Global Regulatory Pulse–Q3 2026

APAC

Hong Kong

SFC Enforcements

There has been a recent increase in enforcement actions by the Securities and Futures Commission (SFC), with a particular focus on:

• Cybersecurity: weak cyber governance, inadequate cyber training for employees, outdated security controls
• Private Fund Governance: Insufficient identification, assessment and escalation of red flags, weak risk management framework, inadequate due diligence processes
• Financial Resources and Client Money Protection: Inaccurate regulatory disclosures, inadequate governance frameworks/policies and procedures, weak oversight of outsourced functions

These enforcement trends suggest the SFC is focusing on the strength of firms’ governance, their risk management and control frameworks, and whether they have effective safeguards in place to protect investors and maintain market integrity.

Cybersecurity and Operational Resilience

The SFC increasingly views cybersecurity risk as a core governance and risk management responsibility. Firms are expected to:

• Protect client data and assets
• Maintain effective cybersecurity controls
• Monitor third-party vendors and outsourced service providers
• Have incident response and recovery plans
• Ensure senior management oversees cyber risk

For licensed firms, this underscores the SFC’s expectation that cybersecurity be embedded within the broader risk management framework and actively overseen by senior management.

OTC Derivatives

The SFC remains highly focused on the over-the counter derivatives (OTCD) sector from a policy, prudential and supervisory perspective. Recent developments, including the forthcoming enhanced licensing regime, highlight the regulator’s continued emphasis on strengthening oversight of OTCD activities.

Key initiatives include:

• Enhanced licensing requirements for OTCD activities
• Proposed enhancements to capital requirements
• Guidance on model risk management
• Updated expectations on financial resources and regulatory compliance

These measures reinforce the SFC’s commitment to strengthening the OTCD regulatory framework and aligning it with international standards.

Tax Breaks

Hong Kong has proposed significant enhancements to its tax concession regimes for funds, family offices and carried interest to attract investment capital and asset managers.

These measures are intended to strengthen Hong Kong’s position as a leading asset and wealth management hub and encourage more investment management activity to be conducted locally. Market interest has been strong, with increasing inquiries from firms exploring licensing and expansion opportunities in Hong Kong.

Singapore

Liquidity Risk Management

On July 2, the Monetary Authority of Singapore (MAS) updated its Guidelines on Liquidity Risk Management Practices for fund management companies and amended the Code on Collective Investment Schemes, reinforcing expectations around liquidity risk management for open-ended funds. The key changes include:

• Aligning redemption terms with the liquidity of underlying fund assets
• Providing appropriate anti-dilution liquidity management tools
• Incorporating explicit and implicit transaction costs, including the market impact of asset sales, into redemption costs
• Strengthening governance and investor disclosures concerning liquidity management tools
• Monitoring portfolio concentration, margin requirements and collateral obligations under both normal and stressed conditions

The revised framework underscores MAS’ focus on ensuring that fund liquidity management practices remain robust and aligned with investor redemption expectations. With compliance required by January 2027, fund managers should be reviewing fund documentation, redemption arrangements, liquidity classifications, stress-testing frameworks and governance processes relating to liquidity management tools.

Retail Fund Product Innovation

On July 9, MAS consulted on proposals to facilitate the faster authorization of new retail fund products through the introduction of an Alternative Funds Appendix to the Code on Collective Investment Schemes. The proposals would allow certain products, including funds with concentrated exposures or significant use of derivatives, to be exempt from the investment requirements applicable to traditional retail funds, but those products would be subject to alternative safeguards.

Key proposals include:

• Product-specific investment limits and risk controls
• Enhanced disclosures in prospectuses, product highlights sheets and marketing materials
• Clear identification of products authorized as alternative funds
• Appropriate distribution controls for complex products
• Evidence of comparable products having operated successfully in other jurisdictions

The initial product categories identified by MAS were futures-based single-commodity funds and a broader range of single-country government bond funds. Once regulatory conditions are established for a particular product category, subsequent funds meeting the same requirements could be authorized within 21 days. These proposals reflect MAS’ efforts to expand the range of investment products available in Singapore while maintaining appropriate safeguards around liquidity, suitability, disclosure and fair dealing.

Fund Tax Incentive Schemes

On July 31, MAS issued a circular introducing significant refinements to the fund tax incentive schemes under sections 13D, 13O, 13OA and 13U of the Income Tax Act. For non-single-family-office funds, the changes include:

• Removal of the annual minimum assets-under-management condition, while retaining applicable entry requirements
• A requirement for funds to have third-party investors or a genuine intention to raise third-party capital
• Removal of the previous 5% limit on physical investment precious metals qualifying as designated investments
• Recognition of certain tokenized interests as designated investments if they provide equivalent rights to direct ownership

For single-family-office structures, MAS has introduced greater flexibility around head count and operating requirements. Some changes took effect on August 1, while others apply retroactively from January 1, 2025. Fund managers and administrators should review both new and existing incentive awards, as the applicable conditions vary by fund structure, award date and approval terms.

Asset Management Competitiveness

On August 19, MAS announced a package of measures aimed at attracting asset managers, investment capital and senior investment professionals to Singapore.

The measures include:

• A proposed tax exemption for profit-related returns earned from fund management services provided to qualifying funds
• A new investment management track under the Overseas Networks and Expertise Pass framework
• A new MAS hedge fund investment program for managers establishing or expanding their presence in Singapore

The proposed tax exemption is expected to take effect from the year of assessment 2027, although the qualifying conditions, scope and mechanics will be announced in Singapore’s 2027 budget.

The investment management track is intended to reflect the compensation structures used within the asset management industry, where senior professionals may receive a significant portion of their remuneration through investment performance and fund outcomes rather than a fixed salary.

The hedge fund investment program is intended to anchor global and regional managers while supporting the wider ecosystem of prime brokers, fund administrators and other service providers.

Taken together with the July reforms to the existing fund tax incentive schemes, these measures demonstrate that Singapore is pursuing regulatory modernization and targeted incentives to strengthen its position as an international asset management center. They are already likely to prompt managers to reassess where they locate investment teams, fund structures and performance-related remuneration arrangements.

Middle East

DFSA Amendments to Legislation Effective July 2

Following the conclusion of its consultation on proposed legislative changes in Consultation Paper No. 171, the Dubai Financial Services Authority (DFSA) amended its Rulebook in several key areas, including capital requirements and client money protections.

Capital requirements include:

• K-ASA Requirement: Capital equal to 0.06% of average assets safeguarded and administered (ASA)
• K-AUM Requirement: Capital equal to 0.02% of average assets under management (AUM)

For both requirements, the calculation is based on month-end balances for the preceding six months, averaged to determine the applicable capital requirement.

Client money reconciliation protections include requirements to:

• Perform client money reconciliations at least monthly, or daily for money service providers
• Include client balances, outstanding items, cash books and third-party statements in the reconciliation process
• Reconcile internal records and ledgers, ensure adequate client money is held and promptly resolve discrepancies
• Complete reconciliations within 10 days of the reconciliation date, or daily for money service providers

DFSA Proposes Significant Updates to Its Collective Investment Fund Framework

The DFSA has issued CP 173, proposing the most significant overhaul of its Collective Investment Fund framework since 2010. The framework proposes risk-based reforms to better align fund regulation with investor risk profiles, international standards and regulatory best practices, while enhancing clarity and reducing unnecessary regulatory burden.

Key proposals include:

Fund Classification Reform

• Shifting from fund-type classifications to a risk-based approach
• Allowing greater flexibility for hybrid and multi-strategy funds
• Increasing focus on disclosure and risk management
• Extending hedge fund risk management standards
• Requiring borrowing limits to be set prudently and disclosed
• Applying prime broker requirements to all relevant funds

Credit Fund Reforms

• Removing the stand-alone credit fund category and 90% credit-investment threshold
• Retaining key lending restrictions and credit risk controls
• Reducing manager base capital requirement from USD 140K to USD 40K
• Aligning fees with other fund manager categories

Assets Authorization Management

• Clarifying that managing assets includes arranging deals and dealing as an agent when incidental to delegated portfolio management
• Extending venture capital fund investment exemption to investment managers

Master-Feeder Fund Enhancements

• Removing certain market maker and feeder ownership restrictions
• Broadening the definition of a master fund to allow direct institutional and professional investor participation

Removal of External Fund Manager Regime

• Ending the regime permitting Dubai International Financial Centre (DIFC) funds to be managed by non-DIFC managers
• Encouraging local DFSA authorization and strengthen regulatory oversight

Employee Investment in Funds

• Permitting investment professionals to invest in funds they manage, including through special purpose vehicles, subject to conflict management and disclosure requirements

FSRA Consultation on Business Transfers–Proposed Refinements to Court Sanctioning

The Financial Services Regulatory Authority (FSRA) has proposed has proposed refinements to the Abu Dhabi Global Market business transfer framework, introducing a more proportionate approach that limits mandatory court sanctioning to most insurance business transfers while reducing regulatory burden for certain other transactions.

Key proposals include:

• Limiting mandatory court sanctioning to insurance business transfers, excluding certain intragroup transfers where all policyholders consent and reinsurance transfers where the ceding insurer consents on behalf of policyholders
• Retaining judicial oversight for other insurance business transfers through the existing court-sanction process, including the use of Scheme Reports to protect policyholder interests
• Allowing firms to seek court approval voluntarily for noninsurance transfers and exempted insurance transfers where complexity, scale or legal certainty warrants judicial involvement
• Introducing a new Modified Transfer Scheme for transfers outside the mandatory court process, requiring FSRA notification, client communications and public disclosures
• Requiring an FSRA no-objection acknowledgment for banks and certain exempted insurance transfers before proceeding

The proposals reflect the FSRA’s effort to balance client protection with regulatory efficiency by reducing execution costs and timelines while maintaining appropriate safeguards, transparency and oversight.

CBUAE Updates AML/CFT/CPF Guidance

The Federal Decree-Law No. 6 of 2025 establishes a unified regulatory framework for banking, insurance and other financial activities regulated by the Central Bank of the UAE (CBUAE), with the transition period ending on September 16. Key developments include:

• Insurance Company Licensing Regulation: Effective August 14, the regulation applies to insurance companies, including foreign insurers operating in the UAE. It replaces legacy insurance licensing frameworks and incorporates insurance licensing into the CBUAE’s consolidated regulatory regime. The regulation introduces enhanced requirements relating to governance, risk management, cybersecurity, outsourcing and fit-and-proper standards.
• SME Consumer Protection Regulation: Effective September 13, this regulation covers financial institutions serving small and medium enterprises (SMEs) and requires financial institutions to establish dedicated customer protection requirements for SMEs. Financial institutions are expected to strengthen product and fee transparency, complaint handling processes, fair and balanced treatment of SMEs and compliance with disclosure obligations.
• Operational Risk Management Regulation: Effective September 14, the regulation requires all licensed financial institutions to enhance operation resilience, business continuity, risk management and accountability from the financial institution’s management team and internal controls. Financial institutions must ensure operational risk frameworks are approved by the board and align with CBUAE expectations.
• Regulation for Takaful Insurance: Effective September 14, the regulation strengthens the regulatory framework that governs Takaful operators and requires firms to assess products, governance, segregation practices and Shariah compliance controls.

United States

Regulation Crypto Assets

The Securities and Exchange Commission (SEC) proposed Regulation Crypto Assets, a new framework designed to support capital formation for digital asset issuers while maintaining key investor protection safeguards. Key proposals include:

• A startup exemption allowing eligible issuers to raise up to $5 million
• A fundraising exemption allowing eligible issuers to raise up to $75 million
• A conditional safe harbor that would allow certain crypto assets to transition out of securities law treatment once specified requirements are met

The proposal reflects the SEC’s efforts to provide greater regulatory clarity for digital asset markets while preserving investor protections. If adopted, the framework could reduce regulatory uncertainty and support broader institutional participation in the crypto-asset ecosystem.

Around-the-Clock Markets: Preparing for 23/5 Trading

As exchanges and market participants continue to move toward near-continuous trading, investment advisers and hedge fund managers should evaluate whether existing compliance, operational and risk management frameworks are equipped for 23/5 market activity. Key areas to focus on include:

• Trade surveillance and market monitoring
• Valuation and pricing oversight
• Best execution processes
• Liquidity risk management
• Cybersecurity controls
• Third-party service provider resilience

Firms may also need to reassess staffing, escalation procedures and governance models to address risks arising from extended trading hours. Read Kroll’s take on the key considerations shaping this shift here.

Form PF Compliance Date Extended Again

The SEC and Commodity Futures Trading Commission (CFTC) further extended the compliance date for the amended Form PF requirements to July 2027, marking the fourth delay since the rules were adopted. The extension provides private fund advisers with additional time to implement data collection, reporting and governance processes needed to comply with the expanded reporting framework. While the delay offers welcome relief, advisers should continue preparing for implementation, including enhancements to:

• Data collection and reporting processes
• Governance and oversight frameworks
• Regulatory reporting controls and procedures

The amended Form PF requirements are expected to significantly expand reporting obligations and regulatory scrutiny once they become effective.

SEC Proposes Recission of the Political Contribution Rule for Investment Advisers

The SEC has announced a proposal to rescind Rule 206(4)-5 of the Investment Advisers Act, more commonly known as the pay-to-play rule. According to SEC Chairman Paul S. Atkins, the rule created a de facto strict liability standard that resulted in unintended consequences and increased operational compliance burdens for investment advisers. The proposal is now open to comment.

SEC Enforcement Agenda Developing

The SEC’s Enforcement Division has recently announced several initiatives that provide insight into its evolving enforcement priorities. Key developments include:

• The formation of a Retail Fraud Working Group, focusing on identifying and combating fraud targeting retail investors.
• The creation of a Financial Reporting and Accounting Unit dedicated to accounting and financial reporting fraud, as well as misconduct involving accounting and auditing professionals.
• An increase in enforcement activity ahead of the SEC’s September 30 fiscal year-end, with a particular focus on traditional enforcement priorities, including Ponzi schemes, affinity and retail fraud, insider trading, accounting and financial reporting fraud, and other fraudulent conduct.
• Enforcement actions outside these traditional areas, including charging a firm with misconduct related to alleged unregistered broker activity involving municipal bonds.
• An enforcement sweep charging 38 entities with allegedly misrepresenting themselves as legitimate investment advisory firms through false regulatory filings.

These developments suggest the SEC remains focused on investor protection, financial reporting integrity and market misconduct, while continuing to pursue both traditional fraud cases and broader compliance-related violations.

CFTC Focus on Prediction Markets Continues

The CFTC continues to assert its jurisdiction over prediction markets through litigation and enforcement activity. Recent developments include:

• Ongoing litigation against the state of Kentucky concerning the regulation of event contracts tied to sporting events.
• Actions relating to state court decisions in Michigan and New York addressing whether state gaming laws or the Commodity Exchange Act governs prediction market activity.
• Continued efforts to support its position that event contracts constitute commodities-based derivatives subject to federal oversight.

The CFTC has also pursued enforcement actions involving the use of material nonpublic information in prediction markets, including settlements with former Congressman George Santos and former White House aide Gabriel Perez. Both were fined for allegedly using material nonpublic information to trade event contracts tied to future events, including George Santos’ attendance at the State of the Union address and the frequency of specific words used by President Trump in public speeches. These settlements underscore that insider trading and market manipulation risks can extend beyond traditional securities markets to prediction and event-based contracts.

CFTC Explores Expansion of Market Offerings

The CFTC has approved the first perpetual futures contract in the U.S., a Bitcoin contract submitted by Kalshi. Unlike traditional futures contracts, the contract does not have an expiration date, although the margin requirements reset at regular intervals. The contract will remain standardized with respect to contract size and central clearing, consistent with other exchange-traded futures products.

The CFTC has also announced and extended a comment period seeking public input on the feasibility of 24/7 futures trading and perpetual futures contracts for physically delivered or storable energy commodities. Key areas of focus include:

• The operational and logistical implications of continuous trading
• Compliance and risk management considerations associated with a 24/7 market structure
• The viability of self-certified perpetual futures contracts for energy commodities
• The potential impact on market participants, exchanges and clearing infrastructure