ASIFMA (Asia Securities Industry and Financial Markets Association) released a report, “Operational Challenges in the Hong Kong and Singapore Capital Markets due to a Lack of Adoption of Electronic Means”.
Financial institutions in Hong Kong and Singapore have encountered a number of operational challenges because of the unavailability of electronic solutions to certain processes. In particular, restrictions on social and physical interaction have made it difficult for firms to comply with certain laws and regulations.
Four key themes have emerged from the operational challenges identified by ASIFMA members:
- Requirements to physically deliver originals or certified true copies;
- Requirements for physical meetings and presence;
- Restrictiveness of rules and regulations on electronic signatures; and
- Restrictiveness on the means of payments.
The report describes the specific operational challenges identified and solutions proposed by members in the following areas:
- Regulatory correspondence, including regulatory applications, notifications or submissions and day-to-day communications;
- Customer onboarding process;
- Corporate meetings;
- Listing and initial public offering process;
- Tax and stamp duty process; and
- Post-trade process.
Solutions include amendments to laws and regulations, issuance of regulatory guidance by regulatory authorities, changes to existing practices of regulatory authorities and support from industry bodies.
ASIFMA members have also identified the adoption of tokenized securities as another area that merits further attention of governmental and regulatory authorities. Although the adoption of tokenized securities is not an operational challenge that stems from the COVID-19 pandemic, members note the development of tokenization as being of relevance because of certain legal and regulatory challenges that are inhibiting the adoption of tokenized securities as a technological solution and urge government and regulatory authorities to consider implementing a conducive framework for tokenized securities.
While this report focuses on the operational challenges faced by members as a result of the COVID-19 pandemic, members generally support the increased promotion, availability and use of electronic solutions as a strategic objective for the Hong Kong and Singapore authorities. Development of electronic solutions in Hong Kong and Singapore ultimately enhances the accessibility of Hong Kong and Singapore markets and their reputation as leading international financial centers.