Five AI initiatives to propel finance sector

Cici Cao and agencies

Hong Kong yesterday outlined five key initiatives to use of artificial intelligence in finance and floated a tax break for virtual assets, part of efforts to promote itself as an Asian financial hub.

The guidelines were announced during Fintech Week, the city's annual flagship industry event.

They include a dual-track approach to promote the use of AI in the financial services sector while addressing challenges like cybersecurity and data privacy, AI governance strategy for financial institutions, updated regulations of financial regulators, and the global exchange of information between international organizations and the police.

Also, the Hong Kong University of Science and Technology will offer its self-developed AI model and computing resources for the industry.

Speaking at the event, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said that around 38 percent of local financial institutions use AI, 12 percent higher than the global average.

Hui said the government is also proposing the extension of existing tax breaks for family offices and private funds to include investments in virtual assets.

At the event, the Hong Kong Monetary Authority launched a fintech matching platform called Fintech Connect, aiming to connect financial institutions with fintech service providers, and offer one-stop assistance in matching the demand and supply of fintech services.

Meanwhile, authorities expect to license more digital-asset exchanges by the end of 2024 after a five-month inspection period.

A finalized list of the platforms graduating from a provisional permit to being fully licensed will be published by year-end, said Eric Yip Chee-hang, executive director for intermediaries at the Securities and Futures Commission.

"The applicants and their controllers have by and large taken up our feedback, and they are willing to commit resources to rectify issues and take a long-term view in developing their business in a regulated environment," Yip said.

The regulator will form a consultative panel with the authorized exchanges to foster closer cooperation by early 2025.

Standard Chartered Bank (Hong Kong) revealed that it has completed tests for trade and supply chain finance in the ensemble sandbox launched by the HKMA in August.

BOCHK had also completed the sandbox tests, while HSBC and Ant International said they had completed cross-bank blockchain test transactions denominated in Hong Kong dollars under the sandbox.

Standard Chartered's international president Benjamin Hung Pi-cheng said digitalization can make it easier for banks to understand enterprises and for enterprises to access finance at a lower cost.

In market news, Hong Kong Exchanges and Clearing (0388) plans to debut a virtual asset index series to provide more benchmarks for bitcoin and ether pricing in Asia-Pacific time zones. It aims to provide a single reference price for virtual assets amid different trading prices across global exchanges.