The Securities and Futures Commission (SFC) issued its Annual Report 2024-25 on 25 June 2025. The report covers the period from 1 April 2024 to 31 March 2025. It discusses the SFC’s initiatives and regulatory objectives against the backdrop of its strategic priorities 2024-2026. This article focuses on two of these priorities and issues which are more relevant to the asset management industry.
Strategic Priority 1: Maintaining market resilience and mitigating serious harm to our market
Disciplinary actions
Key areas in respect of which public disciplinary actions were taken during the year include:
- Internal control deficiencies relating fund marketing activities
- Misconduct in the provision of asset management services
- Anti-money laundering (AML) deficiencies
During the year, the SFC publicly disciplined seven corporations and 17 individuals imposing fines of HK$96.7 million.
On-site inspections
- Number – During the year, SFC commenced 256 on-site inspections, which reflects a year-over-year increase of almost 10%.
- Top five number of breaches — The top five breaches identified by the SFC in relation to asset managers during the year are set out in the table below. The number of breaches relating to internal control weakness increased by over 80%.Internal control weakness includes deficiencies in management review and supervision, operational controls over the handling of client accounts, segregation of duties, information management, adequacy of audit trail for internal control purposes.Areas2024/252023/24Internal control weaknesses856465Breaches of Code of Conduct379332Non-compliance with AML guidelines289269Breach of contract note rules6243Breaches of Fund Manager Code of Conduct (FMCC)122122
Strategic Priority 3: Leading market transformation via technology and ESG
A new “ASPIRe” road map
The SFC published a new “ASPIRe” road map on 19 February 2025 (see what this term stands for further below). The 12 initiatives under the roadmap seek to streamline access for global liquidity, enable adaptive compliance and product frameworks focusing on security, and drive infrastructure upgrades for traditional finance to tap into blockchain efficiency. Under the roadmap, new frameworks for regulating virtual asset (VA) over-the-counter and VA custodian services will be developed, while VA product and service offerings will be expanded. Other measures encompass optimisation of operational requirements for VA trading platforms, combatting illicit activities, investor education and proactive stakeholder engagement. For further discussion, please see our article of 27 February 2025.
Source: SFC Annual Report 2024-25
Virtual Asset Service Providers
There are currently 10 virtual asset service providers (VATPs) licensed by the SFC and eight VATP licence applications being considered, including four deemed-to-be licensed applicants as of 31 March 2025.
