The geopolitical and economic landscape is again undergoing major change and giving rise to significant challenges. Policymakers are responding to developments and reviewing regulatory approaches and priorities. All stakeholders need to navigate widespread uncertainty.
The focus on sustainable finance has further widened and deepened, with an increasing number of jurisdictions introducing rules for asset managers and funds. In Hong Kong, the SFC has issued new rules that will require fund managers to consider climate-related risks in their investment and risk management processes. It has also provided additional guidance on disclosures and reporting for funds that incorporate ESG factors.
Policymakers around the world are walking a tightrope between expanding the available range of products to retail investors while recalibrating their approaches to investor protection. Mainland China continues to open its capital markets, and the addition of the ETF Connect to the Stock Connect scheme this year will enhance mutual access between the Mainland and Hong Kong markets.
At the same time, regulators in Hong Kong are tightening their oversight in areas including the regulation of trustees and custodians of authorized funds, and virtual asset service providers.
Key topics covered in the report include updates on sustainability and ESG requirements, systemic risk including the impact of the conflict in Ukraine, enhancing investor protection amid rapid technology changes and broadening investor choice, and the evolving governance landscape.
Key questions for CEOs
- Do we have sufficient technology and data capabilities to keep pace with regulatory reporting expectations?
- Are we prepared to implement the full range of new sustainable finance regulations that will impact us, directly or indirectly? Do we have access to the datasets and tools we need?
- Have we critically analyzed our experience during the 2020 and 2022 market stress, and re-assessed liquidity risk management for our funds?
- Have we considered how our clients and our systems might be impacted by changes to capital markets regulation?
- Are we tracking new investor protection regulations and putting in place robust processes, systems and controls to meet the new requirements and evidence good outcomes for investors?
- Do we have effective board engagement and supporting governance arrangements in place?
- Do we actively and effectively oversee functions and tasks that we delegate or outsource to other parties?
- Are we utilising the full range of emerging products and fund structures to deliver sound investment strategies to investors? Are we taking advantage of opportunities to invest in new markets and are we navigating new restrictions?
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