Hong Kong, leading financial centre in Asia
Caproasia.com | The leading source of data, research, information & resource for financial professionals, investment managers, professional investors, family offices & advisors to institutions, billionaires, UHNWs & HNWs. Covering capital markets, investments and private wealth in Asia. How do you invest $3 million to $300 million? How do you manage $20 million to $3 billion of assets? Caproasia - Learn more



2025 Summits in Hong Kong & Singapore
Investment / Alternatives Summit - March / Oct / Nov
Investment Day - March / July / Sept / Oct / Nov
Private Wealth Summit - April / Oct / Nov
Family Office Summit - April / Oct / Nov
View Events | Register


This site is for accredited investors, professional investors, investment managers and financial professionals only. You should have assets around $3 million to $300 million or managing $20 million to $30 billion.











Australia & Hong Kong Issue Observations from Joint Review of Foreign Exchange Activities, $6.6 Trillion Trading Volume Per Day

28th January 2022 | Hong Kong

Australia and Hong Kong have jointly issued observations from their review of foreign exchange activities, a financial market averaging $6.6 trillion trading volume per day.  Australia and Hong Kong are important FX trading centres in the Asia-Pacific region, with Australian dollar and Hong Kong dollar among the top 10 currencies in global rankings by turnover.  The Australian Securities and Investments Commission (ASIC) and the Hong Kong Securities and Futures Commission (SFC) launched a collaborative thematic review to assess their compliance with local regulatory requirements in their respective jurisdiction and adoption of industry guidelines (eg FX Global Code).  The review includes onsite inspects and visits to to selected firms of global financial groups licensed by ASIC in Australia and the SFC in Hong Kong. See below for full Circular / Observations on Australia & Hong Kong Joint Review | Click here to download the document

“ Joint Review of Foreign Exchange Activities, $6.6 Trillion Trading Volume Per Day “

 



- Article continues below -



Sign Up
Basic Member: $5 Monthly | $60 Yearly
Newsletter Daily 2 pm (Promo): $20 Monthly | $180 Yearly (FP: $680)


The 2025 Investment Day
Hong Kong | Singapore
March / July / Sept / Oct / Nov

Private Equity, Hedge Funds, Boutique Funds, Private Markets & more. Join 20+ CIOs & Senior investment team, with > 60% single family offices with $300 million AUM. Taking place in Hong Kong and in Singapore. Every March, July, Sept, Oct & Nov.
Visit | Register here


The 2025 Family Office Summit
10th April & 16th Oct Hong Kong St Regis | 17th April & 6th Nov Singapore Amara Sanctuary Resort

Join 80 single family offices & family office professionals in Hong Kong & Singapore
Links: 2025 Family Office Summit | Register here


2025 Investment / Alternatives Summit
March / Oct / Nov in Hong Kong & Singapore

Join leading asset managers, hedge funds, boutique funds, private equity, venture capital & real estate firms in Hong Kong, Singapore & Asia-Pacific at the Investment / Alternatives Summit. Join as delegate, speaker, presenter, partner & sponsor.
Visit | Register here


2025 Private Wealth Summit
April / Oct / Nov in Hong Kong & Singapore

Join CEOs, CIOs, Head of Private Banking, Head of Family Offices & Product Heads at The Private Wealth Summit.  Join as delegate, speaker, presenter, partner & sponsor.
Visit | Register here





Circular on ASIC-SFC Thematic Review: Foreign Exchange

Hong Kong, leading financial centre in Asia

Circular on ASIC-SFC thematic review of global financial groups’ foreign exchange activities:

Foreign exchange (FX) is the world’s largest financial market by trading volume and is of systemic importance to the global economy. In April 2019, trading volume in the over-the-counter FX market averaged US$6.6 trillion per day1––the highest among all financial asset classes. Australia and Hong Kong are important FX trading centres in the Asia-Pacific region. The Australian dollar and Hong Kong dollar have been among the top 10 currencies in global rankings1 by turnover.

In view of the growing importance of the Asia-Pacific region’s FX market and the increasing complexity of regulating a market that involves diverse products and trading channels across different jurisdictions, the Australian Securities and Investments Commission (ASIC) and the Securities and Futures Commission (SFC) launched a collaborative thematic review. The review included onsite inspections of and a prudential visit2 to selected firms of global financial groups licensed by ASIC in Australia and the SFC in Hong Kong. The main aim was to assess their compliance with local regulatory requirements in their respective jurisdiction and their adoption of other industry guidelines (e.g. the FX Global Code3).

Observations and industry practices identified

This circular and its annexes highlight the regulators’ observations of the selected firms’ governance arrangements and internal controls. The SFC also reviewed the firms’ implementation of risk management measures in their FX business. For the avoidance of doubt, this circular and its annexes only apply to participants in Australia and licensed corporations in Hong Kong that engage in FX activities (collectively “participants”)4. More details of the reviews conducted by ASIC and the SFC are set out in Annex 1 and Annex 2, which provide an overview of the FX market landscape in Australia and Hong Kong and share observations and industry practices noted from the reviews.

I.    Supervision and risk management

Supervision

Governance arrangements vary among the participants, but they should be commensurate with the size and complexity of the firms’ FX activities and the nature of their engagement in the FX market, taking the applicable rules and regulations into account. In some cases, FX activities are only ancillary to the main business, e.g. for hedging FX risk. Regardless of whether these activities are carried out as a separate business or an ancillary function, participants are reminded to supervise FX activities.

Appropriate supervision should be in place to cover the entire FX business and promote responsible engagement by the senior management and comprehensive oversight across different functions. Examples of good practices include clearly defining the roles and responsibilities in the three lines of defence, establishing control functions to monitor the front office’s risk-taking activities and promoting a strong risk culture which encourages staff at all levels to identify and escalate issues of concern to appropriate parties.

Risk management – SFC only

The SFC’s review noted all of the participants operated their businesses through multiple overseas-affiliated legal entities for principal or agency trading. For example:

(i) A participant, acting as an agent, engaged in futures and listed options trading in overseas exchanges on behalf of its clients. The trade orders were executed by its overseas affiliate which was a participant of overseas exchanges.

(ii) A participant, acting as a principal, booked risk positions through its own entity and offset the market risk by entering into back-to-back transactions with an overseas affiliate which managed the risk.

(iii) A participant engaged multiple legal entities across different jurisdictions to conduct FX activities. Under this business model, the overseas entities were the contracting entities with clients as well as risk booking and management centres even though the risk positions were originated from the participant in Hong Kong.

While the local entity may delegate risk management to its overseas affiliate, participants should review in a timely manner the counterparty risk arising from exposure to FX trades that are executed locally to avoid a build-up of excessive risks. In addition, participants should take reasonable steps to ensure that they operate within a holistic and robust risk management framework, with reporting processes and accountability clearly defined and suitably integrated across different jurisdictions.

II.    Internal controls

Trade execution

Participants are reminded to ensure fairness and transparency when handling and executing client orders and acting as principal or agent. Participants should make sure that internal control policies and procedures are well-established and maintained, and controls are properly implemented. For example:

(i)  Last look5

Last look is an execution practice in electronic trading activities whereby a firm that receives a trade request will have the final opportunity to accept or reject the request against its quoted price.

There have been concerns about whether last look would increase the costs borne by clients should a trade request be rejected. Participants are hence expected to provide clear disclosure to clients regarding their use of last look, e.g. applicability to the type of product, the basis for rejecting a client order and hold times and their symmetric or asymmetric application.

If last look is utilised, it should serve as a risk control mechanism which checks the validity of the proposed transaction and the consistency between the price of the trade request and the current price available to clients. It is a good practice that participants monitor the use of last look to ensure that client trade information is used appropriately for the intended purposes.

(ii)  Protection of confidential information

In addition to protecting confidential information obtained during the last look practice, participants should implement robust controls to limit staff members’ access to client order information. Participants should adopt a “need to know” policy to ensure that only appropriate staff members could access the details of clients’ FX orders, e.g. the visibility of fixing orders should only be granted to staff who are responsible for handling them. Without proper monitoring and oversight of access to confidential information and appropriate system controls, conflicts of interest among the participant, its staff and clients may not be appropriately managed, e.g. staff members may take advantage of the clients’ trading intent and move market prices against them.

(iii) Mark-up6

Mark-up is a spread or charge which may be included in the final price of a transaction to compensate the firm for the risks taken, costs incurred and services rendered. Participants should disclose to clients how a mark-up is determined. As mark-ups are common in the FX market, participants should have policies and procedures in place to enable staff members determine appropriate and fair mark- ups. They should also have effective oversight of mark-up practices and an escalation process to ensure that these practices are consistent with their policies and procedures.

Post-trade surveillance

Given the fragmentation of FX trading infrastructure and platforms, investors may source liquidity or obtain price quotations from participants via multiple channels prior to order execution. Market surveillance and monitoring could then be a complex exercise with the presence of multiple communication channels. It is therefore important that participants establish effective supervision, control and exception handling procedures in the management of the trade life cycle to detect irregularities and suspicious transactions.

Staff personal dealing and training

To manage conflicts of interest, appropriate personal dealing policies and procedures should be established and provided to staff, particularly those who perform sales and trading activities and may come across confidential information, such as clients’ trade intent and order information. Staff members’ personal FX trading should also be subject to surveillance and monitoring in order for the participants to assess whether there is any potential misconduct.

Staff members should have sufficient skills and expertise to perform their designated roles and responsibilities effectively. Training should be appropriate, adequate, well-established, tailor-made and provided to relevant staff on an ongoing basis in respect of their roles and responsibilities. Training records should be kept for staff development purposes and compliance checks.

Should you have any queries regarding the content of this circular, please contact Market Supervision OTC at [email protected], or Ms Lorraine Chan at the Intermediaries Supervision Department of the SFC on 2231 1751 or at [email protected].

Intermediaries Supervision Department

Intermediaries Division

Securities and Futures Commission

End

SFO/IS/007/2022

1 See the Bank for International Settlements’ Triennial Central Bank Survey – Foreign exchange turnover in April 2019, issued on 16 September 2019.

2 The prudential visit was only conducted by the SFC.

3 The establishment of the FX Global Code was facilitated by the Foreign Exchange Working Group, which operates under the auspices of the BIS Markets Committee and consists of central banks from 16 jurisdictions. While the FX Global Code is a set of global best practice principles which supplement local rules and regulations, global financial institutions (such as the selected firms) have been voluntarily using adherence to the FX Global Code as one of the criteria for assessing their internal controls.

4 The term “participants” refers to banks, investment firms, inter-dealer brokers, agency brokers and hedge funds in Australia and licensed corporations in Hong Kong which engage in dealing in FX products that fall within the definitions of “securities” and “structured product” under Part 1 and Part 1A of Schedule 1 of the Securities and Futures Ordinance (SFO), respectively, or “futures contracts” as defined in section 1 of the SFO. Licensed corporations which are licensed to carry on Type 3 regulated activity (leveraged foreign exchange trading) in Hong Kong, as defined in Part 2 of Schedule 5 to the SFO, were excluded.

5 The term “last look” is defined in Principle 17 of the FX Global Code.

6 The term “mark-up” is defined in Principle 14 and Annex 2 of the FX Global Code.

Click here to download the document

Supplementary document

Report on the SFC’s review of global financial groups’ foreign exchange activities in Hong Kong




Managing $20 million to $3 billion. Investing $3 million to $300 million.
For Investment Managers, Hedge Funds, Boutique Funds, Private Equity, Venture Capital, Professional Investors, Family Offices, Private Bankers & Advisors, sign up today. Subscribe to Caproasia and receive the latest news, data, insights & reports, events & programs daily at 2 pm.

Join Events & Find Services
Join Investments, Private Wealth, Family Office events in Hong Kong, Singapore, Asia-wide. Find hard-to-find $3 million to $300 million financial & investment services at The Financial Centre | TFC. Find financial, investment, private wealth, family office, real estate, luxury investments, citizenship, law firms & more.  List hard-to-find financial & private wealth services.

Have a product launch? Promote a product or service? List your service at The Financial Centre | TFC. Join interviews & editorial and be featured on Caproasia.com or join Investments, Private Wealth, Family Office events. Contact us at [email protected] or [email protected]

Caproasia.com | The leading source of data, research, information & resource for financial professionals, investment managers, professional investors, family offices & advisors to institutions, billionaires, UHNWs & HNWs. Covering capital markets, investments and private wealth in Asia. How do you invest $3 million to $300 million? How do you manage $20 million to $3 billion of assets?



Quick Links


2021 Data Release
2020 List of Private Banks in Hong Kong
2020 List of Private Banks in Singapore
2020 Top 10 Largest Family Office
2020 Top 10 Largest Multi-Family Offices
2020 Report: Hong Kong Private Banks & Asset Mgmt - $4.49 Trillion
2020 Report: Singapore Asset Mgmt - $3.48 Trillion AUM


For Investors | Professionals | Executives
Latest data, reports, insights, news, events & programs
Everyday at 2 pm
Direct to your inbox
Save 2 to 8 hours per week. Organised for success

Register Below

For CEOs, Heads, Senior Management, Market Heads, Desk Heads, Financial Professionals, Investment Managers, Asset Managers, Fund Managers, Hedge Funds, Boutique Funds, Analysts, Advisors, Wealth Managers, Private Bankers, Family Offices, Investment Bankers, Private Equity, Institutional Investors, Professional Investors

Get Ahead in 60 Seconds. Join 10,000 +
Save 2 to 8 hours weekly. Organised for Success.

Sign Up / Register


    Manage investmentsManage assetsManage risksFind informationFind servicesFind advisors / expertsFind clientsGrow AUMNetworkingOthers


    $3 m to $20 m$20 m to $300 m$300 m to $1 b$1 b to $10 bMore than $10 bNo AUM. I advise institutions / CEOs / Entrepreneurs / billionaires / UHNWs & HNWsOthers


    Investment ProfessionalAdvisorProfessional InvestorFinancial ProfessionalManagementCEO & EntrepreneurOthers


    Mailing List / Free TrialSubscription ($70 monthly / $180 yearly)Subscription June Promo ($20 monthly / $180 yearly)Membership ($60 / $680 / $2,000)


    2025 Investment Day Hong Kong2025 Investment Day Singapore2025 Investment Summit Hong Kong2025 Investment Summit Singapore2025 Family Office Summit Hong Kong2025 Family Office Summit Singapore












    Web links may be disabled on mobile for security.
    Please click on desktop.










    Caproasia Users

    • Manage $20 million to $3 billion of assets
    • Invest $3 million to $300 million
    • Advise institutions, billionaires, UHNWs & HNWs

    Caproasia Platforms | 11,000 Investors & Advisors

    Monthly Roundtable & Networking

    Family Office Programs

    The 2025 Investment Day

    • March - Hong Kong
    • March - Singapore
    • July - Hong Kong
    • July - Singapore
    • Sept- Hong Kong
    • Sept - Singapore
    • Oct- Hong Kong
    • Nov - Singapore
    • Visit: The Investment Day | Register: Click here

    Caproasia Summits

    Contact Us

    For Enquiries, Membership
    [email protected], [email protected]

    For Listing, Subscription
    [email protected], [email protected]

    For Press Release, send to:
    [email protected]

    For Events & Webinars
    [email protected]

    For Media Kit, Advertising, Sponsorships, Partnerships
    [email protected]

    For Research, Data, Surveys, Reports
    [email protected]

    For General Enquiries
    [email protected]





    Caproasia | Driving the future of Asia
    a financial information technology co.
    since 2014