Business law digest

HONG KONG

Allen & Overy

ONE-YEAR TRANSITION FOR CRYPTO LICENCES

Following the collapse of crypto exchange FTX in 2022, Hong Kong’s Securities and Futures Commission implemented a new licensing scheme for virtual asset trading. This came into effect on 1 June 2023. All trading platforms must apply for a licence within one year to proceed with their businesses in Hong Kong, and are regulated in terms of suitability checks, good governance, enhanced due diligence, admission criteria and disclosures. The implementation of this licensing scheme fills the absence of regulations on virtual asset trading platforms that provide services to retail investors.

JAPAN

TRAVEL RULE FOR CRYPTO EXCHANGES

Japan has implemented laws that mandate crypto exchanges and other virtual asset service providers to collect and share identifiable information of customers and providers at each stage of a transaction. The travel rule started on 1 June. It was introduced to complement Japan’s framework and keep up with global crypto regulations as part of its anti-money laundering measures.

MALAYSIA

NATIONAL COMMITTEE FOR SUSTAINABILITY REPORTING

The Securities Commission Malaysia has set up a national-level advisory committee on sustainability reporting (ACSR) to support the implementation of sustainability disclosure standards to international standards. The ACSR will look into minimising the additional cost of reporting, and finding supporters to help implement the standards. After the country’s stock exchange, Bursa Malaysia, enhanced its sustainability reporting requirements in 2022, the ACSR adopted core pillars of the exchange’s improvements including governance, strategy, risk management, key metrics and targets.

IN NUMBERS

PHILIPPINES

SEC AND BOURSE WORK ON SHORT SALE RULES

The Philippine Stock Exchange’s (PSE) proposal to introduce short selling in the stock market has been approved by the Securities and Exchange Commission (SEC). SEC chair Emilio Aquino told The Philippine Star newspaper in late May that short selling could increase liquidity in the market. The PSE and SEC are now finalising the implementation process. This trading strategy is expected to attract more big funds and foreign investors, as it allows investors to bet on the decline of a stock’s price. This involves borrowing and selling shares, and then buying them back when the price falls, thereby profiting from the difference.

SINGAPORE

SGX TO LINK ETF WITH SHANGHAI EXCHANGE

The Singapore Exchange (SGX) has signed a memorandum of understanding with the Shanghai Stock Exchange (SSE) to roll out an exchange-traded fund (ETF) scheme with a master-feeder fund model. This allows multiple investors to invest in onshore and offshore “feeder” funds and, in turn, invest in a larger “master” fund. The collaboration came a year-and-a-half after SGX’s link-up with the Shenzhen Stock Exchange. The new ETF link is expected to attract more investors with more blue-chip companies in the SSE as the scheme will allow investors in both bourses to access feeder ETFs that link to locally listed ETFs on each other’s exchanges.

INCOME TAX AMENDMENTS IN THE PIPELINE

Singapore’s Ministry of Finance ran a public consultation on 33 proposed amendments to the Income Tax (Amendment) Bill 2023. A notable point was a proposed change aimed at taxing gains from the sale of foreign assets that are received in Singapore by businesses without local economic substance. The consultation ended on 30 June and the ministry will publish a summary of comments together with its response in August.

SOUTH KOREA

SIMPLIFIED FOREIGN INVESTMENT IN SECURITIES

The Financial Services Commission of South Korea has approved a revision bill of the Financial Investment Services and Capital Markets Act, which abolishes the foreign investors’ registration requirement from 14 December 2023. Foreign investors will no longer have to undergo a time-consuming paperwork and registration process to invest in locally listed securities. Foreign corporate entities and individuals can open investment accounts using their legal entity identifiers or passport numbers. Investors already assigned with a foreign investor ID can continue to use their registration number. Guidelines, revised rules on financial investment business and measures to improve foreign access to South Korean capital markets will be announced soon and come into effect together with the registration requirement’s abolition.

THAILAND

CENTRAL BANK LAUNCHES RETAIL CBDC PILOT

The Bank of Thailand launched its retail central bank digital currency (CBDC) pilot project to improve the efficiency of financial transactions. The trial runs from June to August and will involve up to 100,000 users. Users’ Thai baht can be converted into CBDC at the rate of 1:1 and used in retail and welfare payments through a mobile banking app and quick response code scanning. This pilot payment process is expected to ease the intensity of transactions made under the country’s PromptPay service, a real-time proxy payment service developed by Thai banks and Vocalink, a MasterCard company.