The Hong Kong Securities and Futures Commission issued a notice on "Intermediaries Engaging in Activities Related to Tokenized Securities."

ChainCatcher news, the Hong Kong Securities and Futures Commission today issued a notice regarding the activities of intermediaries engaged in tokenized securities. The notice mentioned that the Commission recognizes the potential benefits of tokenization for the financial market, particularly in enhancing efficiency, increasing transparency, reducing settlement times, and lowering traditional financial costs, but it also acknowledges the new risks associated with the use of this technology.

The Commission supports intermediaries in actively tokenizing traditional securities and believes that more guidance should be provided regarding activities related to tokenized securities. The focus of the notice is to provide guidance for intermediaries to address and manage the new risks arising from the use of this new tokenization technology, so that the tokenized market can develop in a healthy, responsible, and sustainable manner.

The notice emphasizes that intermediaries need to have sufficient manpower and expertise to conduct due diligence on tokenized securities and to be responsible for the overall operation of tokenization arrangements, even when third-party vendors/service providers are involved. It also highlights considerations for custody arrangements, disclosure requirements for client notices, and the complexity assessment of tokenized securities. In addition, intermediaries are required to comply with applicable laws and regulatory requirements, provide necessary information to the Commission, and implement appropriate controls in digital securities-related activities.