Lack of Electronic Solutions Hindering Capital Market Access: ASIFMA

The report calls on government and regulators to facilitate greater use of e-signatures, virtual meetings, and other electronic solutions in Hong Kong and Singapore capital markets.

ASIFMA has released a new report calling for greater adoption of electronic means to facilitate access to Hong Kong and Singapore capital markets.

According to the report, social distancing measures, office closures, work from home arrangements and travel restrictions amid the Covid-19 pandemic have impacted capital markets and the ways in which FIs are able to operate their businesses.

In particular, FIs in Hong Kong and Singapore have encountered a number of compliance challenges due to restrictions on social and physical interaction, and operational challenges because of the unavailability of electronic solutions for certain processes.

The processes that could benefit from electronic solutions include regulatory correspondence, customer onboarding, corporate meetings, listing and IPO processes, tax and stamp duty processes, and post-trade processes.

The report highlights four key themes that have emerged from the operational challenges identified by ASIFMA members:

  • requirements in Hong Kong and Singapore for firms to physically deliver original documents with ‘wet-ink’ signatures and/or certified true copies of documents to regulatory authorities or other persons
  • requirements in Hong Kong and Singapore for physical meetings to be held and/or for an individual’s physical presence at a certain place and time (e.g. to witness the execution of a document)
  • rules and regulations in Hong Kong in relation to electronic signatures and electronic records, whch restrict wider usage/acceptance of electronic signatures
  • requirements in Hong Kong for payments to be made using cheques or bank cashier orders within a prescribed time period in some situations

“When viewed in isolation, these themes and underlying issues do not appear to be material,” the report says. “However, when aggregated together they present real operational challenges that could be alleviated by the implementation of electronic solutions.”

The solutions proposed in the report range from amendments to laws and regulations, the issuance of regulatory guidance by regulatory authorities, changes to existing practices of regulatory authorities, and support from industry bodies.

The report offers recommendations to the SFC (Securities and Futures Commission), HKMA (Hong Kong Monetary Authority), HKCR (Hong Kong Companies Registry), HKEX (Hong Kong Exchanges and Clearing), FSTB (Financial Services and the Treasury Bureau), IRD (Inland Revenue Department), and Hong Kong share registrars.

In Singapore, it offers recommendations to ACRA (Accounting and Corporate Regulatory Authority), MAS (Monetary Authority of Singapore), SGX (Singapore Exchange), IRAS (Inland Revenue Authority of Singapore) and IMDA (Infocomm Media Development Authority).

The report also calls on governmental and regulatory authorities to provide clarity on the adoption of tokenised securities, which can serve as a technological solution to address certain legal and regulatory challenges.

The full report is available here.

The report was written as a collaboration with Latham & Watkins, PricewaterhouseCoopers Hong Kong, and ASIFMA on behalf of its members.

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