Global Trustee and Fiduciary Services Bite-Sized Issue 1 2025

14 QUICK LINKS AIFMD CRYPTOASSETS EMIR FINTECH MIFID II/MIFIR MMF NBFI OPERATIONAL RESILIENCE SUSTAINABLE FINANCE/ESG ASIA IRELAND LUXEMBOURG NETHERLANDS NORTH AMERICA UNITED KINGDOM Global Trustee and Fiduciary Services Bite-Sized | Issue 1 | 2025 Greater Connectivity Driving Hong Kong’s Capital Markets Forward: SFC Quarterly Report Hong Kong’s capital markets have continued to reap benefits since the third quarter from the success of Connect schemes with the Mainland and breakthroughs in Middle East market connectivity, according to the SFC’s Quarterly Report published on 12 December 2024. Marking the tenth anniversary of the scheme, the Mainland-Hong Kong Stock Connect had notched up strong net southbound inflows up to end-November, amounting to RMB664.3 billion year-to-date and RMB3.2 trillion cumulatively. Driving the growth of the city’s exchange-traded fund (ETF) market, the enhanced ETF Connect boosted the number of eligible Hong Kong ETFs to 16 with a total market capitalisation of more than HKD300 billion. Cross-boundary Wealth Management Connect scheme recorded a more than 60% increase in southbound investment since its February enhancement. Under the Mainland-Hong Kong Mutual Recognition of Funds scheme, net subscriptions for Hong Kong funds amounted to RMB8.8 billion for the quarter. Swap Connect – the first derivative market connect – saw active investor participation, with daily transactions of renminbi interest rate swaps averaging RMB10 billion. Connectivity with the broader Asian markets also made strides with the landmark cross-listing of two Hong Kong ETFs on the Saudi exchange. Being the largest in the Saudi ETF market with a combined market capitalisation exceeding USD1.6 billion upon listing, the two feeder ETFs have been trading actively since their listing in late October. Other highlights in the quarterly report included: a. Hong Kong’s ETF market continued to grow, with the market capitalisation of ETFs up 34% year-on-year (YoY). They recorded net inflows of HKD6.3 billion in the quarter. Hong Kong- domiciled funds saw assets under management up 29.5% YoY to HKD1.67 trillion, with continued net fund inflows of about HKD34 billion in the quarter. The number of licensed asset managers jumped 24% YoY, while the number of open-ended fund companies also surged 132.6% YoY. b. The numbers of both corporate and individual licence applications received by the SFC increased in the quarter, up 56% and 23% YoY, respectively. c. The SFC is reviewing 15 licence applications from virtual asset (VA) trading platforms (11 deemed to be licensed) and is on track to license a few deemed operators this year under a swift licensing process. The market capitalisation of Asia’s first batch of VA spot ETFs listed in Hong Kong was up more than 70%with average daily turnover doubling from their launch in April to late November. d. A number of leading Mainland enterprises went public through IPOs in Hong Kong after the Mainland announced support measures in April. With the SFC’s approval, the Stock Exchange of Hong Kong streamlined the new listing vetting procedure. All market operations under severe weather trading were smooth on 14 November. Link to SFC Quarterly Report here MAS Revises Guidelines on Licensing and Conduct of Business for FundManagement Companies On 10 December 2024, the Monetary Authority of Singapore (MAS) revised its Guidelines on Licensing and Conduct of Business for Fund Management Companies (FMCs) (Guidelines SFA 04- G05) to include a new Appendix 5 setting out examples of conflicts of interest that can arise and good practices for mitigating these conflicts. The guidelines continue to emphasise the MAS’s expectation that FMCs ensure that conflicts of interest are managed in the best interests of their customers and that FMCs have a mechanism to identify and mitigate conflicts of interest that may arise. In addition, the assessment of the conflicts and measures taken to mitigate them should be documented by FMCs and made available to the MAS upon request. While the examples in Appendix 5 of the guidelines are broadly in the context of closed-ended private funds, the MAS has emphasised that these are not exhaustive or prescriptive, and FMCs may tailor the recommended practices according to their own business model, structure and/or types of funds.