On 31 January 2023, the Hong Kong Monetary Authority (the “HKMA”) published a Conclusion of Discussion Paper on Crypto-assets and Stablecoins (the “Consultation Conclusion Paper”). This followed its earlier consultation by way of its discussion paper published on 12 January 2022 on the relevant proposals (the “Discussion Paper”) (see our news update on the Discussion Paper). Taking into account the feedback received, the HKMA will further proceed to bringing certain activities relating to stablecoins into the regulatory regime. The target implementation date of the regime will be by 2023/24 after considering various issues such as the volatility and risks of the stablecoins as well as the need to adopt the latest international recommendations and align Hong Kong’s regulatory regime in stablecoins with those in other major jurisdictions. ¹

Introduction

On 31 October 2022, the Securities and Futures Commission of Hong Kong (“SFC”) issued a circular regarding virtual assets (“VA”) ¹futures exchange traded funds (the “Circular”). The Circular sets out the requirements under which the SFC may consider authorising exchange-traded funds (“ETFs”) that obtain exposure to VAs primarily through futures contracts (“VA Futures ETFs”) for public offering in Hong Kong under sections 104 and 105 of the Securities and Futures Ordinance (“SFO”).
As noted in the Circular, the SFC is prepared to accept applications for authorisation of VA Futures ETFs. The SFC will keep in view and closely monitor the development of the VA market and its regulatory landscape regarding the appropriateness of authorisation of ETFs that invest directly in spot VAs.
The Circular was published soon after the Hong Kong government issued a policy statement on the development of VA (the “Policy Statement”) relating to, among others, non-fungible token issuance, green bond tokenisation, and e-HKD (see our news update on the Policy Statement here).

On 30 August 2022, our Partner Gordon Tsang and Associate Gary Kwok were invited by LexOmnibus to give a CPD course on the topic “Rules and Recent Developments on Special Purpose Acquisition Companies”.

Background

On 2 August 2022, The Securities and Futures Commission (the “SFC”) published an Agenda for Green and Sustainable Finance (the “Agenda”) outlining its further steps to support Hong Kong’s role as a regional green finance centre. The SFC will continue supporting the development of green and sustainable finance in Hong Kong and the transition to a greener economy through enhancing the quality of information available, increasing transparency and building trust for investors. The three main areas of focus are:

(1) Enhancing corporate disclosures;
(2) Monitoring the implementation of and enhancing existing measures relating to environmental, social and governance (ESG) funds and expectations for fund managers; and
(3) Identifying an appropriate regulatory framework for any proposed carbon markets.

1. Introduction

With increasing overseas operational activities coupled with more accommodating and flexible regulations regarding disclosure and registration procedures for issuing overseas bonds, there has been a rapid increase in offshore bond issuances from China in the past decade. These offshore bonds from PRC enterprises can be denominated in renminbi or other currencies (such as US dollars and euros), though US dollar bonds account for the largest portion. Furthermore, as shall further discussed below, they can be issued directly by Chinese domestic enterprises as well as their offshore subsidiaries or branches.

Background

We note that the Stock Exchange of Hong Kong (the “Exchange”) published an information paper (the “Information Paper”) back in April 2022 outlining the amendments to the Rules Governing the Listing of Securities on the Exchange (the “Rule Amendments”) to complement the Securities and Futures Commission’s (the “SFC”) new Code of Conduct¹ provisions on the conduct of issuers and intermediaries involved in book building and placing activities. As such, this article serves as an apt refresher of the rule amendments involved. The capitalised terms used herein shall have the same meaning as defined in the Information Paper.

The Rule Amendments apply to:

(a) a placing of Equity Interests² to be listed on the Exchange, including:

• (i) a placing in connection with a New Listing³ (whether by way of a primary listing or secondary listing); and
• (ii) a placing of Equity Interests of a class new to listing or new Equity Interests of a class already listed under a general or specific mandate; and

(b) a placing of listed Equity Interests by an existing holder of Equity Interests if it is accompanied by a top-up subscription by the existing holder of Equity Interests for new Equity Interests in the issuer.