Global Trustee and Fiduciary Services Bite-Sized Issue 5 2024

Global Trustee and Fiduciary Services Bite-Sized | Issue 5 | 2024 11 QUICK LINKS CYBERSECURITY DIVERSITY DORA ELTIF EMIR FINTECH FSB IOSCO SUSTAINABLE FINANCE/ESG UCITS ASIA EUROPE NETHERLANDS NORTH AMERICA UNITED KINGDOM Three-year Extension of Grant Scheme for OFCs and REITs On 26 April 2024, the Securities and Futures Commission (SFC) announced details of the three- year extension of the Government’s grant scheme to subsidise the setting up of open-ended fund companies (OFCs) and real estate investment trusts (REITs) in Hong Kong. The SFC says that for OFCs incorporated in or re-domiciled to Hong Kong and SFC-authorised REITs listed on the Stock Exchange of Hong Kong Limited, the extended scheme covers 70% of eligible expenses paid to Hong Kong-based service providers, subject to a cap of HKD 1 million per publicly offered OFC, HKD 500,000 per privately offered OFC and HKD 8 million per REIT. The extended scheme will open for applications starting from 10 May 2024 to 9 May 2027 on a first-come-first-served basis. The SFC will update the frequently asked questions and the grant application form in light of the extension. The SFC says that market participants are welcome to consult it about the extended scheme before making an application. Link to SFC Announcement here Link to Detailed Eligibility Criteria of the Scheme here SFCWelcomes CSRC’s Announcement of Five Measures on Capital Market Cooperation with Hong Kong On 19 April 2024, the Securities and Futures Commission (SFC) welcomed the five measures announced by the China Securities Regulatory Commission (CSRC) to further enhance the Stock Connect and to support Hong Kong’s strengthening of its status as an international financial centre. Specifically, the SFC says that the measures include: i. Expanding the scope of eligible exchange-traded funds (ETFs) under the Stock Connect; ii. Incorporating real estate investment trusts (REITs) into the Stock Connect; iii. Supporting the inclusion of RMB-denominated stocks into southbound Stock Connect; and iv. Enhancing the scheme of mutual recognition of funds; and (v) supporting the listing of leading Mainland companies in Hong Kong. The announcement came following the recent issuance of the State Council’s guideline in promoting the high-quality development of the capital markets, strengthening regulation and forestalling risks. The consensus on these initiatives also came after rounds of discussions between the CSRC and the SFC. The Mainland and Hong Kong stock exchanges and clearing houses, under the guidance of the two securities regulators, have also had extensive communications and are actively working on the implementation details. The SFC says it is pleased to note that the Hong Kong Exchanges and Clearing Limited has reached an agreement with Shanghai Stock Exchange and Shenzhen Stock Exchange to expand the scope of eligible ETFs under Stock Connect which will further enrich investment options for investors in both markets. Link to SFC Announcement here SFC/HKMA Issue Joint Circular to Intermediaries On the 18 April 2024, the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) issued a joint circular to intermediaries that contained the findings of the concurrent SFC/HKMA Thematic Review of the Distribution of Non-traded Investment Products. During the concurrent thematic review, the SFC and the HKMA identified some issues on intermediaries’ practices in performing product due diligence (PDD) and suitability assessment, providing information to clients and ensuring investment products are in the best interests of the clients. The intermediaries concerned were required to undertake remedial action to address the issues identified.