Asia Regulatory Update (June 2026)

On 17 April 2026, HKEX published a Consultation Paper on Accelerated Settlement for the Hong Kong Cash Market, proposing to shorten the settlement cycle from T+2 to T+1 with a Q4 2027 implementation target. The paper follows a July 2025 Discussion Paper that drew over 60 responses from banks, asset managers and custodians, with broad in-principle support.

The logic behind the timing is straightforward. The US moved to T+1 in May 2024, and Hong Kong’s current T+2 cycle creates a day of settlement mismatch for participants active in both markets. The compressed cycle releases collateral and margin faster, resulting in greater capital efficiency for high-volume participants. HKEX’s own post-trade systems had cleared the technical readiness bar by the end of 2025, so for the exchange, at least, the remaining challenge is operational, not infrastructural.

Key highlights:

• Scope: The proposal covers all secondary market exchange trades, which include equities, exchange-traded funds (ETFs), Real-estate investment trusts (REITs), leveraged and inverse products, structured products and Stock Exchange of Hong Kong (SEHK)-traded debt securities, as well as physical equity settlement arising from stock options exercise and assignment.
• Exclusions: Initial Public Offerings (IPOs) and Northbound Stock Connect trades are explicitly carved out and will continue under their existing settlement timetables. Primary market activities are also out of scope.
• Operational implications: Earlier cut-off times on the trade date (T) will be required for post-trade activities, including securities lending recall, allocation and confirmation, which creates an adequate runway for T+1 settlement. The Delivery vs Payment (DvP) framework and batch settlement structure are unchanged.
• Infrastructure: The HKEX confirmed that its clearing and settlement systems had reached T+1 technical readiness by the end of 2025. The transition burden falls primarily on market participants’ own post-trade workflows, rather than on exchange infrastructure.
• Global alignment: The EU and UK are both planning T+1 transitions in the coming years. A move in Hong Kong to T+1 would eliminate settlement cycle mismatch risks for crossmarket participants and maintain parity with the major global equity markets.
• Next steps: The Consultation period ended on 18 May 2026, and HKEX is reviewing responses. Consultation conclusions and detailed implementation specifications are expected in the second half of 2026, with a Q4 2027 go-live, subject to market readiness and final rule changes

1.2 Listing Reforms and the Listing Framework Competitiveness Review

On 13 March 2026, HKEX published a Consultation Paper on the Listing Framework Competitiveness Review, which proposed the most comprehensive overhaul of HKEX listing requirements since the 2018 reforms that introduced Weighted Voting Rights (WVR) structures, the Biotech chapter and the enhanced secondary listing regime. The consultation closed on 08 May 2026.

The proposals are calibrated around two objectives. Firstly, to make HKEX more competitive for mid-cap technology companies that currently fall below the WVR thresholds but do meet listing quality standards. HKEX has lost several notable listings of companies that fall into this category. Secondly, to reduce the barrier for US-listed Chinese companies that are considering a secondary listing in Hong Kong. The proposed reduction in market cap thresholds and the expanded confidential filing access are both clearly directed at this category of firm.

Key highlights:

• WVR thresholds halved: Under HKEX’s WVR listing framework, applicants must satisfy one of two financial eligibility tests. The floors for both have been reduced. Test A (pure market capitalisation) drops from HKD 40 billion to HKD 20 billion; Test B (combined market cap and revenue) drops from HKD 10 billion / HKD 1 billion to HKD 6 billion / HKD 600 million. The dual-test structure means companies with meaningful revenue, but more modest valuations, have a separate path in with the lower thresholds. That path is now open to mid-cap technology and innovative companies that previously fell just short.
• WVR voting ratio increased for large-caps: For companies with expected market cap of at least HKD 40 billion at listing, the cap on WVR voting ratio increases from 10:1 to 20:1, giving founding shareholders of large-cap issuers stronger dilution protection.
• Biotech and specialist technology: Qualified Biotech Applicants and Qualified Specialist Technology Applicants would be presumed to satisfy Route A financial eligibility even when not listing under the dedicated specialist chapters, cutting duplicative assessments.
• Secondary listing threshold: The criteria B market cap threshold for overseas issuers without a WVR structure drops from HKD 10 billion to HKD 6 billion, directly lowering the barrier for US-listed Chinese issuers considering a secondary listing in Hong Kong.
• Confidential filing open to all: The mechanism is extended from select applicants to all new listing applicants. Companies will be able to receive regulatory feedback without public disclosure of an abortive application. Where an application is returned, HKEX would disclose the identity and role of responsible professionals to strengthen intermediary accountability.
• Next steps: The Consultation period ended on 08 May 2026. Consultation conclusions and rule amendments are expected in the second half of 2026, subject to SFC and exchange approval. All proposals remain at the consultation stage.

1.3 SFC Tokenisation Circulars and Secondary Trading of Tokenised Funds via VATPs

On 20 April 2026, the SFC issued two circulars that, taken together, complete the regulatory infrastructure for tokenised SFC-authorised investment products: an updated Circular on Tokenisation of SFC-authorised Investment Products clarifying primary market dealing arrangements, and a new Circular on Secondary Trading of Tokenised SFC-authorised Investment Products establishing the first framework for retail secondary market trading via SFC-licensed VATPs. As of March 2026, 13 tokenised products were publicly available in Hong Kong with AUM of their tokenised classes up approximately sevenfold to HKD 10.7 billion since the preceding year.

Until April 2026, investors in the tokenised fund framework could only subscribe and redeem through the primary market, as there was no regulated secondary market. This means tokenised funds offered no liquidity advantage over traditional counterparts. The two circulars address this by authorising on-platform secondary trading via licensed VATPs, with mandatory price-deviation alerts and a market maker requirement to backstop liquidity. This step makes tokenised funds genuinely distributable to retail investors as a product category rather than as a proof-of-concept.

Key highlights:

• Primary dealing (updated): Direct subscriptions and redemptions are confirmed as permitted, subject to full product authorisation requirements plus tokenisation-specific safeguards. Managers must appoint SFC-licensed corporations or registered institutions as distributors for primary market creations and redemptions.
• Secondary trading via VATPs: On-platform secondary trading is now permitted on SFC-licensed VATPs under the existing VATP Guidelines trading and risk-control framework. OTC secondary trading arrangements may also be considered by the SFC on a case-by-case basis.
• Price deviation alert: VATPs must alert investors when the execution price deviates significantly from the product’s real-time or near real-time indicative NAV per unit, using a threshold set by reference to the specific product’s features. This addresses the gap between continuous on-platform pricing and the NAV-based pricing of the underlying fund.
• Market maker requirement: Managers must use best endeavours to appoint at least one market maker, with a minimum three-month notice obligation before termination. The safeguard prevents sudden liquidity gaps in the secondary market that could disadvantage retail investors.
• Primary-to-secondary transfer: Managers must put in place arrangements with their VATP partner to ensure seamless transfer of tokenised units across primary and secondary markets, involving a complex operational requirement that reflects the SFC’s insistence on a unified investor experience across both routes.
• Retail access: Retail investors may participate in VATP secondary trading of tokenised products, extending beyond the professional investor limitations on earlier tokenised product categories and consistent with the SFC’s progressive broadening of retail access under the ASPIRe roadmap.

1.4 HKMA Operational Resilience and the OR-2 Full Implementation Milestone

On 31 May 2026, the three-year implementation period under SPM OR-2 reached its hard deadline, requiring all Authorised Institutions, that includes licensed banks, restricted licence banks and deposit-taking companies, to be fully compliant with the operational resilience framework. The HKMA’s ‘1+3 year’ implementation model set two milestones: frameworks developed by May 2023, and full operational resilience to be attained by May 2026.

When SPM OR-2 was published in 2021, the requirement to map every critical operation’s interconnections, which includes systems, people, data and third parties, felt abstract to many institutions. By 31 May 2026, that mapping must be complete, scenario-tested and ready for supervisory scrutiny. The HKMA has been clear that this is not a box-ticking exercise: firms that have not stress-tested their tolerance limits under realistic disruption scenarios will find it reflected in examination assessments. The does not only impact banks. Asset managers and securities firms that run on banking infrastructure now have counterparties which must prove, not just assert, their operational resilience.

Key highlights:

• Critical operations and impact tolerances: Authorised Institutions must have identified all critical operations. This includes those whose disruption causes significant harm to the institution, its customers or financial stability, and Authorised Institutions must define maximum tolerable disruption levels (impact tolerances) for each. Major retail banks have tightened these limits following supervisory feedback.
• Mapping and interdependency analysis: The mapping of interconnections and interdependencies across systems, processes, people, data and third-party service providers must be complete by 31 May 2026. The HKMA has repeatedly identified this as the most operationally intensive element of OR-2 compliance, and the foundation for all subsequent scenario testing.
• Scenario testing: Authorised Institutions must have completed testing against severe but plausible disruption scenarios to validate delivery of critical operations within impact tolerances and identify gaps. The HKMA – Hong Kong Association of Banks (HKAB) Industry Sharing Session in December 2024 confirmed major retail banks had tightened tolerance limits following supervisory feedback and were progressing through mapping and testing.
• Third-party dependencies: Operational resilience requirements must be embedded into vendor contracts and third-party dependencies tested in scenario exercises. This is particularly relevant given the banking sector’s shared concentration in a small number of cloud and technology providers.
• Sector readiness: The HKMA confirmed ahead of the deadline that all AIs had developed their frameworks and were on track for full OR-2 compliance, with most completing the second critical stage of mapping and scenario testing.
• Post-deadline obligations: The 31 May 2026 is the beginning of the ongoing operating regime. Authorised Institutions must continuously maintain frameworks, update mapping as systems change, run periodic scenario tests and report material disruptions to the HKMA within prescribed timeframes. Operational resilience is a standing supervisory expectation from this point forward.

2. China Regulatory Developments

Two regulatory events dominated China’s capital markets calendar this quarter. The CSRC’s ChiNext Reform Opinions, issued in April 2026 with full State Council backing, represents the most ambitious overhaul of the board’s listing framework since the shift to the registration-based system in 2023. This has extended ChiNext’s reach to pre-revenue frontier technology companies for the first time. The 30 April 2026 marked a quieter but equally significant milestone; the first mandatory ESG disclosure deadline for over 400 major A-share companies. For institutional investors with China equity exposure, this implications of this milestone may prove to be more lasting; the moment China’s ESG data landscape moved from voluntary and patchy to mandatory and comparable.

2.1 ChiNext Reform and CSRC Opinions on New Quality Productive Forces

On 10 April 2026, with State Council approval, the CSRC issued the Opinions on Deepening the ChiNext Reform to Better Serve the Development of New Quality Productive Forces. This is the most significant institutional upgrade to a core A-share segment since the full rollout of the registration-based system in 2023.

The ‘new quality productive forces’ framing is deliberately political. It takes the language of the 15th Five-Year Plan and embeds it directly into ChiNext’s listing standards, repositioning the board as the primary capital market channel for the technology sectors that China’s state strategy has identified as priorities. The practical result is a fourth listing standard with two tiers; one for emerging industries (EVs, robotics, new energy, intelligent connected vehicles), and one for frontier technology (quantum computing, hydrogen energy, brain-computer interfaces and embodied AI). The frontier tier is the more notable: it accepts R&D spend as an alternative to revenue thresholds, which is a meaningful concession for genuinely pre-commercial deep-technology companies.

Key highlights:

• Fourth listing standard (emerging industries): Combined market cap, revenue and revenue growth rate thresholds, calibrated to reflect earlier-stage commercialisation. Targets sectors including next-generation information technology, new energy, new materials, intelligent connected vehicles, robotics and biomedicine.
• Fourth listing standard (frontier technology): Adjusted thresholds for pre-revenue or early-revenue companies in quantum technology, hydrogen energy, brain-computer interfaces and embodied AI. R&D investment accepted as an alternative qualification criterion, which represents a structural first for ChiNext.
• 15th Five-Year Plan alignment: The reform explicitly channels public capital toward the sectors identified in the 2026–2030 Five-Year Plan as strategic priorities. ChiNext is formally repositioned as the capital market destination for ‘new quality productive forces’ companies.
• IPO pricing and shelf registration: ChiNext’s IPO pricing mechanisms will be refined to improve price discovery and reduce first-day volatility. Shelf registration for follow-on fundraising will be introduced, reducing the time and cost burden on existing listed companies.
• Market-making: A market-making mechanism will be introduced to narrow bid-ask spreads and improve liquidity, particularly for smaller-cap ChiNext companies that have historically traded with thin volumes relative to Main Board peers.
• ChiNext index futures: The CSRC is exploring launch of ChiNext stock index futures to give institutional investors an effective hedging tool for ChiNext-specific exposure and to facilitate greater long-term institutional participation in the innovation segment.
• Delisting discipline: The normalised delisting mechanism is reinforced with stronger disclosure requirements and consolidated gatekeeper responsibilities, consistent with the CSRC’s ‘quality over quantity’ doctrine.
• Effective date: Issued 10 April 2026, effective immediately. Implementing rules and ChiNext-specific listing rule amendments are expected mid-2026.

2.2 China Mandatory Sustainability Disclosure — First Compliance Cycle

On 30 April 2026, China’s first mandatory sustainability disclosure cycle closed. For the first time, over 400 major A-share listed companies were required to publish corporate sustainability reports covering fiscal year 2025. The mandatory cohort covers all constituents of the SSE 180 Index, STAR 50 Index, Shenzhen 100 Index and ChiNext Index that were continuously included during the 2025 reporting period, plus all companies duallisted domestically and overseas. The requirement flows from sustainability reporting guidelines issued by the Shanghai Stock Exchange, Shenzhen Stock Exchange and Beijing Stock Exchange in April 2024 (effective 01 May 2024), with the Basic Standards for Corporate Sustainability Disclosure (Trial) issued by the Ministry of Finance and eight co-departments in December 2024 establishing the overarching national framework.

China has had voluntary ESG reporting frameworks since 2024, but the inaugural mandatory cycle changes what investors can rely on systematically. For QFII/RQFII participants and Stock Connect investors, the coverage and comparability of ESG data for major A-share names, most of which sit in global EM indices, improves materially from this reporting cycle. The alignment with International Sustainability Standards Board (ISSB) standards also reduces the translation burden for international investors accustomed to International Financial Reporting Standards (IFRS) S1/S2-aligned reporting from European and UK counterparts.

Key highlights:

• Mandatory cohort of more than 400 companies: The rules apply to the largest and most widely-held listed companies. Those that were continuously included in major indices (SSE 180, STAR 50, SZSE 100, ChiNext) throughout 2025, plus any company dual-listed in both A-shares and H-shares. Smaller companies on the Beijing Stock Exchange, which caters to small-to-medium enterprises (SMEs), are not required to comply but may do so voluntarily.
• ISSB-aligned framework: Reports must follow exchange-specific guidelines aligned with IFRS S1 (General Requirements) and IFRS S2 (Climate-related Disclosures). The Ministry of Finance’s December 2024 Basic Standards sit above exchange guidelines, providing a unified national baseline across the three exchanges.
• Four disclosure dimensions:

1. Governance – Board-level ESG oversight and accountability;
2. Strategy – ESG risks and opportunities and their effect on business models;
3. Risk management – Identification, assessment and management processes; and
4. Metrics and targets – GHG emissions, energy, water and waste, with climate metrics following an IFRS S2 structure.

• Expansion path: Companies outside the mandatory cohort are encouraged to report voluntarily. The CSRC and exchanges have signalled an intention to widen mandatory coverage progressively in subsequent cycles, tracking the approach taken in the EU and UK.
• Investor implications: The inaugural cycle provides institutional investors with a consistent and comparable ESG data set for over 400 major A-share names. Firms running systematic ESG screens across China equity portfolios should assess whether their current data sourcing and scoring methodologies require updating to reflect the new mandatory disclosure baseline.
• Enforcement: Exchange self-regulatory oversight applies. Companies failing to publish required reports, or publishing materially deficient reports, face exchange regulatory action and potential CSRC referral. Enforcement in the inaugural cycle is expected to be graduated as the market adapts.

3. Singapore Regulatory Developments

Singapore had two regulatory priorities in Q2 2026: Getting the SGX-Nasdaq Global Listing Board (GLB) legislation through Parliament; and telling capital markets firms what supervisory scrutiny will look like for the year ahead. The GLB bill passed its Second Reading on 07 May 2026 and was enacted, creating the legislative basis for a genuinely novel dual-listing structure. The Monetary Authority of Singapore (MAS) supervisory priorities circular, issued in April 2026, confirmed AI risk governance as the dominant theme in the 2026/27 examination cycle, with operational resilience and technology risk close behind.

3.1 MAS MindForge AI Risk Management Toolkit

The Securities and Futures (Amendment) Bill 2026 (SF(A) Bill) was introduced at First Reading on 07 April 2026 and passed following its Second Reading on 07 May 2026. The Bill provides the legislative basis for the Global Listing Board (GLB), a simultaneous dual-listing framework developed jointly by SGX and Nasdaq.

The GLB is not another secondary listing route. It is a true simultaneous dual listing, with one offering, one set of documents, two exchanges. The eligibility bar is deliberately high: SGD 2 billion minimum market cap and a demonstrable Asia nexus. But for the right issuer, the structure offers North American distribution with Singapore’s regulatory stamp and regional investor access in a single transaction, without maintaining parallel documentation processes across two jurisdictions. The law leaves the door open for tie-ups beyond Nasdaq. Singapore’s stated ambition runs wider than a single exchange partnership.

Key highlights:

• Prescribed Dual-Listing Board (DLB) framework: MAS is empowered to declare an overseas exchange (such as Nasdaq) as a “prescribed overseas exchange” and to declare a dual-listing board established by SGX (such as the GLB) as a “prescribed DLB”, enabling MAS to tailor regulations to the dual-listing context, including modifying or disapplying specified provisions of the Securities and Futures Act.
• Single offering document: GLB issuers may prepare one set of offering documents incorporating applicable US prospectus disclosure requirements under a new Part 13A of the SFA, enabling simultaneous public offers in both Singapore and the US without parallel documentation.
• Eligibility: Firms must have a minimum SGD 2 billion market cap and demonstrable Asia connection. The approach is open to both new IPO candidates and companies that are already listed on the Nasdaq Global Select Market that are seeking a simultaneous or secondary listing in Singapore.
• Earlier retail investor access: Issuers may distribute preliminary prospectuses to retail investors during the marketing phase, not only to institutional and accredited investors as under the current framework.
• Depositary receipts: For sponsored depositary receipt offers, the issuer of the underlying securities must register the prospectus, placing primary disclosure responsibility with the party that holds the most direct knowledge of the issuer’s business.
• Market misconduct safe harbours: MAS may extend certain market misconduct safe harbours available under US law to GLB issuers, ensuring they are not placed at a regulatory disadvantage relative to US-only listings.
• Next steps: SGX and Nasdaq are expected to finalise GLB rulebook and detailed eligibility criteria in H2 2026, with the GLB open for applications thereafter.

3.2 MAS MindForge AI Risk Management Toolkit

In April 2026, MAS issued a Circular setting out its supervisory priorities for capital markets entities (CMEs) for the 2026/27 cycle, covering capital markets services licence holders, exempt financial advisers and other MAS-regulated entities. The circular identifies four areas:

1. AI risk management
2. Operational resilience
3. Technology risk and cybersecurity
4. AML/CFT and conduct risk.

The four priorities are not equally weighted in practice. AI risk is the dominant theme, which is consistent with MAS’s pace of AI-related guidance over the last 18 months, culminating in the Artificial Intelligence Risk Management Guidelines for Financial Institutions (AIRG) consultation that closed in January 2026. Operational resilience and technology risk sit closely behind, and for firms that have been slow to map third-party dependencies or test business continuity plans, the 2026/27 cycle is likely to be uncomfortable.

Key highlights:

• AI risk management – the lead priority: MAS expects CMEs to have credible AI risk frameworks already in place as final AIRG guidelines approach. A current AI inventory, use case materiality assessments and higher standards for customer-facing or regulated AI applications, including explainability, fairness testing and documented human oversight, are the baseline expectation for supervisory engagement.
• Operational resilience – four pillars: MAS is examining operational resilience across: (i) operational risk management, (ii) technology and cyber risk management, (iii) third-party risk management and (iv) business continuity management. CMEs must be able to show that critical business services have been identified, impact tolerances set and recovery plans scenario-tested.
• Technology risk management and cybersecurity: MAS has flagged that it will consult on updates to the Technology Risk Management (TRM) Notice during the 2026/27 cycle, covering IT asset management, continuous monitoring and oversight of critical systems. On cybersecurity, AI-fuelled attacks and more sophisticated threat actors are the backdrop. MAS is pressing CMEs on vendor and third-party oversight, and on the rigour of cyber incident response and continuity testing. This means the emphasis is not just on the existence of plans, but whether they have actually been put into action.
• AML/CFT and conduct risk: CMEs are expected to modernise AML/CFT frameworks and conduct-risk management to align with MAS’s fair dealing and customer outcomes expectations.