Page 18 - Building a Treasury Centre for Sustainable Growth

RELEVANT LEGAL & REGULATORY REGIMES

Payment Services

Payment systems are regulated under the Payment Systems and Stored Value Facilities
Ordinance (Cap. 584, PSSVFO) by the HKMA. The PSSVFO, which came into operation in 2015,
established a licensing regime for stored value facilities (SVFs), and outlines the criteria and
factors based on which the HKMA determines whether a clearing system or retail payment
system (RPS) should be designated, and the requirements that the designated payment
systems should comply with. However, with regards to payment systems, only payment
systems that have a large impact on Hong Kong SAR’s economy will be designated for
regulation. Currently, only the large payment card operators are designated.

Close regulation by the HKMA and the introduction of the PSSVFO have helped to bring Hong
Kong SAR’s payment system regulation forward and provided greater clarity to a number of
areas of the payment process, enhancing public confidence in Hong Kong SAR’s payment
services.

Securities markets and Trading
Hong Kong SAR has a well-developed securities regulatory regime, primarily outlined under
the Securities and Futures Ordinance (Cap. 571; SFO). The securities industry is regulated by
the Securities and Futures Commission (SFC). The SFC handles a number of responsibilities,
including:
1. Licensing and supervising licensed corporations that conduct regulated activities (such as
dealing in and advising on securities and futures contracts, advising on corporate finance,
asset management, and so on)
2. Investigating breaches of regulatory rules, and market misconduct
3. Setting standards on investment products

4. Overseeing listing matters in Hong Kong SAR, and regulating takeovers, mergers and
privatisations
5. Overseeing the performance of The Stock Exchange of Hong Kong Limited as frontline
regulator of listing matters
6. Regulating OTC derivative activities by the SFC and the HKMA. In particular, authorised
institutions and money brokers regulated by the HKMA (deposit taking businesses such
as banks) and licensed corporations are subject to clearing and record keeping obligations
in relation to specified OTC derivative transactions once certain thresholds are reached.
Additionally, certain activities related to OTC derivatives – namely, any person that is
managing OTC derivative portfolios or advising on or dealing in OTC derivative products – will
need to be licensed with the SFC

Thanks to the impartial regulators and a strong regulatory and compliance regime in Hong Kong
SAR, participants in the securities and derivatives markets of Hong Kong SAR, including any
CTC looking to use such markets for hedging purposes, can be assured that they are operating
and conducting their operations in one of the most mature and well-regulated securities and
derivatives markets in Asia.

16 Building a Treasury Centre for Sustainable Growth