse AG 2. LME Warehouse Delivered Stones Instead of Nickel 3. OKX Expressed Interested in Virtual Asset Service Provider Licence in Hong Kong 4. SFC Published Quick Licensing Guides for Family Offices and Private Equity Firms 5. SFC Issued Quarterly Report to Highlight the Latest Development in the Financial Industry 6. HKEX Commenced to Test the New FINI Settlement Platform to Shorten the IPO Period 7. SFC Banned Citigroup Global Markets Asia Limited’s Former Responsible Officer for 10 Years 8. SFC Reprimanded and Fined City International Futures (Hong Kong) Limited for AML Breaches 9. SFAT Affirmed SFC Decision to Reprimand and Fine I-Access Investors Limited over System Failure 10. SFC Banned Wong Kwun Shing for Life for Stock Manipulation 11. Five More Arrested in SFC and ICAC Joint Operation against Sophisticated Ramp-and-dump Syndicate 12. Court Reaffirmed SFC’s Restriction Notices related to a Suspected “Ramp-and-dump” Scheme MARKET NEWS 1. Hong Kong Regulators Welcomed UBS AG’s acquisition of Credit Suisse AG The SFC and the HKMA welcomed the announcements made by the Swiss Financial Market Supervisory Authority (FINMA) and the Swiss National Bank (SNB) on 20 March 2023 of the acquisition of Credit Suisse AG (CS) by UBS AG. It was stated that the operations of CS merely comprised a branch under the HKMA and two licensed corporations under the SFC, and were maintained intact to continue as usual in its banking and trading services. The total assets of CS amounted to about HKD100 billion which represented an insignificant portion of less than 0.5% of the entire banking sector in Hong Kong. The Hong Kong banking sector is resilient with strong capital and liquidity positions with total capital adequacy ratio of locally incorporated authorized institutions stood at 20.1% at the end of 2022, well above the international minimum requirement of 8%. SIGNIFICANCE: It was quite a big deal for two large Swiss Banks, one of UBS to take over its long-time rival Credit Suisse for about USD3.2 billion, to prevent CS from being liquidated which once was an emblem of pride of Switzerland. Another point of interest was the controversial way the FINMA rescued this giant bank by writing down the USD17 billion of AT1 bond to zero value, an administrative tact dumbfounded many bondholders as the Swiss government was rescuing a renowned historical bank at the expense of its prestige in the long-established heritage of the banking industry! 2. LME Warehouse Delivers Stones Instead of Nickel Nickel delivered by London Metal Exchange (LME) approved warehouse firm turned out to be stones, and nine warrants or 54 tonnes of nickel valued around USD1.3 million were cancelled. The incidence shaken the confidence in nickel trades, and was shocking to traders in the LME system and over the world. Warehousing sources said that the substitution of stones for nickel would have been discovered if the standard operating procedures of checking the weight of bagged nickel briquettes before warranting for delivery had been properly observed. In the wake of the incidence, the LME, a subsidiary of the HKEX, reacted by immediately reminding the operators to strictly comply with the weighting requirements of all metals. Again, the LME postponed nickel trading during Asian hours by a week to March 27 after the reported incidence. SIGNIFICANCE: It is really ironical that a well-established LME system, now a full-owned subsidiary of the HKEX, a renowned exchange in an international financial centre as Hong Kong, would have come up with such embarrassing incidence; not to mention the nickel crisis in March last year where the trading of nickel had been suspended, unprecedented for decades ever since 1988 when prices jumped to a record above USD100,000! 3. OKX Expressed Interest in Virtual Asset Service Provider licence in Hong Kong OKX, the second largest crypto exchange and a Web3 technology company, announced on 28 March 2023 that is would apply for a licenses of the virtual asset service provider (VASP) through its entity set up in Hong Kong, namely for the Type 1 & 7 licenses under the SFC regime of the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Ordinance 2022 to be in effect from 1 June 2023. Lennix Lai, OKX Managing Director of Global Institutional, had stated that regulation and licensing were key to the success of the crypto and Webs sector, and OKX found immense potential in Hong Kong in its strong determination to establish a robust regulatory framework and furnish a niche for licensing the virtual asset industry. Another crucial character, Bing Zhao, OKX General Counsel, also reiterated the commitment of OKX to collaborate with the SFC through the application process, and was keen to demonstrate how conversant and versatile OKX was in fulfilling the robust standards under the prevailing licensing regime. SIGNIFICANCE: While jurisdictions over the world are tightening their grips on crypto exchanges, HK is taking a contrarian and proactive approach to formulate a licensing regime for attracting potential VASP applicants, and through their participation the efforts to develop Hong Kong as a financial virtual asset hub has been further leveraged. 4. SFC Published Quick Licensing Guides for Family Offices and Private Equity Firms The SFC published quick reference guides on 22 March 2023 to help family offices, private equity firms, hedge fund managers and overseas and Mainland industry professionals better understand the SFC’s licensing regime. “ By providing useful, important and frequently sought information to prospective licence applicants via the quick reference guides, the SFC encourages more family offices and private equity businesses to operate in Hong Kong, ” said Mr Keith Choy, the SFC’s Interim Head of Intermediaries. SIGNIFICANCE: As stated in the circular, the SFC has actually been working on the licensing regime of family offices and private equity firms long before with consultations since 2020 as shown in the circulars below: (1) Circular on licensing obligation of family offices (7 Jan 2020) (2) Circular to private equity firms seeking to be licensed (7 Jan 2020) (3) Family Office FAQ (8 Sep 2020) 5. SFC Issued Quarterly Report Highlight the Latest Development in the Financial Industry The SFC published its latest Quarterly Report on 7 March 2023 which summarised key developments from October to December 2022 amidst increasing business activity. It was reported with a great number and wider variety of investment products were authorised or registered; twelve new open-ended fund companies were also registered during the quarter. As at 31 December, the assets under management of Hong Kong-domiciled funds increased 11% from three months earlier, to US$165.2 billion, and the number of firms licensed for asset management grew to 2,069! The report also showed the priority policy areas of the SFC in advocating the climate-related risks in fund governance as well as the authorization of the first two virtual asset futures exchange-traded funds in Hong Kong. SIGNIFICANCE: One thing encouraging here is that despite the challenging financial environment during the COVID-19 months, there were still 1,470 license applications filed to SFC during the quarter most of them pertaining to individuals while the rest to corporations. 6. HKEX Commenced to Test the New FINI Settlement Platform to Shorten the IPO Period HKEX ( 00388.HK ) announced that it will commence FINI (Fast Interface for New Issuance) external user testing on 1 March 2023, to prepare for the official rollout of FINI later this year. HKEX is striving to achieve an intended launch of FINI to June, far behind its initial schedule in the fourth quarter last year. The FINI is a new platform which streamlines and digitalises Hong Kong’s IPO settlement process, reducing the time gap between an offering being priced and the new share be listed for trading on the Exchange from existing “T+5” to “T+2” (the IPO pricing time), in aspiration to align with other exchanges towards a T+1 settlement. Materials and guidelines for user acceptance test (UAT) have been circulated to market participants to get ready for the coming rehearsals. Data provided by the Exchange showed that market participants, banks, sponsors and intermediaries were assigned with designated time slots for testing due to large number of registrations and had already started the rehearsal. SIGNIFICANCE: Despite a long-awaited launch of the FINI, it is never too late as it demonstrates the commitment of the HKEX to adhere to innovation as it always declares, and the keen responses from market practitioners validate the HKEX is heading a right direction. ENFORCEMENT NEWS 7. SFC Banned Citigroup Global Markets Asia Limited’s Former Responsible Officer for 10 Years The SFC had banned Mr Philip John Shaw, a former responsible officer (RO), board member and Head of Pan-Asia Execution Services of Citigroup Global Markets Asia Limited (CGMAL), from re-entering the industry for 10 years from 4 March 2023 to 3 March 2033. The disciplinary action followed the SFC’s earlier sanctions against CGMAL for serious regulatory breaches and internal control failures which, in the view of the SFC, were attributable to Shaw’s failure to discharge his duties as an RO and senior management. SIGNIFICANCE: “ The disciplinary action against Shaw also underscored the SFC’s determination to hold errant senior management accountable for their firms’ failures. This is imperative for driving changes in the culture and behaviour of intermediaries, ” added by Mr Christopher Wilson, the SFC’s Executive Director of Enforcement. As stated in the news, with Shaw’s incompetence as an RO and his connivance with misconduct of his subordinates, a culture of chasing revenue at the expense of client interests and basic standards of honesty within CGMAL had been engendered. 8. SFC Reprimanded and Fined City International Futures (Hong Kong) Limited for AML Breaches The SFC has reprimanded and fined City International Futures (Hong Kong) Limited (CIFHKL), now known as VERCAP Financial Services Limited, $100,000 for failures in complying with anti-money laundering and counter-terrorist financing (AML/CFT) and other regulatory requirements between March 2016 and October 2018. The SFC’s investigation found that CIFHKL did not conduct any due diligence on the customer supplied systems (CSSs) used by its clients for placing orders. Other key findings were: (1) amounts of deposits made into two client accounts were incommensurate with their declared financial profiles; but no proper follow-up enquiries or assessment of ML/TF risks been made; (2) no effective ongoing monitoring system to detect suspicious transactions and trading patterns typical of ML/TF risks; (3) internal systems and controls were inadequate and ineffective, and failed to ensure compliance with the AML Guideline. SIGNIFICANCE: It seems amount to a "rule of thumb" that the use of CSS definitely poses uncontrollable and unavoidable ML/TF risks, and camouflages suspicious transactions under its system which the LC could have no access to monitor or assess for its compliance. 9. SFAT Affirmed SFC Decision to Reprimand and Fine I-Access Investors Limited over System Failure The SFC had reprimanded and fined I-Access Investors Limited (I-Access) $600,000 for breach of the Code of Conduct after the Securities and Futures Appeals Tribunal (SFAT) upheld the SFC’s disciplinary action against it The SFC’s disciplinary action arose from I-Access’s response to an internal system test conducted by HKEX on 6 April 2015. It was found that I-Access in turn disseminated such data in its own system when they should have been disregarded, resulting in the incorrect triggering of 27 stop loss sell orders by 12 clients and their executions on the following trading day. SIGNIFICANCE: It was ridiculous and frivolous that a LC having infringed the interests of the clients, and did not take the initiative to promptly notify the affected clients of the incident and make imminent remedial compensations. The SFC is of the view that I-Access was in breach of the Code of Conduct by failing to act with due skill, care and diligence, and in the best interests of its clients. 10. SFC Banned Wong Kwun Shing for Life for Stock Manipulation The SFC has banned Mr Wong Kwun Shing, a former licensed representative of Convoy Asset Management Limited (CAML), from re-entering the industry for life; having found that he was involved in a stock manipulation on the Growth Enterprise Market of HKEX. Apart from actively navigating and facilitating the manipulation process with the manipulators and clients’ orders through his ex-colleague to prop up the prices of the target shares, Wong would also collect the cash rebates from the manipulators and pay his ex-colleague for onward distribution to his clients. It ended up with the clients of his ex-colleague suffering huge losses. SIGNIFICANCE: Even worse was that Wong obfuscated the true story by giving false and misleading answer amid the SFC investigation. Such misfeasance of Wong rendered him a life-long ban to the industry which was the price he had to pay! 11. Five More Arrested in SFC and ICAC Joint Operation against Sophisticated Ramp-and-dump Syndicate Five key members of an active ramp-and-dump syndicate were arrested in a follow-up joint operation of the SFC and ICAC, involving illicit gains of HKD191 million. The five arrestees were key members of the syndicate, including qualified accountants and senior executives of a number of Hong Kong-listed companies. Whereas another eight people, including a suspected ringleader and other key members of the syndicate, were arrested on suspicion of corruption in an earlier joint operation mounted in November 2022. Amid the intensive investigation by the SFC and the ICAC, another criminal offences including perverting the course of public justice and obstructing the SFC’s investigations. SIGNIFICANCE: The concerted efforts of the SFC and the ICAC in the joint operation demonstrated to the public again the determination to tackle corruption and market misconduct, and zero tolerance of any wrongdoers and illegal acts which are core values to uphold the integrity of the financial markets which Hong Kong cannot afford to relinquish. 12. Court Reaffirmed SFC’s Restriction Notices related to a Suspected “Ramp-and-dump” Scheme The Court of First Instance has dismissed a judicial review application against the SFC relating to restriction notices issued in an ongoing investigation into a suspected “ramp-and-dump” scheme. The judicial review application sought to challenge the restriction notices issued on 9 February 2021 by the SFC to freeze assets of two individuals in various trading accounts held with certain licensed corporations, which were supposedly to be related to a suspected“ramp-and-dump” scheme. As Mr Christopher Wilson, the SFC’s Executive Director of Enforcement, had said: “ We welcome the Court’s decision reaffirming the SFC’s statutory powers to issue restriction notices to freeze suspects’ assets held with licensed corporations. This enables the SFC to take front-loaded actions to protect investors and the public interest .” For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or call us at (852) 39550277 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk To unsubscribe, please simply reply with “ I don’t like to know more about Compliance ”.

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter – August 2022 ComplianceOne Newsletter – August 2022 The topics discussed in this monthly newsletter are as follows: 1. Regulators to enhance Stock Connect trading calendar 2. Hong Kong Securities and Futures Commission (SFC) sets out the way forward for green and sustainable finance 3. Creating and accumulating wealth with diversified fund structures—by Financial Services and the Treasury Bureau 4. SFC reprimands and fines TC Capital International Limited $3 million and suspends its responsible officer for sponsor failures 5. SFC commences MMT proceedings against hedge fund manager over alleged false trading 6. SFC issues restriction notice to a broker to freeze client account linked to suspected insider dealing 7. Retail investors convicted and fined for illegal short selling MARKET NEWS 1. Regulators to enhance Stock Connect trading calendar The SFC and the China Securities Regulatory Commission (CSRC) today jointly announced their in-principle approval for changes to the trading calendar for Stock Connect. The changes would apply to both northbound and southbound trading. Because different public holidays are observed in the Mainland and Hong Kong, investors currently cannot trade through Stock Connect on certain days. The proposed changes enable Stock Connect trading on any day when both the Mainland and Hong Kong markets are open, even when the corresponding settlement day falls on a public holiday Significance: As Mr. Ashley Alder, the SFC’s Chief Executive Officer had said: “ Stock Connect provides a unique opportunity for Mainland and Hong Kong investors to participate in each other’s market. The enhancements will allow investors to better manage their portfolios through Stock Connect and support the further expansion of the programme. ” 2. SFC sets out the way forward for green and sustainable finance The SFC published its “ Agenda for Green and Sustainable Finance ” to set out further steps to support Hong Kong’s role as a regional green finance center with key focus on: a) Enhancing corporate disclosures; b) Monitoring the implementation of and enhancing existing measures relating to environmental, social and governance (ESG) funds and expectations for fund managers; and c) Identifying an appropriate regulatory framework for any proposed carbon markets. As a speech of Mr. Ashley Alder, the SFC’s Chief Executive Officer, has made it explicit that: “ Climate change and sustainability are cross-border issues which require a coordinated response, and Hong Kong has a critical role to play as a regional and international green finance center. The SFC will continue to lead global regulatory development in this space to ensure that domestic policies and international standards are aligned. ” Significance The SFC as a robust regulatory body in HK plays a pro-active role in navigating and allocating more resources to attaining an intricated balance between global economic growth and the preservation of environment from climate risk given the existing scenario where the private sectors, if left to its own device, would not be so dedicated to implementing the measures in a sound and efficient manner than otherwise spearheaded by a regulatory body a like SFC. 3. Creating and accumulating wealth with diversified fund structures Last year, the assets managed by Hong Kong stood at HK$35.5 trillion (US$4.6 trillion), which was 12 times the size of our GDP. The HKSAR has been striving to develop Hong Kong as a premier international asset and wealth management center in the Asia-Pacific region; and among the measures taken is the introduction of new fund structures, which includes the set-up of open-ended fund company (OFC), is of prior significance. Ever since commencement of the OFC regime, 88 OFCs have been set up or re-domiciled to Hong Kong, and the number of registered OFCs recorded a more than four-fold year-on-year increase as at end July this year. To further enhance the attractiveness of the OFC regime, a three-year grant scheme was launched in May 2021, and subsidies have been provided to 52 OFCs set up in/re-domiciled to Hong Kong. Significance: The HKSAR plays a proactive role in developing the asset and wealth management regime, given the advantages enjoyed by OFC as follows: (1) Tax concession (2) Cost-savings (3) Easy management (4) Facilitate international distribution (5) Cater for public/private funds (6) Eligible Products under the Cross-boundary Wealth Management Connect Scheme in the Greater Bay Area and ETF Cross-listing Scheme Coupled with the introduction of the grant scheme, and the fact that OFCs are qualified products under the Cross-boundary Wealth Management Connect Scheme, it is expected that market practitioners would be delighted to show great interest among the industry in this new fund structure and anticipate further growth of the OFCs ENFORCEMENT NEWS 4. SFC reprimands and fines TC Capital International Limited $3 million The SFC has reprimanded and fined TC Capital International Limited (TC Capital) $3 million for failing to discharge its duties as the sponsor in the listing application of China Candy Holdings Limited (China Candy). It is found that TC Capital failed to: a) conduct reasonable due diligence on the third party payments made on behalf of two top customers of China Candy; and b) maintain proper records of the due diligence work allegedly done in relation to the listing application Although TC Capital was aware of the third party payments, their RO and transaction team members did not make any further queries and assess if such payment method was legitimate or not; and no follow-up due diligence was conducted. Apart from the lack of proper records in due diligence, there was also no audit trail showing that TC Capital had turned its mind to the issues at all. Significance: It demonstrates to the market practitioners again the crucial importance of due diligence on any third party payments which are signal of red flags that necessitate serious attention and follow-up remedial action from licensed corporation in the eyes of SFC. 5. SFC commences MMT proceedings against hedge fund manager over alleged false trading The SFC has commenced proceedings in the Market Misconduct Tribunal (MMT) against Mr. Jonathan Dominic Iu Wai Ching, a responsible officer of Tarascon Capital Management (Hong Kong) Limited (Tarascon), for allegedly engaging in false trading in the shares of two Hong Kong-listed companies. The SFC alleges that Iu executed matched trades between the brokerage accounts of the hedge fund and of his mother between August and September 2014, which had the effect of creating a false or misleading appearance of active trading or of the price for dealings in the listed shares concerned. 6. SFC issues restriction notice to a broker to freeze client account linked to suspected insider dealing The SFC has issued a restriction notice to Bright Smart Securities International (H.K.) Limited (Bright Smart), prohibiting it from disposing of or dealing with certain assets held in a client account that holds proceeds of suspected insider dealing. Significance: The SFC considers that the issue of the restriction notice, which prevents dissipation of proceeds of suspected insider dealing held in the account, is desirable in the interest of the investing public or in the public interest. 7. Retail investors convicted and fined for illegal short selling The Eastern Magistrates’ Court today convicted Ms. Chan Siu Tai and her sister Ms. Janice Chan after they pleaded guilty to illegal short selling in prosecutions brought by the SFC. The sisters were fined a sum of $114,000 and ordered to pay the SFC’s investigation costs. For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================== The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or call us at (852) 39550277 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk To unsubscribe, please simply reply with “ I don’t like to know more about Compliance ”.

The topics discussed in this monthly newsletter for Licensed Corporations 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 – October 2022 ComplianceOne Newsletter – October 2022 The topics discussed in this monthly newsletter are as follows: 1. The SFC Considers Authorization of Virtual Asset Futures Exchange Traded Funds ( VA Futures ETFs ) 2. HKEX Announces the Launch of Core Climate - A New International Carbon Marketplace 3. Court orders Sound Global ( 0967.HK ) Chairman to Purchase Shares from Investors 4. SFC Reprimands and Fines Asia Research & Capital Management Limited HK$1.75 million and Bans its MIC of Compliance 5. Former Account Executive of Fullbright Securities Limited Convicted of Securities Fraud 6. Court Convicted Wong King Hoi for Obstruction of SFC's Search Operation 7. SFC Bans a Former Licensed Staff of China Galaxy for Violation of Company's Staff Dealing Policy MARKET NEWS 1. The SFC Considers Authorization of Virtual Asset Futures Exchange Traded Funds (VA Futures ETFs) The SFC would consider authorizing exchange traded funds (ETFs) that obtain exposure to virtual assets (VAs) primarily through futures contracts for public offering in Hong Kong. Unlike before in 2018 NOV where only professional investors are allowed to have exposure to VAs, and having witnessed the rapid evolution of the VA landscape; a Joint Circular in January 2022 between the SFC and the HKMA has announced that licensed and registered intermediaries are allowed to offer VA Futures ETF to retail investors in HK. For reasons that it has been observed that there are meaningful developments in the VA ecosystem recently and some of the initial concerns over VA Futures ETFs have become increasingly manageable and could be adequately addressed with proper safeguards, disclosure and investor education. SIGNIFICANCE: Despite the recent developments and innovations, the exposure to spot VAs are still restricted to professional investors only. Whereas VA Futures ETFs seeking for SFC authorization have to meet applicable requirements including the followings: (i) Management companies should demonstrate at least three years’ proven track record with relevant experience. (ii) Only VA futures traded on conventional regulated futures exchanges are allowed currently, only Bitcoin futures and Ether futures on CME are allowed. (iii) The management company is expected to adopt a flexibility investment strategy in the portfolio composition (iv) Disclosure of the product key facts statement is required. (v) Intermediaries are obliged to comply with the applicable requirements under the Code of Conduct when distributing the derivative products. (vi) Investor education should be provided. 2. HKEX Announces the Launch of Core Climate - A New International Carbon Marketplace HKEX announced on 20 OCT 2022, the launch of the Core Climate , a new international carbon marketplace that helps connect capital and resources with climate-related opportunities in Hong Kong, Mainland China, Asia and beyond. The HKEX is committed to provide an easy-access, one-stop, integrated carbon marketplace that includes trading, custody and settlement functions for investors and project owners across the climate value chain, contributing to the realization of global carbon neutrality goals. What is Core Climate: (i) Trading platform : investors can source, purchase, settle and retire voluntary carbon credits in phases. (ii) Trusted marketplace : provides best-in-class market infrastructure and effective, transparent and certified carbon credits and instruments that corporates and investors can use to deliver on their commitment to net zero. (iii) Global community : Core Climate builds Hong Kong’s position as a leading global finance center connecting capital with climate-related products and opportunities in vicinity and around the world. SIGNIFICANCE: HKEX is demonstrating to the world that Hong Kong , as an international financial center, also entrusts with itself the obligation to committing to building a more low-carbon and healthy community to our next generations. As CO-Head of Markets Glenda So said: " We see Core Climate developing to become essential infrastructure, part of our highly connected international ecosystem, matching investment capital with new climate projects, technologies and business models. This will accelerate the shared Net Zero transition and secure a sustainable future for coming generations .” ENFORCEMENT NEWS 3. Court orders Sound Global ( 0967.HK ) Chairman to Purchase Shares from Investors The Securities and Futures Commission (SFC) has obtained an order in the Court of First Instance against the chairman and executive director of Sound Global Ltd. (Sound Global), Mr. Wen Yibo, to purchase shares held by the other shareholders of the company at a price to be determined by the Court – after he was found to have orchestrated a scheme to falsify the company’s bank balances and fabricated relevant bank statements and balance confirmations. And the Court also issued a disqualification order for 12 years against Wen. As Mr Ashley Alder, the SFC’s Chief Executive Officer said: “ The share purchase order represents an important milestone in the SFC’s efforts to protect the investing public from wrongful conduct by management of listed companies and our determination to deploy our full range of regulatory tools to tackle market misconduct and uphold market integrity .” 4. SFC Reprimands and Fines Asia Research & Capital Management Limited HK$1.75 million and Bans its MIC of Compliance The SFC has reprimanded and fined Asia Research & Capital Management Limited (ARCM) HK$1.75 million for failures relating to its non-compliance with the European Union’s short selling reporting requirements (EU Regulation) and to promptly notify the SFC of its material regulatory breaches. The SFC has also banned Mr. Billy Wong Yim Chi, ARCM’s former Head of Compliance and Operations and Manager-In-Charge (MIC) for Compliance for two months from 10 October 2022 to 9 December 2022 for reason that ARCM’s failures to comply with the EU Regulation were directly attributable to Wong’s failure to discharge his duties as ARCM’s MIC for Compliance and a member of its senior management during the material time. The SFC also considers Wong’s conduct fell short of the standard required of him as MIC for Compliance. SIGNIFICANCE: This case seems to be the first instance since the introduction of the MIC regime that a person entrusted with MIC function is sanctioned by the SFC for his incompetence in discharging the duties for the licensed corporation. It conveys a signal to the licensed corporations and the MIC candidates that non-licensed personnel taking the roles of MIC are supposed to assume the same degree of accountability in the eyes of the SFC. 5. Former Account Executive of Fullbright Securities Limited Convicted of Securities Fraud The Eastern Magistrates’ Court has convicted Mr. Danny Fung Kwong Shing, a former account executive of Fulbright Securities Limited, of the offences of engaging in fraud or deception in transactions involving securities under the Securities and Futures Ordinance (SFO) in a criminal prosecution brought by the SFC. Fung admitted that he had employed a fraudulent scheme of effecting transactions between two accounts, one of his friend and one of his client (without proper authorization from the client), rendering the client a loss and his friend a profit instead. Fung was remanded in custody pending sentence on 27 October 2022 after pleading guilty to all 25 charges; and was later sentenced to two-and-a-half months’ imprisonment following his conviction. 6. Court Convicted Wong King Hoi for Obstruction of SFC's Search Operation The Eastern Magistrates’ Court has convicted Mr. Wong King Hoi (aka「 摸魚 」) after he pleaded guilty to a charge of obstructing employees of the SFC in the execution of a search warrant . When the SFC executed the search warrant at Wong’s residence, Wong allegedly delayed in giving the SFC search team access to his residence and attempted to dispose of four objects including two mobile phones and two notebooks. Wong was remanded in custody pending sentence on 10 November 2022. 7. SFC Bans a Former Licensed Staff of China Galaxy for Violation of Company's Staff Dealing Policy The SFC has banned Ms. Tang Shiyi, a former licensed staff of China Galaxy International Securities (Hong Kong) Co., Limited and China Galaxy International Futures (Hong Kong) Co., Limited (collectively, CGI), from re-entering the industry for 10 months from 29 October 2022 to 28 August 2023. The disciplinary action follows an SFC investigation which found that between July 2019 and February 2021, Tang: (i) failed to obtain CGI’s approval to open and maintain two securities trading accounts with an external brokerage firm and conducted 148 personal trades through the said accounts; (ii) dealt in a stock on CGI’s restricted list; (iii) engaged in day-trading on two occasions, in violation of CGI’s staff dealing policy; (iv) concealed the above securities trading accounts by providing a false and misleading declaration to CGI. The SFC considers that Tang’s conduct, which was willful and dishonest, calls into question her fitness and properness to be a licensed person . SIGNIFICANCE: Tang circumvented CGI’s internal control policies and her conduct prevented CGI from monitoring and reviewing its employees’ trading activities to ensure compliance with laws and regulations. It reminds the licensed persons that taking a frivolous attitude in complying with internal policies will not be construed by the SFC as a lesser breach as compared to violation of prevailing governing rules. For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or call us at (852) 39550277 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk To unsubscribe, please simply reply with “ I don’t like to know more about Compliance ”.

The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Insurance Newsletter – June 2025 The topics discussed in this monthly newsletter are as follows: 1. CPD Compliance Reporting Guidelines for 2024/2025 2. IA Conducts Undercover Inspections of Un-Licensing Activities 3. IA Enforces Retrospective Compliance with Broker Companies under SROs Regime 4. IA Bans Two Intermediaries for Fabricating Policies Regulatory News 1. CPD Compliance Reporting Guidelines for 2024/2025 The IA has released comprehensive guidelines in a circular dated 6 June 2025, outlining the Continuing Professional Development (“ CPD ”) compliance reporting procedures for individual licensees and appointing principals for the Assessment Period 2024/2025 (1 August 2024 to 31 July 2025). This newsletter highlights the essential details. Key Deadlines Deadline What to do before the deadline 31 July 2025 Individual licensees must complete their required CPD hours 30 September 2025 Individual licensees must submit CPD Declarations to the IA via Insurance Intermediaries Connect (“ IIC ”) or to their appointing principals 31 October 2025 Appointing principals must report the CPD compliance status of their appointed licensees to the IA How to accessing CPD Information via IIC Individual Licensees : Log into IIC > select "CPD Requirement and Compliance Status" from the left menu to check required CPD hours and compliance status. Appointing Principals : Use IIC Supervisor or Admin accounts to search individual licensees’ CPD status or download CPD Lists under the "Report" option, selecting "CPD hours required for the Assessment Period 2024/2025." Reporting Procedures Individual licensees can submit CPD Declarations in two ways: 1. Direct Submission via IIC: Deadline : 30 September 2025. Before 31 July 2025 : Submit only if CPD hours are fully completed (status: "Yes"). 1 August to 30 September 2025 : Submit regardless of compliance status ("Yes" or "No"). 1 October to 15 November 2025 : Update submissions for those initially reporting shortfalls ("No") with rectified status. 2. Submission via Appointing Principals: Licensees submit CPD Declarations to principals by 30 September 2025 . Principals verify and report to the IA via IIC by 31 October 2025 . CPD Requirements and Penalties Minimum CPD Hours : 15 hours, including 3 hours on "Ethics or Regulations," except for travel agents with restricted scope licenses (3 hours total). Penalties : Shortfall < 8 hours : $600 fine per hour, must be rectified by 31 October 2025, or face a 3-month suspension (continuing until resolved) and potential license revocation. Shortfall ≥ 8 hours : $600 fine per hour, immediate 3-month suspension (continuing until resolved), with possible revocation if unresolved. Non-submission by 30 September 2025 : May trigger an IA investigation for fitness and propriety; false declarations risk license revocation and a 12-month ban. SIGNIFICANCE: The IA notes a rise in CPD compliance from 90% (2021/2022) to 99% (2023/2024) and urges full compliance in 2024/2025 to uphold professional standards in Hong Kong’s insurance market. For further assistance, email cpd@ia.org.hk (general inquiries) or licensing@ia.org.hk (IIC-related matters). Market News 2. IA Conducts Undercover Inspections of Un-Licensing Activities The IA has recently taken proactive measures to protect the interests of policyholders and uphold the integrity of the insurance industry. Ms. Maria Tsui, Head of the Enforcement Department, highlighted the IA’s increased focus on street sales activities in Tsim Sha Tsui, which have raised concerns due to a surge in the number of sales personnel conducting promotional activities in the area. On a weekend in early June 2025, the IA conducted a targeted surveillance operation in Guangdong Road, Tsim Sha Tsui. Undercover officers, acting as mystery shoppers, engaged with sales personnel to gather detailed information about these street sales practices. The findings from this operation have been shared with the relevant insurance companies to address any identified issues and prevent future non-compliance. Passersby witnessed suspected IA’s Undercover Inspections ( Source: Social Media – 3 May 2025 ) IA’s Guidelines related to MCV Unlicensed referrers In May 2024, IA issued Circular which outlines key principles to regulate referral business models for licensed insurance broker companies. This circular focuses particularly on long-term insurance products and clients from Mainland China, referred to as Mainland China Visitors (MCV). Its primary goal is to prevent unlicensed selling practices within the insurance industry. Unlicensed referrers are restricted to introducing potential clients to licensed insurance brokers. They are explicitly prohibited from providing regulated advice, explaining insurance products, or engaging in any sales activities related to insurance products. Such sales activities must only be conducted by individuals or entities holding a valid license from the IA. Undertaking these actions without proper licensing is illegal and carries significant consequences. Violations of these regulations can lead to criminal charges, especially in regions like Mainland China, where insurance laws are strictly enforced. Furthermore, non-compliance with the IA’s guidelines may result in severe disciplinary measures for licensed entities. These measures include, but are not limited to, suspension of licenses, substantial fines, and public reprimands. SIGNIFICANCE: Ms. Maria Tsui emphasized that the Enforcement Department is strengthening its monitoring capabilities to collect intelligence and detect any misconduct or harmful practices that could affect policyholders or tarnish the industry’s reputation. The IA is committed to early intervention, using public education and regulatory actions to deter wrongdoing before it escalates into systemic issues that could lead to severe disciplinary measures or criminal prosecution. In addition to on-the-ground surveillance, the IA is leveraging technology and data tools to monitor online activities and social media platforms for intelligence gathering. Recognizing the value of industry collaboration, the IA is also working closely with industry organizations to encourage the sharing of information and knowledge, further enhancing its monitoring effectiveness. Enforcement News 3. IA Enforces Retrospective Compliance with Broker Companies under SROs Regime On 2 July 2025, the IA has taken disciplinary action against two licensed broker companies for failing to comply with essential regulatory standards aimed at protecting policyholders. These cases highlight the importance of maintaining separate client accounts and securing adequate professional indemnity insurance. These violations breached guidelines under the three Self-Regulatory Organizations (“ SROs ”) and the current Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules (Cap. 41L) . Case 1: Century Investment Planning Limited Century Investment Planning Limited, a former licensed insurance broker company, received a public reprimand for the following breaches (incident occurred from April 2019 to March 2020): Failure to deposit client monies into a separate account on multiple occasions. Misuse of client funds. Delayed settlement of premiums payable to an insurer. Case 2: Unnamed Broker Company A second broker company was fined $12,000 for inadequate professional indemnity insurance (Incident took place in 2019): Miscalculation of required coverage under the SROs. Resulting in a shortfall of $11.8 million in coverage. No policyholders were harmed in either case, and both companies fully cooperated with the IA during the disciplinary proceedings. SIGNIFICANCE: The IA stresses that segregating client monies and maintaining sufficient professional indemnity insurance are non-negotiable requirements for insurance intermediaries. These safeguards are critical to ensuring policyholder security. The authority has made it clear that failure to comply will lead to proportionate disciplinary measures. 4. IA Bans Two Intermediaries for Favrucating Policies On 12 June 2025, the IA announced the ban of two insurance intermediaries, Ms. LEUNG Wai Mei (“ LEUNG ”) and Ms. Ip Ka Ying (“ IP ”), from acting as insurance intermediaries for 12 months and 21 months respectively. This disciplinary action was taken due to their unethical practice of creating bogus policies to meet sales targets. Details of the Misconduct Ms. LEUNG Wai Mei: Fabricated two policy applications by misusing a client’s personal information. She certified a fake proof of identity for her son and attempted to conceal her actions by changing her correspondence address. Ms. IP Ka Ying: Fabricated eight policy applications using personal details from clients and friends. Additionally, she fraudulently accepted exclusions of personal liabilities related to premises owned by two applicants. The IA has described these actions as "iniquitous and premeditated," highlighting that such misconduct severely damages the trust and professionalism expected of insurance intermediaries. SIGNIFICANCE: The IA stresses that segregating client monies and maintaining sufficient professional indemnity insurance are non-negotiable requirements for insurance intermediaries. These safeguards are critical to ensuring policyholder security. The authority has made it clear that failure to comply will lead to proportionate disciplinary measures. [End of ComplianceOne Insurance Newsletter – June 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