6 regulatory changes impacting cross-border marketing in Asia and the Middle East

1. Hong Kong

1. The SFC published an updated version of its circular on the mutual recognition of funds scheme with China to reflect the expansion of the types of eligible funds, to increase the proportion of the China fund which may be sold to Hong Kong investors and to change rules relating to delegation of fund management.

• Mutual market access with Mainland China – plans to enhance this by including real estate investment trusts and extending the Wealth Management Connect Scheme in the Guangdong-Hong Kong-Macao Greater Bay Area;
• Securities and Derivatives Market - HKEX will step up its promotion in ASEAN and the Middle East and actively explore areas of co-operation with countries in the region, including the listing of exchange-traded funds;
• Virtual Assets - expedition of vetting virtual asset licence applications, how to leverage the advantages of traditional financial services and innovative technologies in the area of virtual assets, consulting on licensing regimes of virtual asset over-the-counter trading services and custodian services.

2. The SFC published an updated version of its circular on the mutual recognition of funds scheme with China to reflect the expansion of the types of eligible funds, to increase the proportion of the China fund which may be sold to Hong Kong investors and to change rules relating to delegation of fund management.
3. HKMA announced new measures to deepen the financial market connectivity with China, including plans to allow Northbound Bond Connect participants to use eligible onshore bonds as collateral to conduct RMB repurchase (repo) business in Hong Kong and to further enhance the Southbound Bond Connect to expand the scope of eligible China investors in due course.

2. Saudi Arabia

1. The CMA is consulting on the development of the regulatory framework for investment fund. The proposed amendments are intended to strengthen the asset management industry and increase transparency and disclosure levels for investors, ensure governance standards that protect investor rights and align with the CMA's strategic objectives to enhance the appeal of asset management in the Kingdom. Some of the proposed amendments aim to allow capital market institutions licensed to conduct investment management activities to distribute foreign funds in the Kingdom, in accordance with specific requirements. 
2. The CMA is also consulting on amendments to the licensing requirements for capital market institutions (CMI) authorised to carry out dealing and custody business in the Kingdom. The amendments, aimed at aligning with international best practice and encouraging competition in the dealing and custody business, relate to the minimum capital and legal structure requirements for such brokerage companies. An offshore financial institution is required to use a CMI for the offer of securities business in Saudi Arabia.

3. Israel

1. The ISA has published updated Q&A on section 49A of the Securities Law. There are two aspects of the Q&A which relate to routes to provide services outside the regulatory perimeter of Section 49A: (i) clarification that a foreign broker may rely on reverse enquiry while other brokers in the same group may continue to use their s49 permit; and (ii) a foreign bank (which is an exempt broker-dealer in the US) is able to provide securities custody services to clients of an Israeli permit holder without holding a permit itself subject to certain conditions.
2. Offers of securities made to Qualified Investors are exempt from certain public offering restrictions, including the requirement to provide an ISA-approved prospectus prior to offering. Increased thresholds for individuals who are considered Qualified Investors apply from 1 January 2025.

4. Thailand

1. The SEC has amended the regulations for funds investing in digital assets (effective 16 January 2025) by:

• including investment tokens as an eligible asset;
• permitting funds to invest in crypto assets with a risk level appropriate for different types of investors; and
• revising related regulations on establishment and management of funds including asset custody; disclosure of information; appropriate advertising and adjustment of the suitability test to cover crypto asset investment.

2. The SEC is also consulting on the revision of the classification criteria and the provision of advice to institutional investors and large investors to be consistent with securities and derivatives business as well as the provision of domestic and foreign product services. The changes include referring to ultra-high net worth investors as those with a total investment of 30 million baht or more for individuals and 60 million baht or more for juristic persons, with the required knowledge or experience.  When the new classification criteria come into effect, investors who were previously classified as qualified investors will be automatically considered as ultra-high net worth investors.

5. India

1. Cross-border marketing and provision of services falling within scope of regulated ‘Investment Advice’ or that involve acting as a ‘Research Analyst’ in India trigger a requirement to register with SEBI as an Investment Adviser or Research Analyst. On 16 December amendments to the regulations governing this area were published, taking immediate effect. The changes include creation of a new definition of Research Services, amendment to the definitions of Research Analyst and Investment Advice as well as the Widely Available Medium Exception from the registration requirement for marketing/provision of Research Analysis being no longer available.
2. Foreign entities that do not have a physical presence in the IFSC are permitted to trade directly on IFSC stock exchanges on a proprietary basis without a broker-dealer as a remote trading participant (RTP). On 11 February 2025, the IFSCA published a circular specifying revised conditions for the onboarding of a foreign entity as a RTP by an IFSC stock exchange, in particular differentiating between an entity regulated by its home state securities markets regulator and and unregulated entity.