SFST's opening remarks on financial services at LegCo Finance Committee special meeting
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Chairman and Honourable Members,
I will briefly introduce the estimates of expenditure for financial services and our key areas of work in 2025-26.
Estimates of expenditure
The allocation to the Financial Services Branch (FSB) and departments under its purview for 2025-26 is around $1.6 billion. The allocation is decreased by around $0.6 billion over the revised estimate of last year, mainly due to the one-off provision of $200 million to the Accounting and Financial Reporting Council last year, but no such special expenditure is estimated for 2025-26. Secondly, most of the system development costs of the eMPF Platform have been settled in previous years, and the eMPF Platform Company Limited has to repay a one-off cash advance to the Government, resulting in a decrease in cash flow requirement for the Platform in 2025-26. Furthermore, allocation for various funding schemes/initiatives under the "Funding for promoting and facilitating the development of the financial services sector" in 2025-26 is revised.
Key areas of work
In the coming year, our work will focus on six main themes, namely, continuously supporting the vibrant development of stock market and initial public offering (IPO) market, facilitating asset and wealth management business, attracting enterprises, boosting fintech and innovation, deepening mutual access and international co-operation and taking forward institutional reforms continuously.
(i) To continuously support the vibrant development of the stock market and IPO market, Hong Kong Exchanges and Clearing Limited (HKEX) is taking forward the establishment of a dedicated "technology enterprises channel" (TECH) to further assist specialist technology and biotechnology companies in raising funds and expanding business, facilitating the relevant companies in preparing for listing applications. Meanwhile, the Securities and Futures Commission (SFC) and the HKEX will take forward a comprehensive reform to the listing regime and review the market structure to dovetail with the latest economic trends and corporate needs, attracting more Mainland and overseas issuers to raise funds in Hong Kong as well as investors to increase their allocation to Hong Kong stocks. In addition, we will take forward various measures in facilitating financing of overseas enterprises and specific products, improving trading and risk management efficiency, and promoting trading of Renminbi (RMB) stocks, thereby driving the high-quality development of the Hong Kong securities market and creating more new growth areas.
(ii) To facilitate the asset and wealth management business, we will formulate proposals on the preferential tax regimes for funds, single family offices and carried interest this year, including expanding the scope of "fund" under the tax exemption regime and increasing the types of qualifying transactions eligible for tax concessions for funds and single family offices. Our target is to submit the legislative proposals to the Legislative Council (LegCo) for consideration next year, and strive for the LegCo's approval as soon as possible to apply the relevant measures with effect from the 2025-26 financial year. Furthermore, Invest Hong Kong has assisted over 160 family offices to set up or expand their businesses in Hong Kong. The third edition of the Wealth for Good in Hong Kong Summit, themed "Hong Kong of the World, for the World", was successfully held last month, attracting around 360 family office principals and industry leaders, to showcase Hong Kong's advantages as a leading global family office hub.
(iii) We strive to attract enterprises from the Mainland and around the world to set up headquarters or corporate divisions in Hong Kong. Meanwhile, we submitted a bill to the LegCo for the introduction of a company re-domiciliation mechanism to provide facilitation for companies domiciled overseas to re-domicile to Hong Kong. The scrutiny of the bill is approaching the final stage, and we are thankful to Members for their support. We will pursue the passage of the bill in May for it to take immediate effect.
(iv) We are at the forefront of fintech and are actively promoting innovation.
On virtual assets, we will soon promulgate a second policy statement on the development of virtual assets to explore the convergence of traditional finance and virtual assets, and will conduct consultation on the licensing regimes of virtual asset over-the-counter trading services and custodian services this year. The Stablecoins Bill submitted to the LegCo at the end of last year has also reached the final stage of scrutiny.
In terms of gold and commodities market, we established the Working Group on Promoting Gold Market Development last December, which will formulate a plan this year to enhance gold storage facilities, trading mechanisms, etc. The London Metal Exchange, a subsidiary of the HKEX, has included Hong Kong as an approved delivery point, further strengthening our market position.
We, together with the Office for Attracting Strategic Enterprises and the Hong Kong Trade Development Council, will host the inaugural Hong Kong Global Financial and Industry Summit this year, which will, through financial empowerment, attract more leading companies in advanced industries, domestic as well as overseas enterprises and investors to establish a foothold in Hong Kong.
On fixed income and currency hub, the SFC and the Hong Kong Monetary Authority (HKMA) have set up a task force to formulate a roadmap. We will also organise a flagship forum in the second half of this year to promote Hong Kong's strengths in this regard. We will also conduct research into the current legal and regulatory regime related to the issuance and transactions of digital bonds and explore enhancement measures to promote the wider adoption of tokenisation in Hong Kong's bond market.
(v) Hong Kong's status as an international financial centre is inseparable from our connection with the Mainland and the world. To deepen mutual access and international co-operation, we will strive to enhance the mutual access mechanism. For example, we will explore extending the Cross-boundary Wealth Management Connect Scheme in the Greater Bay Area. Both places are also conducting technical preparations to implement the inclusion of RMB trading counter under Southbound trading of Stock Connect, and taking forward further expansion initiatives. Offshore RMB business is also being upgraded, with the liquidity pool expanding to approximately RMB1.1 trillion.
The Government and the HKEX will step up promotion in ASEAN (Association of Southeast Asian Nations) and the Middle East, foster financial co-operation, attract more enterprises to list in Hong Kong, and explore co-operation including listing of exchange-traded funds to promote two-way capital flows.
(vi) We will also take forward institutional reforms on different aspects continuously.
On improving trading and risk management efficiency, the HKEX is gradually conducting upgrades to its post-trade system to ensure technical compatibility with the T+1 settlement cycle by the end of this year, and will also put forward recommendations on improving the trading unit system (or so-called "board lot" system) within this year. In addition, to meet the risk management needs of investors, the SFC has consulted the market on the proposal to increase the position limits for key index derivatives, so as to enhance flexibility for investors to use the relevant derivatives while safeguarding financial safety.
On reforming the MPF (Mandatory Provident Fund) System, the MPFA (Mandatory Provident Fund Schemes Authority) commenced public consultation on the proposal of MPF "Full Portability" in late March, and will submit consultation conclusions and a legislative amendment proposal to the Government upon completion of the public consultation. Subject to the results of the public consultation, the Government will proceed with legislative amendments, so that MPF "Full Portability" could be launched soon after the full implementation of the eMPF Platform.
Chairman, my colleagues and I will be happy to answer Members' questions. Thank you, Chairman.
Ends/Tuesday, April 8, 2025
Issued at HKT 17:57
Issued at HKT 17:57
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