The Financial Institutions (Resolution) Ordinance (Ordinance), which sets out the framework for a cross-sector regime for the orderly resolution of financial institutions in Hong Kong, was passed by the Legislative Council (LegCo) on 22 June 2016. The Ordinance largely follows the legislative proposals introduced into the LegCo for consideration in December 2015 (see our earlier e-bulletin for an overview of such proposals).
The Ordinance will commence operation on a date to be appointed by the Secretary for Financial Services and the Treasury, following the passing of the necessary regulations to be made as subsidiary legislation under the Ordinance. The government has also indicated that it will, along with the Hong Kong Monetary Authority (HKMA), the Securities and Futures Commission (SFC) and the Insurance Authority (IA), maintain close liaison with the industry and the relevant stakeholders in the formulation of the relevant regulations, rules and codes of practice.
On 22 November 2016, the Financial Services and the Treasury Bureau of the Hong Kong government, in conjunction with the HKMA, the SFC and the IA, published a consultation paper in relation to the regulations on "protected arrangements" to be made under section 75 of the Ordinance, which are expected to become operational at the same time as the Ordinance is brought into operation.
An overview of the proposals under the consultation paper is provided in our e-bulletin of 6 December 2016. If you wish to discuss the proposals further, please contact William Hallatt, Alexander Aitken, Rachel Yu, or your usual Herbert Smith Freehills contact.
Filed under Asia, Hong Kong
On December 1, 2016, the Senate unanimously passed a bill to extend the Iran Sanctions Act of 1996 (the "ISA") for 10 years by a 99-0 vote, after it had passed the House of Representatives by a similarly wide margin of 419-1. President Obama is expected to sign the bill into law, despite his administration's easing of sanctions against Iran under the Joint Comprehensive Plan of Action ("JCPOA"), the recent nuclear-related agreement between Iran and the P5+1 nations. President-elect Donald J. Trump, who will assume office in January 2017, has criticized the JCPOA and suggested that he may seek to alter or renegotiate its terms.
In our October 2016 briefing, we reported on the publication of the Criminal Finances Bill 2016–17. The Bill introduces a range of new measures to fight financial crime, of which one of the most important and far-reaching is the introduction of new offences of failure to prevent the facilitation of tax evasion. The offences are modelled on the so-called "corporate offence" of "failure to prevent bribery" in the Bribery Act 2010 and renders corporate bodies liable, in certain circumstances, for the acts of their "associated persons", subject only to a defence relating to having in place reasonable prevention procedures designed to prevent them from facilitating tax evasion.
Partners Kyle Wombolt and John O'Donnell, and senior consultant Pamela Kiesselbach have published a chapter on cross-border US tax enforcement in The Asia-Pacific Investigations Review 2017, in partnership with Global Investigations Review.
The European Commission has published proposed amendments to the remuneration requirements of CRDIV which would have the effect of extending the cap on variable remuneration (the "bonus cap") to all CRDIV firms, including smaller banks and all CRDIV investment firms. In addition, the proposal would limit the firms which are able to disapply the "Pay Out Process Rules" (requiring deferral and payment in instruments), a change which could primarily affect UK banks with assets of between €5bn and £15bn, as well as materially limiting the ability for firms to waive those requirements in respect of relatively lower paid staff.
Please click here to read the full briefing.
Partners Kyle Wombolt and Robert Hunt, and professional support consultant, Anita Phillips, have published two chapters for Lexology Navigator's latest Anti-corruption and Bribery publication.
The Indonesian Financial Services Authority (OJK) is in the process of finalising a draft regulation regarding lending services based on information technology (Draft Fintech Lending Regulation). The preparation and finalisation of the Draft Fintech Lending Regulation, which is expected this year, is timely as it seeks to address an acknowledged gap in Indonesia’s current financial services regulatory framework, in an area (including peer-to-peer and other marketplace lending) where fast moving market developments, driven by new technologies and a surge in innovative online financial services, have currently overtaken the existing regulatory framework.
The Draft Fintech Lending Regulation is the most developed articulation we have yet seen of a draft set of basic rules for the conduct of marketplace lending in Indonesia. The draft regulation seeks to balance the requirements of applying prudential principles (including risk management and consumer protection rules) to regulate marketplace lending, versus creating rules which are too restrictive such that they inhibit the proper development of a young industry. It remains to be seen whether the draft regulation will strike the optimal balance in practice, as much will depend on the details of the implementation policies.
To read more from David Dawborn, Vik Tang, Sakurayuki, Mark Robinson and Jy Millis, from Herbert Smith Freehills in association with Hiswara Bunjamin & Tandjung in Indonesia, click here.
Filed under Asia, Indonesia
China's new Cyber-Security Law was recently issued, with the government downplaying suggestions that the new law would be used to drive foreign technology and products out of the Chinese market. The new Law provides a tighter definition of critical information infrastructure, making it less likely that the operations of foreign-invested enterprises in China will be caught by strict implementation of the new law. However, the localization of information technology remains prominent in the government's agenda. The new Law will take effect 1 June 2017. To read more from our team in China, click here.
Karen Ip, Nanda Lau and James Gong
Filed under Asia, Banking, China
The Singapore Exchange (SGX) has issued a public reprimand to Swiber Holdings Limited (Swiber), an oilfield services firm, on 31 October 2016 (Regulatory Announcement) for failing to provide a balanced and fair project announcement to the market. SGX considered that Swiber had presented more favourable possibilities as certain, or as more probable than was actually the case. In addition, SGX noted that the relevant market announcement by Swiber had failed to disclose certain material conditions which were pre-requisites to the completion of the project.
To read more about the case from Siddhartha Sivaramakrishnan, William Hallatt, Grace Chong, please click here.
Filed under Asia, Hong Kong
The FCA has published its Asset Management Market Study Interim Report, which can be accessed here, with annexes. The FCA sets down a clear marker as to its direction of travel. Clearly uninhibited by Brexit on the horizon, it is entirely consistent with the thrust of recent European regulatory initiatives, driving hard a consumer focused agenda that champions value for money, transparency and accountability to investors. The report picks up on many of the themes that have recently received material press attention, including: