FSTB publishes details of three major initiatives announced in Hong Kong FinTech Week 2023

Following the announcement of three major initiatives during Hong Kong’s latest FinTech week to foster the application of FinTech and the development of Hong Kong as a key financial market place by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, the Financial Services and the Treasury Bureau (FSTB) has now released a corresponding document to provide more details on those initiatives. Each one is briefly summarized below; for more detailed comprehensive information, please refer to the original document issued by the FSTB.
(1) The development of an integrated fund platform for the distribution of retail investment funds in Hong Kong: The new fund platform will be operated by the Hong Kong Exchanges & Clearing (HKEX). It aims to facilitate the entire distribution chain of retail funds, making it easier for market participants to offer fund products to their clients and, in turn, providing investors with a broader range of investment options. The first phase of the platform is expected to launch at the end of 2024. The new platform will encompass a new communication hub to connect fund managers, distributors, transfer agents, trustees/custodians for efficient data and message exchange in fund transactions. It will also entail a business hub to allow managing fund subscriptions, redemptions, order routing, and payment/settlement, and offer nominee services to support corporate actions and operational aspects. Finally, investors will be allowed to access the platform to receive transparent information on fund investment options.
(2) Supporting e-CNY applications: Mr. Hui and the FSTB welcome applications for e-CNY (digital currency issued by China’s central bank – or digital Remnibi) to benefit both inbound Mainland visitors to Hong Kong and outbound Hong Kong residents visiting the Mainland. Companies like Octopus Cards Limited (OCL) and Bank of China (Hong Kong) (BOCHK) are exploring various e-CNY applications to facilitate transactions for both groups. For instance, OCL has enabled Hong Kong residents to purchase e-CNY hard wallets in Shenzhen through self-service machines using the Octopus mobile app. On the other hand, BOCHK is offering e-CNY services that allow Mainland visitors to pay retailers in Hong Kong and Hong Kong residents to top up their e-CNY wallets from their local bank accounts. Moreover, the FSTB would welcome further innovation in using e-CNY for cross-border retail payments in accordance with local rules and regulations and re-emphasizes its support to financial institutions and corporations fostering such developments.
(3) Promoting real economy related applications and innovations by the Virtual Assets (VA) and Web3.0 sector, and further developing the regulatory
framework: The FSTB notes that efforts are currently underway to establish a regulatory environment that balances innovation within the virtual assets (VA) and Web3.0 sectors while mitigating associated risks. The focus is on fostering innovations that directly impact the real economy and fortifying the regulatory framework governing VA-related activities. In this context, the Securities and Futures Commission (SFC) has recently issued guidelines for tokenized securities activities, including guidelines as regards the Commission’s expectations pertaining to investor protection. The government further plans to expand regulations beyond VA trading platforms and and to issue consultations on stablecoin issuer legislation. Additionally, the Hong Kong Monetary Authority (HKMA) is currently working on a guidance that aims to support banks in digital asset custodial services as far as risk management and asset protection are concerned.