Hong Kong Announced a Proposal to Introduce a New Licensing Regime for Virtual Asset Trading Platforms
ISSUING AUTHORITY:
Securities and Futures Commission of Hong Kong
DATE OF ISSUANCE:
November 3, 2020
EFFECTIVE DATE:
Please see below
On November 3, 2020, the Hong Kong Financial Services and Treasury Bureau (FSTB) issued a Consultation Paper proposing a new licensing regime for virtual asset service providers (VASPs) (“Proposed Regime”) in order to implement the recommendations of the Financial Action Task Force (FATF).
Under the Proposed Regime, all VASPs, which trade any type of virtual asset, are required to apply for a license from Securities and Futures Commission (SFC) and are regulated under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (“AMLO”). Non-compliance would be a criminal offence.
The SFC would have the ability to assess licence applications, ensure compliance, monitor the firms’ daily operations, investigate any irregularities and enforce the rules.
Once the Proposed Regime is in place, all VASPs operating in Hong Kong or targeting Hong Kong investors would be regulated, supervised and monitored under one of two regimes: (1) the existing opt-in framework introduced by SFC last year, or (2) the Proposed Regime. Both regimes will impose the same regulatory standards, guaranteeing a level playing field for all operations.
The consultation period of the Consultation Paper will end on 31 January 2021. Taking into account the views and comments received and subject to progress in the preparatory work, the FSTB aims to introduce a bill into the Legislative Council in 2021.
Reference:
Fintech: the regulatory response to evolving challenges Keynote address at Hong Kong FinTech Week
Hong Kong Proposes to Shorten IPO Settlement Time
ISSUING AUTHORITY:
Hong Kong Exchanges and Clearing Limited
DATE OF ISSUANCE:
November 16, 2020
EFFECTIVE DATE:
Please see below
On November 16, 2020, Hong Kong Exchanges and Clearing Limited (HKEX) published a Concept Paper seeking market feedback on its proposal to comprehensively modernise and digitalise Hong Kong’s IPO settlement process (“Proposal”).
Under the Proposal, HKEX will introduce a new IPO settlement platform, Fast Interface for New Issuance (FINI), enabling IPO market participants, advisers and regulators to interact digitally and seamlessly on the many steps that comprise the end-to-end IPO settlement process.
The key benefit of the Proposal is to shorten IPO settlement cycles. By modernising both the logic and the infrastructure of the Hong Kong IPO settlement, the FINI is expected to shorten the time gap between IPO pricing and trading from its current average of more than five business days (“T+5”) to as little as one business day, the next business day after pricing (“T+1”).
FINI will also provide a user-friendly platform for brokers, share registrars, IPO sponsors, lawyers, underwriters and distributors to share information and coordinate workflows during the offering initiation, subscription, pricing, allotment, payment, regulatory approval and stock admission processes.
In addition, HKEX’s Listing Division and the Securities and Futures Commission will use FINI to oversee the settlement process for each IPO as it happens, providing certain acknowledgements and approvals that may be required during the process directly via the new platform.
The launch date of FINI will be subject to market support and readiness, and is envisaged to take place no earlier than the second quarter of 2022.
Reference:
HKEX seeks views on New Proposal to Modernise Hong Kong IPO Settlement Process
Court of Appeal decision prevented subcontractor from advancing claims in arbitration not previously notified to contractor
ISSUING AUTHORITY:
Court of Appeal, High Court of Hong Kong
DATE OF ISSUANCE:
October 16, 2020
EFFECTIVE DATE:
October 16, 2020
In Maeda Kensetsu Kogyo Kabushiki Kaisha v Bauer Hong Kong Ltd [2020] HKCA 830, the Court of Appeal dismissed the Plaintiffs’ appeal and upheld the first instance decision that the Plaintiffs (“Sub-contractor”) are precluded from pursuing a claim on a different contractual basis from that stated in its earlier notice to the contractor, by virtue of the clear and unambiguous wordings used in the notice provisions of the sub-contract entered into between the Sub-contractor and the contractor (“Notice Provisions”).
It was provided in the Notice Provisions that, where the Sub-contractor wishes to pursue a claim for additional payment or loss and expense, a notice or submission, which covers the contractual basis of its claim, full and detailed particulars and the evaluation of the claim, has to be given to the contractor, and such requirement has to be strictly complied with.
Despite the clear language used in the Notice Provisions, the Sub-contractor had raised an alternative claim in the arbitration for additional payment against the contractor, being a “like rights” claim, which was not mentioned in any of the notices or letters to the contractor. It was argued by the Sub-contractor that this additional contractual basis should be allowed to be added as the contractor was aware of the factual basis underlying the claim.
The CA held that on proper interpretation of the Notice Provisions, the Sub-contractor was precluded from amending or substituting the contractual basis stated in its earlier notice delivered to the contractor. The Notice Provisions are put in place to achieve the commercial purpose of finality and ensure that the Sub-contractor’s claim could be passed up the line and submitted to the employer on time. In the premises, the CA considered that there is no basis for a court or tribunal to rewrite the plain language of the provisions.
Reference:
Maeda Kensetsu Kogyo Kabushiki Kaisha v Bauer Hong Kong Ltd [2020] HKCA 830
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