News Update:

The Hong Kong Fintech Promotion Blueprint – The Acceleration of Adopting Emerging Financial Technologies

28 April 2026

Introduction

The Hong Kong Monetary Authority (“HKMA”) has released a comprehensive Fintech Promotion Blueprint in February 2026 setting out concrete measures to push Hong Kong’s banking sector from broad, basic use of digital tools into deeply embedded, sophisticated financial technology across core operations.

From “All Banks Go Fintech” to Advanced Adoption

The Blueprint builds on the HKMA’s “Fintech 2030” strategy and the earlier Fintech Promotion Roadmap, which helped banks digitise front‑to‑back operations under the “All Banks Go Fintech” initiative. Comparing data from 2022 to 2025, 95% of surveyed banks – including all retail banks – had adopted fintech for end‑to‑end digitalisation, with particularly high uptake in Regtech (from 83% to 97%), Insurtech (28% to 57%), Greentech (26% to 45%) and Wealthtech (43% to 52%). Banks are also increasing investment: 36% have allocated more than 30% of their technology budgets to fintech, 95% have planned to maintain or increase these levels over the next three years, and half have expected budget growth of 10 – 20%.

Yet the HKMA notes that most institutions still deploy fintech as standalone tools which neither fundamentally re‑engineer processes nor integrate into core operating models, thereby limiting return on investment and slowing more ambitious adoption. The new Blueprint therefore shifts the emphasis from breadth to depth, aiming to move the industry towards “Advanced” maturity, where fintech is embedded in day‑to‑day operations and delivers tangible business value.

Five Pillars: A.I., DLT, HPC, Data and Cyber

The Blueprint is structured around five priority enablers and foundations: Artificial Intelligence (“A.I.”), Distributed Ledger Technology (“DLT”), High‑Performance Computing (“HPC”), Data Excellence, and Cyber Resilience.

Artificial Intelligence

Hong Kong’s financial sector is entering a new phase of A.I., progressing from traditional models used for fraud detection and credit scoring towards Generative A.I. (“GenA.I.”) and agentic A.I. GenA.I. is already powering applications such as anti‑money laundering systems that analyse transaction narratives and communications, and conversational agents that autonomously handle customer queries, supported by the HKMA’s GenA.I. Sandbox. Agentic A.I., emerging since 2025, enables autonomous monitoring, decision‑making and execution, for example real‑time fraud prevention that can freeze accounts or multi‑agent loan approval processes that coordinate risk assessment, identity verification and disbursement.

However, institutions report significant barriers: limited revenue‑generating use cases, concerns around accuracy and “hallucinations” (plausible yet factually incorrect outputs), integration with fragmented legacy systems, decentralised data, and acute talent shortages that combine technical, regulatory and business skills. Smaller banks lag behind their larger peers in adoption, with only 63% of small firms using A.I. compared with 83% of large firms. The Blueprint prioritises industry‑wide knowledge exchange, targeted upskilling, expanded sandbox use and shared infrastructure to enable safe, scalable and impactful A.I. adoption.

Distributed Ledger Technology

DLT is framed as a driver of tokenisation and next‑generation payments by providing shared, synchronised ledgers that support faster, more secure transactions and asset tokenisation. The Blueprint cites live examples including the HKSAR Government’s tokenised Green Bonds and the HKMA’s e‑HKD+ initiative, as well as Project Ensemble, a sandbox for cross‑boundary settlement in tokenised deposits, and the Supervisory Incubator for DLT.

Despite this progress, banks face heavy integration costs with legacy systems, interoperability and scalability constraints, smart‑contract and private‑key risks, difficulties in reversing fraudulent immutable transactions, and regulatory uncertainty over digital asset classification and smart‑contract enforceability. The HKMA therefore sets promotion priorities around sharing concrete integration strategies and commercially successful use cases, building production‑level skills (especially in smart contracts), and working towards clearer standards on asset classification, security baselines and preferred network architectures to support scalable and interoperable deployments.

High‑Performance Computing

HPC – including supercomputing and quantum computing – is positioned as critical infrastructure for advanced modelling, A.I. and risk analytics. Supercomputers can already support intensive risk simulations, portfolio stress‑testing and quantitative trading strategy optimisation, while also providing compute for GenA.I. workloads, for example via Cyberport’s A.I. Supercomputing Centre. Quantum computing is highlighted for its potential in portfolio optimisation, scenario analysis, product pricing and fraud detection, but also for the threat it poses to current cryptography.

Adoption is hampered by high cost, lack of supporting infrastructure, energy and cooling demands, and specialised talent gaps, with some smaller banks not exploring HPC at all. The Blueprint therefore calls for shared supercomputing facilities, broader literacy on supercomputing and quantum concepts, and early integration of post‑quantum cryptography (“PQC”) to address “harvest now, decrypt later” risks.

Data Excellence

Data Excellence is identified as a core foundation for A.I., DLT and advanced risk management, but many banks struggle with incomplete and inconsistent datasets locked in fragmented legacy systems. Batch‑oriented mainframes, non‑standard formats and isolated repositories prevent unified customer views, real‑time monitoring and high‑quality model training, while growing volumes of unstructured and cross‑border data add complexity.

The Blueprint calls for structured programmes to share best practices in managing structured and unstructured data, governance frameworks for internal and external data use, and sector‑wide standards on interoperability, formats and validation to improve availability, quality and sharing of risk data.

Cyber Resilience

As advanced fintech deployments demand large, granular datasets, cyber and privacy risks intensify. The Blueprint highlights adversarial A.I. attacks (such as poisoned training data, prompt‑injection, and deepfakes), smart‑contract bugs and oracle manipulation in DLT, and quantum‑enabled cryptographic threats, compounded by multi‑layered third‑party supply chains in cloud, data and platform services. HKMA’s priorities include stronger governance of third‑party risks, sector‑wide sharing of threat intelligence and defensive practices, and  definition of baseline expectations for cyber standards in advanced fintech solutions.

Market Landscape: Adoption Progress and Pain Points

The Blueprint describes a rich fintech ecosystem in Hong Kong comprising fintech firms, financial institutions, regulators, investors, industry associations, academia and the public, all connected through platforms such as Fintech Connect, the FiNETech event series, the Commercial Data Interchange (“CDI”), GenA.I. Sandbox and the Supervisory Incubator for DLT. Government grants, the Digital Bond Grant Scheme, and Cyberport and HKSTP incubation programmes further de‑risk adoption and support solution development.

Despite this, the Tech Maturity Stock‑take identifies persistent barriers: 75% of banks cite high implementation costs, 73% highlight risks associated with new technologies, 71% struggle with integration into existing systems, 61% worry about data privacy and cybersecurity, and 59% report regulatory uncertainty and talent shortages. These challenges, especially for smaller institutions, reinforce the need for tactical and coordinated measures – the core focus of the new Blueprint.

Key Priorities: From Use Cases to Standards

Drawing on its research and engagement, the HKMA distils five priority directions that underpin the Blueprint’s design:

• For A.I., the priority is to move beyond internal pilots to advanced, customer‑facing use cases with measurable ROI, supported by proven case studies and connections to credible solution providers;
• For DLT, the focus is on embedding tokenisation, real‑time transactions and cross‑boundary settlements into business models, underpinned by clear standards for interoperability, asset classification and smart‑contract enforceability;
• For HPC, the Blueprint emphasises literacy, targeted education and clear integration pathways to prepare institutions for the post‑quantum era;
• For Data Excellence, the focus is to develop industry‑wide standards and guidance on managing diverse datasets and integrating external data sources for analytics, fraud prevention and risk modelling; and
• For Cyber Resilience, priorities include better governance of technology‑specific risks, especially third‑party risks, and collaborative programmes for sharing cyber risk intelligence and defensive practices.

These priorities feed into a Blueprint architecture with three strategic dimensions – (1) Ecosystem Collaboration, (2) Technological Advancement and (3) Talent & Outreach – each populated with concrete initiatives.

Blueprint Design 1: Ecosystem Collaboration

Beyond the flagship projects, the Blueprint sets out a series of ecosystem initiatives designed to increase connectivity and reduce search and coordination costs in the market:

• Fintech Cybersecurity Baseline: To streamline banks’ due diligence when onboarding fintech partners, HKMA will develop a standardised, industry‑led Fintech Cybersecurity Baseline for solution providers. This will define clear expectations on technological capabilities, operational readiness and security controls – with emphasis on emerging risks in A.I. and DLT – supported by guidance materials so providers can align their products. The baseline is designed to reduce misinterpretation of regulatory requirements, strengthen trust between banks and fintech firms, and lift cyber resilience across the ecosystem.
• Events and FiNETech: The HKMA will continue and expand conferences, FiNETech events and satellite activities to promote knowledge sharing on A.I., DLT, HPC, Data Excellence and Cyber Resilience, while showcasing global innovation and promoting Hong Kong as a leading international fintech hub;
• Hong Kong A.I. Fintech Map: A new publicly accessible directory will map A.I. and GenA.I. firms active in financial services, detailing their capabilities and use cases and integrating with Fintech Connect to make solution discovery more efficient; and
• Revamped Fintech Connect: The cross‑sectoral sourcing platform launched in 2024 will be enhanced with richer profiles of fintech providers and potential A.I.‑driven matching functionality, enabling banks to articulate problems and receive tailored solution recommendations. The HKMA will also explore linking platform registration to event participation to deepen engagement.

These measures are designed to transform current bilateral engagements into a more structured, data‑rich collaboration fabric that helps banks find credible partners and scale proven solutions more quickly.

Blueprint Design 2: Technological Advancement

Under the Technological Advancement dimension, the HKMA will deploy multiple content‑based and engagement‑based tools that translate complex technologies into implementable blueprints for banks:

• Quantum Preparedness Index: To help the sector prepare for quantum disruption, the HKMA will launch a Quantum Preparedness Index, starting with a baseline assessment of banks’ strategic awareness and operational readiness regarding quantum computing and PQC. This assessment will inform a “target index” and a transition roadmap, outlining concrete PQC and quantum computing projects and pilots to systematically raise quantum readiness, especially among small and medium‑sized banks.
• New Risk Data Strategy: Recognising that high‑quality risk data is essential to unlock the potential of A.I., DLT and HPC, the HKMA proposes a New Risk Data Strategy to foster collaboration, collect feedback and share best practices in data management. The strategy aims to enhance data infrastructure, enable smarter risk management and proactive insights, and broaden the scope of the HKMA’s Granular Data Reporting to cover more supervisory data, ultimately building a collaborative risk‑data ecosystem between banks, service providers and the HKMA.
• Publications: Building on prior guides and research, new in‑depth publications will cover A.I., DLT, HPC, Data Excellence and Cyber Resilience, drawing on surveys, interviews and case studies to highlight real‑world applications, risk management considerations and integration strategies;
• Industry Showcase Workshops: Hands‑on workshops will feature local experts and fintech firms demonstrating emerging technologies such as agentic A.I., tokenised assets and quantum computing, with follow‑up resources to support implementation and collaboration; and
• Digital Content: The HKMA will produce podcasts and video spotlights featuring expert discussions and case studies on topics such as A.I. bias mitigation, DLT–legacy interoperability and HPC’s impact on analytics and decision‑making.

These initiatives aim to turn abstract innovation narratives into practical, repeatable models that banks can adapt and deploy in their own environments.

Blueprint Design 3: Talent and Outreach

To ensure human capital keeps pace with the technology push, the Blueprint extends the HKMA’s talent and outreach agenda:

• Competency Development Support: To close A.I. and DLT skills gaps, the HKMA will explore the competency needs of fintech users in banks and develop practical tools that complement existing frameworks such as the Hong Kong Institute of Bankers’ Enhanced Competency Framework (“ECF”) – Fintech. With a strong focus on “human–machine interaction”, this initiative will support continuous learning via modular training resources, peer‑sharing platforms and skill‑progression guidance, building a more resilient, adaptable workforce ready to implement advanced fintech safely and effectively;
• Training Programme: Building on positive feedback from “All Banks Go Fintech”, the HKMA will roll out training modules across A.I., DLT, HPC, Data Excellence and Cyber Resilience, with a heavy emphasis on hands‑on exercises and real‑world scenarios, delivered via the Fintech Knowledge Hub;
• Competitions: New innovation competitions will focus on advanced use cases of GenA.I. and DLT, following the successful Green Fintech competitions of 2023 and 2025. They will encourage responsible innovation, attract global participation and help banks connect with leading solution providers; and
• Knowledge Repositories: A specialised repository within the Fintech Knowledge Hub will host technical artefacts such as GenA.I. prompt references and DLT smart‑contract designs tailored for finance, populated in collaboration with industry contributors.

These measures are intended to progressively raise the baseline of technical and practical competence across the industry, enabling institutions to adopt and govern sophisticated fintech safely.

Measuring Impact and Next Steps

To ensure the Blueprint translates into concrete results, the HKMA will monitor progress at both initiative and programme levels. Initiative‑level metrics will track engagement and behavioural changes, while programme‑level assessment will evaluate systemic progress across Ecosystem Collaboration, Technological Advancement and Talent & Outreach, allowing the HKMA to recalibrate actions as market conditions evolve.

The HKMA will kick off implementation with a FiNETech event on Data Excellence in the second quarter of 2026 and will continue to refine the initiatives through active engagement with banks, technology firms and other regulators. Ultimately, the Blueprint positions Hong Kong to move from foundational fintech adoption to strategic technological leadership, using targeted, tactical measures to accelerate the uptake of advanced, responsible financial technology across its financial industry.

Please contact our Partner Mr. Rodney Teoh for any enquiries or further information.

This news update is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.

We are delighted to announce the promotion of Kenneth Leung to the Partnership, a move that significantly strengthens our firm’s senior capabilities in financial regulation and dispute resolution.

Mr. Leung is a Hong Kong-qualified solicitor with over a decade of experience at the forefront of the region’s most complex legal challenges. His practice is defined by a sophisticated mastery of corporate and securities laws, where he seamlessly bridges the gap between contentious regulatory enforcement and high-stakes commercial litigation.

Renowned for his strategic precision, Mr. Leung regularly advises on matters involving fiduciary duties and civil fraud, providing robust advocacy in proceedings before the SFC, HKEX, and the High Court. He serves as a pivotal advisor to listed companies and licensed corporations, navigating the intricate regulatory landscapes and shareholder disputes that define the Hong Kong market.

The promotion of Mr. Leung will strengthen our firm’s capacity to deliver exceptional legal services to our clients amidst Hong Kong’s evolving regulatory landscape. His elevation underscores our commitment to excellence and ensures we remain at the forefront of the legal sector.

During the operation, authorities searched 14 locations and arrested eight individuals. Those arrested included senior executives from the implicated firms and a middleman. Investigators suspect that senior executives at the securities firms accepted bribes exceeding HK$4 million from the hedge fund’s owner. In return, they allegedly leaked confidential information about upcoming share placements by various Hong Kong-listed companies before the information was publicly announced.

Leveraging this confidential information, the hedge fund established short positions through short selling and short equity swap contracts. When the share placements were eventually publicised, the relevant stock prices dropped, allowing the hedge fund to allegedly make illicit profits of approximately HK$315 million.

The joint raid is the latest instalment of joint operations between the SFC and the ICAC, driven by the escalating complexity of financial crime and the necessity for a unified regulatory response. Historically, the SFC handled the administrative regulatory sphere, while the ICAC governed the criminal investigative sphere. However, this distinction has become increasingly permeable, formalized by a 2019 Memorandum of Understanding (“MoU”) and hardened through successive joint operations. Legal practitioners advising listed issuers, licensed intermediaries, and directors of listed companies must all understand the mechanics of this unified enforcement regime.

The Statutory Architecture

The efficacy of the joint operation model is predicated not on the merging of powers, but on their parallel and coordinated application. The 2019 MoU establishes a framework where the limitations of one agency are offset by the capabilities of the other. The current enforcement doctrine utilizes a “pincer movement” strategy to dismantle complex networks systematically.

• SFC Compulsory Powers: The SFC derives its investigative authority primarily from the Securities and Futures Ordinance (Cap. 571) (“SFO”). Under Section 183 of the SFO, the SFC can compel a person to attend an interview and answer questions, effectively abrogating the common law right to silence. A person cannot refuse to answer on the grounds that it might incriminate them.
• The Section 187 Safeguard: While the interviewee must answer, Section 187 of the SFO provides a statutory safeguard: if the person claims privilege against self-incrimination before answering, the answer is inadmissible against them in criminal proceedings. However, this “use immunity” is limited and does not extend to civil proceedings, the Market Misconduct Tribunal (MMT), or disciplinary actions.
• ICAC Enforcement Powers: Operating under the Independent Commission Against Corruption Ordinance (Cap. 204) and the Prevention of Bribery Ordinance (Cap. 201) (“POBO”), the ICAC possesses the power of arrest, the power to detain suspects for up to 48 hours, and the power to seize travel documents. Suspects interviewed by the ICAC are interviewed under caution, preserving their right to remain silent.
• Tactical Execution: In a typical “dawn raid”, the ICAC executes search warrants and arrests the primary targets, preventing flight or the destruction of evidence. Simultaneously, the SFC issues Section 183 notices to the suspect or their associates (e.g., brokers or accountants), compelling them to provide documents and answer questions. The intelligence gathered by the SFC provides a “roadmap” for ICAC investigators to obtain independent, admissible evidence.

The Evolution of Enforcement

The operationalization of the MoU has evolved from focusing on singular instances of corruption to targeting sprawling, multi-jurisdictional syndicates.

• The Formative Years: Sea Pearl and Jade Qilin (2021): The first major tests of the 2019 MoU occurred in the summer of 2021. Operation Sea Pearl targeted an IPO corruption scheme. The ICAC arrested a senior executive for offering bribes to an underwriter, while the SFC searched offices to secure the “paper trail” of the listing application. Operation Jade Qilin targeted a more complex scheme involving suspicious money lending. The syndicate allegedly bribed executive directors to approve sham loans that were defaulted upon, effectively looting the company’s assets. Five individuals were arrested.
• Ramp-and-Dump Schemes (2022): In 2022, the focus shifted to “ramp-and-dump” schemes, which fuse market manipulation with fraud and corruption. A landmark joint operation in November 2022 demonstrated the scale of this crackdown. Deploying nearly 200 officers to search 50 premises, the SFC and ICAC arrested eight people who utilized a complex cross-shareholding network of Hong Kong-listed companies to generate HK$191 million in illicit gains. Among those arrested are the suspected ringleader, the chairperson of a listed company, and three responsible officers of licensed brokers who allegedly accepted bribes to facilitate share placements for the scheme.
• The Tripartite Model (2023): In October 2023, the enforcement model expanded to include the Accounting and Financial Reporting Council (AFRC). This operation targeted listed companies suspected of falsifying HK$193 million in corporate transactions. Bringing the AFRC into the task force allows regulators to effectively target Public Interest Entity (PIE) auditors who may facilitate these crimes.
• Cross-Boundary Reach (2024): Operation Demarcation in August 2024 involved the SFC, the ICAC, and the Macao Judiciary Police, dismantling the assumption that utilizing Macao-based subsidiaries could shield syndicates from Hong Kong regulators.

Judicial Hardening and Strategic Preparation

The courts have responded to the surge in sophisticated financial crime with increasingly severe sentences. In May 2024, the Court of First Instance handed down the heaviest prison sentences for market manipulation since the enactment of the SFO, sentencing three defendants to terms ranging from 4 years and 4 months to 6 years and 8 months for their roles in manipulating shares of Ching Lee Holdings Limited.

In light of these developments, adopting a proactive defence strategy is imperative. Listed companies and financial institutions must prioritize the following:

1. Dawn Raid Readiness: When officers arrive, it is essential to verify the scope of the search warrants. Persons under investigation must be mindful of the distinct statutory obligations when interfacing with SFC and ICAC officers.
2. Digital Hygiene: Ensure that all data is preserved, as the destruction of evidence is a standalone charge that is diligently prosecuted. Legal advisors can assist persons under investigation with ascertaining what data may be covered under legal professional privilege and hence withheld from disclosure to the SFC and ICAC.
3. Navigating the Interview Matrix: As interviewees shall answer questions raised by the SFC during an SFC interview conducted pursuant to section 183 of the SFO, seeking legal advice from legal advisors prior to such interview is crucial to preserving the interviewee’s interests and avoid disclosing information beyond what is legally necessary. For ICAC interviews, any statements made should not be inconsistent with the answers given to the SFC, as any discrepancies may be regarded as an indication of dishonesty.

Conclusion

With enforcement actions becoming more frequent, complex, and punitive, financial advisory work must go beyond technical compliance and address the broader risks of financial crime and internal corruption. It is foreseeable that the frequency of joint operations conducted by regulators such as the SFC and the ICAC will only increase in the future. Surely, this is a potent development for maintaining an orderly and clean financial market. While these collaborations boost market integrity and investor confidence, they also create a high-stakes environment where financial participants must be acutely aware of their legal obligations and rights.

To discuss how we can assist you, please contact our Partner Rainbow Ip, Consultant Kenneth Leung or Associate Ronnie Tse.

This article is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.

For years, a common misconception has been that transferring funds to overseas jurisdictions might provide a safe harbour against domestic regulatory enforcement. A recent, unprecedented move by the Securities and Futures Commission (SFC) has emphatically shattered this illusion.

In a stark warning to individuals attempting to evade the regulatory perimeter, the SFC has successfully obtained a first-of-its-kind interim injunction from the English courts to freeze assets located in England and Wales, running parallel to a worldwide Mareva injunction obtained in Hong Kong.

This development signals a paradigm shift in the SFC’s enforcement strategy. Geographical borders are now less of a barrier to the SFC’s pursuit of enforcement actions.

Background: The Alleged “Home-Grown” Insider Dealing

On 12 February 2026, the SFC obtained a worldwide interim injunction order (the “HK Order”) from the Court of First Instance of Hong Kong under section 213 of the Securities and Futures Ordinance (SFO). The legal proceedings target Mr. Chan Ching Wa (“Mr. Chan”), a former Assistant Vice President of the Listing Regulation and Enforcement Department at Hong Kong Exchanges and Clearing Limited (HKEx), and two of his extended relatives, Mr. Lam Cho Man (“Mr. Lam”) and Mr. Chau Chi Kwong (“Mr. Chau”).

The SFC alleges that between June 2020 and March 2025, Mr. Chan abused his position to access confidential, price-sensitive information regarding at least 24 Hong Kong-listed companies prior to their public announcements. These companies notably include names such as SOHO China Limited, Ping An Healthcare and Technology Company Limited, and Lifestyle International Holdings Limited.

According to the SFC, Mr. Chan conducted insider dealing by trading the shares through securities accounts held by his relatives. He allegedly procured Mr. Lam to trade on his behalf. Mr. Lam also allegedly disclosed the insider information from Mr. Chan to Mr. Chau, who executed further trades. This is a classic, albeit easily traceable, method of evasion.

A First-of-its-Kind Cross-Border Injunction

While the alleged misconduct represents a serious breach of trust by an insider with “god’s-eye view” access to listing documents, the true watershed moment of this case lies in the SFC’s asset recovery strategy.

Because the three suspects had left Hong Kong and transferred their assets overseas, the SFC did not stop at securing the HK Order in Hong Kong. In a pioneering legal manoeuvre, the regulator commenced proceedings in England and Wales, successfully obtaining an interim injunction order (the “UK Order”) from the High Court of Justice Business and Property Courts, freezing the assets of Mr. Chan and Mr. Chau in England and Wales.

The HK Order and the UK Order prohibit the suspects from disposing of or diminishing the value of their assets both in Hong Kong and overseas (including England and Wales), up to a total value of approximately HK$4.3 million (HK$3,709,566 for Mr. Chan and Mr. Lam; HK$604,545 for Mr. Chau).

The SFC’s announcement can be viewed here.

The Cost-Benefit Analysis: A Resolute Statement of Intent

From a purely commercial perspective, the economics of this enforcement action are striking. Market observers and legal practitioners are keenly aware that the costs associated with instructing foreign counsel and commencing complex cross-border litigation in the English High Court may rival—if not eclipse—the HK$4.3 million currently frozen.ss

Why, then, would the SFC expend such significant resources for a relatively modest recovery?

This action is likely a strategic move designed to establish a powerful deterrent. By demonstrating its willingness to absorb exorbitant legal costs to pursue wrongdoers across common law jurisdictions, the SFC is establishing a firm precedent. The objective is to dismantle the psychological “firewall” relied upon by individuals who believe that relocating themselves or their wealth to popular destination countries like the UK immunizes them from Hong Kong’s regulatory reach.

Furthermore, this high-profile action serves to reinforce the integrity of Hong Kong’s financial markets, demonstrating that the regulator will decisively conduct “spring cleaning” and hold insiders, especially former HKEx officers with their extensive access to price-sensitive information, accountable to the highest standards.

Implications for Market Participants

The SFC’s successful deployment of cross-border judicial assistance carries profound implications:

• Global reach of Section 213: The SFC has proven its ability to weaponize section 213 of the SFO beyond domestic borders, leveraging international judicial frameworks to lock down assets globally.
• Vulnerability of offshore wealth: Wealth migrated overseas is no longer beyond the grasp of Hong Kong regulators. The English courts’ willingness to side with the SFC indicates that other common law jurisdictions may adopt similar collaborative stances.
• Effective surveillance capabilities: The SFC’s detection of trading anomalies, even when obscured through the accounts of extended family members (in this case, in-laws), highlights the sophistication of the regulator’s data analytics and market surveillance systems.

How Stevenson, Wong & Co. Can Help

The regulatory landscape is becoming increasingly borderless and aggressively policed. In this environment, relying on geographical distance or jurisdictional separation for protection is a flawed strategy.

Whether you are a licensed corporation, an executive, or an individual with multi-jurisdictional assets, proactive compliance and immediate legal counsel during the initial stages of any regulatory inquiry are critical.

Our regulatory and compliance team at Stevenson, Wong & Co. possesses extensive experience in dealing with complex SFC investigations, sections 213 and 214 proceedings. We routinely advise clients on:

• Responding to SFC statutory notices and investigations.
• Navigating the complexities of domestic and worldwide injunctions and other orders.
• Assessing, drafting and reinforcing internal compliance protocols to mitigate the risks of insider dealing and market misconduct.

To discuss how we can assist you, please contact our Ms. Rainbow Ip, Mr. Kenneth Leung or Mr. Ronnie Tse.

This article is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.

Recently, Nasdaq, with the approval of the U.S. Securities and Exchange Commission (SEC), made two landmark adjustments to the rules governing initial listings. These adjustments concern (i) the quantitative liquidity thresholds and (ii) Nasdaq’s authority to review and guard against potential market manipulation risks. For companies seeking a U.S. listing, this development signifies that Nasdaq’s admission criteria have evolved from a mere numerical checklist into a deeper compliance rationale.

With Nasdaq raising its market liquidity requirements and introducing new Interpretive Material IM-5101-3 (hereinafter “IM-5101-3”), which grants Nasdaq broader but limited discretionary authority, companies must now upgrade their listing preparation from a focus on meeting indicators to a systematic compliance project. In this new regulatory environment, applicants must not only satisfy more stringent financial and liquidity benchmarks but also proactively demonstrate that their governance structure, intermediaries, and offering arrangements possess resilience against market manipulation.

Significantly Higher Liquidity Thresholds: Building a “Safety Chassis” for Price Discovery

Nasdaq’s decision to raise the Market Value of Unrestricted Publicly Held Shares (MVUPHS) requirement aims to reduce the risk of price volatility and manipulation associated with thinly traded securities.

Effective 17 January 2026, Nasdaq has substantially raised the minimum liquidity thresholds for companies applying under the “Net Income Standard” or “Income Standard”, as follows:

• Nasdaq Capital Market (Rule 5505(b)(3)(C)): For listings under the “Net Income Standard”, the minimum MVUPHS will rise from US$5 million to US$15 million.
• Nasdaq Global Market (Rule 5405(b)(1)(C)): For listings under the “Income Standard”, the minimum MVUPHS will increase from US$8 million to US$15 million.

In its approval notice, the SEC emphasised that a robust public float is the cornerstone of effective price discovery. For listing applicants, this means the IPO offering size and allocation structure must be carefully designed to ensure that a verifiable and compliant free float is achieved on the first day of trading.

Institutionalising “Limited Discretion”: Extending Supervision to External Risk Factors

Beyond quantitative thresholds, the newly introduced IM-5101-3 explicitly grants Nasdaq a legal basis to reject a listing application on the grounds of public interest.

IM-5101-3 stems from Nasdaq proposal SR-NASDAQ-2025-104 and took effect on 19 December 2025. This rule was prompted by regulators’ observations that certain small-cap issuers experienced abnormal trading activity shortly after listing, often involving unidentified third parties disseminating investment tips on social media to manipulate share prices.

Under IM-5101-3, even where a listing applicant fully satisfies the quantitative criteria, Nasdaq may exercise its discretion based on a series of non-exclusive factors, including but not limited to:

• Jurisdictional Risk: Nasdaq may consider the locations and regulatory environments of the company and its key control persons, including the availability of legal remedies for U.S. shareholders, the existence of blocking statutes, data privacy or other laws impeding U.S. enforcement, the feasibility of conducting comprehensive due diligence locally, and the transparency of local regulators.
• Share Distribution and Concentration Risk: Nasdaq may review the allocation arrangements of underwriters, brokers, and settlement agents, referring to their prior distribution patterns to assess whether the expected public float at and following the IPO raises concerns regarding adequate liquidity or potential shareholder concentration.
• Management and Board Experience: Nasdaq may assess whether the board and management team have experience operating a U.S. public company and an adequate understanding of Nasdaq’s rules and disclosure obligations under U.S. federal securities laws.
• Going‑Concern Risk: Whether the company has recently received a going‑concern qualification from its auditors, and the adequacy of plans adopted to sustain ongoing operations.

In short, meeting the metrics no longer guarantees approval. Applicants must be prepared to clearly articulate and substantiate why their business and capital structure are not vulnerable to manipulation or compliance breakdown.

The Value of Professional Advisors: Core Indicators in Risk Assessment

Under Nasdaq’s revised framework, the roles of auditors, lawyers, underwriters, and other professional advisors as regulatory gatekeepers have become more critical than ever. Their track record, regulatory history, and past involvement in cases exhibiting abnormal trading behaviour are now key elements in Nasdaq’s risk assessment.

According to IM-5101-3, Nasdaq may not only scrutinise advisory institutions themselves but also consider the compliance history of their principals or newly formed affiliates, including whether they have been the subject of referrals or disciplinary actions by the Financial Industry Regulatory Authority (FINRA), the SEC, or other regulatory authorities.

Accordingly, selecting a professional team with proven Nasdaq listing experience, impeccable integrity, and proactive risk-screening capabilities is no longer a matter of cost alone – it constitutes the first line of defence in building regulatory confidence, reducing review uncertainty, and mitigating market-manipulation risks.

Project Management Logic Upgrade: From Compliance to Demonstrable Systems Engineering

Faced with these more granular regulatory standards, companies planning a Nasdaq listing should implement a reverse-scheduled compliance roadmap of 18 to 24 months.

Given Nasdaq’s potential for multiple rounds of inquiries on issues such as the source of MVUPHS, intermediary backgrounds, or cross-border enforcement feasibility, applicants should not expect the review process to conclude within a few weeks.

Preparations should begin early across the following dimensions:

• Governance Structure: Including board composition and the ratio of independent directors.
• Liquidity Design: Covering market-maker configuration and the proportion of freely tradable shares.
• Compliance Evidence Chain: Including revenue‑quality verification, audit working papers, and due diligence documentation.

Only by treating the listing process as a verifiable compliance system can a company respond convincingly when regulators exercise discretion and thereby significantly improve its prospects for first-round approval.

Conclusion

In summary, Nasdaq’s two recent rule changes, namely the increase in MVUPHS liquidity thresholds effective 17 January 2026, and the institutionalisation of limited discretion under IM-5101-3 effective 19 December 2025, send a clear signal of tighter and more sophisticated supervision.

This shift requires companies preparing for a U.S. listing to transition from mere metric fulfillment to a more comprehensive model of compliance substantiation and risk defence. Under the new regulatory framework, prospective issuers must not only meet higher entry thresholds but also proactively demonstrate, through experienced Nasdaq advisors, sound corporate governance, and transparent offering structures, their capacity to resist market-manipulation risks and maintain continuous compliance.

For companies with strong fundamentals, solid governance, and forward‑looking compliance awareness, the new rules, while raising the bar, also establish a more credible and selective platform. This, in turn, presents an opportunity to gain higher market trust and long-term capital recognition on the Nasdaq.

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Stevenson, Wong & Co. have recently acted for the father in an application for the return of child made under the Child Abduction and Custody Ordinance (Cap. 512, Laws of Hong Kong) and the Hague Convention on the Civil Aspects of International Child Abduction 1980 (“the Hague Convention”).  This case concerns an unusual issue regarding state and consular immunity.

The Court of First Instance handed down the judgment on 15 December 2025 and ordered the immediate return of the two children of the family to their habitual residence in the Czech Republic.  (See Secretary for Justice v SK & Another [2025] HKCFI 6345)

Case Background

The parties have two children born in 2012 and 2016 respectively. Following divorce proceedings in the United States, a U.S. court made a decision in 2022, granting joint legal custody of the children to the parties and primary physical custody of the children to the mother.  The mother was also allowed to relocate with the children to the Czech Republic in June 2022.  The U.S. decision in 2022 was subsequently recognised by the Czech Republic Court in 2024.

In 2025, the Mother was employed by the Ministry of Foreign Affairs of the Czech Republic (“the Ministry”) and was posted to Hong Kong.  She relocated the children to Hong Kong without the Father’s consent.  The Father then obtained an order from the U.S. Court granting him temporary legal and physical custody of the children and directing that the children shall attend the school in Czech Republic as last enrolled.

Through the Central Authority for the Czech Republic and the Central Authority for Hong Kong, the father requested the immediate return of the children to the Czech Republic.

The Mother’s Defence

The mother opposed the application on the following grounds:

• State immunity & consular immunity: The mother claimed that, as a consular officer, she was entitled to state immunity and consular immunity by virtue of Vienna Convention on Consular Relations 1963 and the Consular Relations Ordinance (Cap.557, Laws of Hong Kong), such that the Hong Kong Court has no jurisdiction over her.
• No wrongful removal: The mother further claimed that pursuant to the U.S. decision in 2022, she had sole decision-making authority regarding the children including their relocation and schooling.
• Grave risk of Children’s return: The return of the Children to Czech Republic would expose the Children to physical or psychological harm or otherwise place them in an intolerable situation

Court’s Findings

The Court rejected the mother’s grounds of opposition:-

• State and Consular Immunity: The Court held that arranging the relocation of children is a private domestic matter. It is neither an act performed in the exercise of “consular functions” nor an act of a “sovereign or governmental nature”, but merely the mother’s own choice. Consequently, diplomatic status cannot be invoked to shield a party from Hague Convention obligations. The Court also noted that the Czech Consulate-General had communicated to the Secretary for Justice that it expected the Mother to participate in the proceedings, further undermining the claim of immunity.
• Whether the removal was wrong: While the U.S. decision in 2022 granted the mother certain decision-making powers regarding the children’s education, such authority did not extend to relocating the children to another country for schooling. The parties were granted joint legal custody of the children, the unilateral removal of the children to Hong Kong is therefore wrongful.
• Whether there was a grave risk: The Court held that there was no basis to allege that the children would be exposed to physical or psychological harm or abuse under Article 13 of the Hague Convention.

The Court therefore ordered that the children be returned to the Czech Republic.  Due to the mother’s unilateral decision to bring the children to Hong Kong and her unreasonable conduct in the proceedings, she was ordered to pay for the children’s return air tickets and the father’s legal costs.

This decision provides important clarification on the limits of state and consular immunity, particularly in the context of family and child-related disputes. it also underscores the Hong Kong courts’ rigorous enforcement of international treaty obligations when navigating child abduction matters.

The father was represented by Stevenson Wong & Co, with the matter handled by Partner Calvin Lo. For further inquiries regarding this case or our services, please contact our Partner and Head of SW Private Client, Wendy Lam or Calvin Lo.