The token admission and review committee should ensure that all conflicts of interest are properly identified and managed. Amongst other things, if any committee member has interest in any virtual assets being reviewed by the committee, the committee member concerned should declare his/ her interest and abstain from considering matters in relation to those virtual assets.

(Key references: Paragraphs 7.1 and 13.1 of the VATP Guidelines)

Except for dealing with institutional and qualified corporate professional investors, the Platform Operator should deliver the following information to the client prior to or at the point of entering into an off-platform back-to-back transaction:
(a)   The capacity (ie, principal) in which the Platform Operator is acting;
(b)   Affiliation of the Platform Operator with the virtual asset issuer (if any);
(c)   Whether or not the Platform Operator is independent (see FAQ 4 below) and the bases for such determination. The disclosure should be made in the form of a statement as specified in Appendix 1 to this FAQ; and
(d)   Disclosure of monetary and non-monetary benefits (see also FAQs 6 and 7 below).

The disclosure must be made in writing, electronically or otherwise, in Chinese or English according to the language preference of the client. The Platform Operator should ensure that the disclosure in writing is prominent, presented in a clear and concise manner and easy for average clients to understand.

The Platform Operator should also have adequate measures in place to ensure that the above information is provided to the client prior to or at the point of entering into the transaction. In circumstances where provision of information in written form is not possible before a transaction is concluded, the Platform Operator should make a verbal disclosure and provide such information in writing to the client as soon as practicable after the conclusion of the transaction. In respect of the disclosure to be made under:

• paragraphs (a), (b) and (c) above, a one-off disclosure (One-off Disclosure) is acceptable; and
• paragraph (d), a One-off Disclosure is acceptable if the Platform Operator only receives the same fixed fee or fixed spread (as a percentage of the transaction amount) for each transaction and the Platform Operator does not make any trading profit (apart from the fixed fee or fixed spread).

Where there are changes to the One-off Disclosure, either (i) an updated One-off Disclosure, or (ii) individual disclosure for each transaction where the information for which deviates from the information in the One-off Disclosure, must be provided to the client prior to or at the point of entering into a transaction.

(Key references: Paragraph 13.2 of the VATP Guidelines)

(a) Specific disclosure

Where the monetary benefits received or receivable by the Platform Operator are quantifiable prior to or at the point of entering into a transaction, Platform Operators should make the following disclosures on a transaction basis (except for the circumstances as specified under FAQ 3 above):

(i)   Explicit remuneration arrangement: Where the Platform Operator and/or any of its associates explicitly receives monetary benefits from an issuer of virtual asset or any other person (directly or indirectly) for distributing a virtual asset to clients or making a virtual asset available for trading by clients, the Platform Operator should disclose the monetary benefits that are receivable by it and/or any of its associates as a percentage ceiling of the investment amount or the dollar equivalent.

(ii)   Trading profit made from an off-platform back-to-back transaction: Where the Platform Operator enters into an off-platform back-to-back transaction concerning a virtual asset, the Platform Operator should disclose to the client the trading profit to be made. The trading profit should be disclosed as a percentage ceiling of the investment amount or the dollar equivalent.

As a minimum, the Platform Operator should disclose the monetary benefits that are receivable by it and/or any of its associates or the trading profit in the form of a percentage ceiling of the investment amount rounded up to the nearest whole percentage point or the dollar equivalent. However, having regard to its own circumstances, the Platform Operator may disclose a specific percentage or the dollar equivalent instead.

(b) Generic and other disclosure

Where the Platform Operator does not explicitly receive monetary benefits or the monetary benefits received or receivable are not quantifiable prior to or at the point of entering into a transaction, the Platform Operator should make the following disclosures:

(i)   Where the Platform Operator does not explicitly receive monetary benefits for distributing a virtual asset or making available for trading a virtual asset by clients and the virtual asset is issued by it or any of its associates, the Platform Operator should disclose that it or any of its associates will benefit from the origination and distribution of this virtual asset and making this virtual asset available for trading.

(ii)  Where the monetary benefits received or receivable by the Platform Operator and/or any of its associates from a virtual asset issuer or any other person (directly or indirectly) for distributing a virtual asset or making a virtual asset available for trading are not quantifiable prior to or at the point of entering into a transaction, the Platform Operator should disclose the existence and nature of such monetary benefits, and the maximum percentage of such monetary benefits receivable per year. Such disclosures should be made on a transaction basis.

Upon receipt of a client request to buy or sell a virtual asset, the Platform Operator may agree on a limit order price, which is usually set with reference to the best indicative price quote obtained by the Platform Operator from the available counterparties when the order is taken and the intended spread to be charged to the client, and place the client order to the market for execution. Price improvements occur when client orders are executed at better prices than the indicative prices quoted from the available counterparties when the order is taken.

The Platform Operator could retain the benefits arising from price improvements. However, the Platform Operator should disclose or agree this arrangement with its clients.

The Platform Operator should also disclose to (which can be a One-off Disclosure) or agree with clients prior to or at the point of the transaction in writing:

(a)   it will not retain the benefits from price improvements; or

(b)   it will retain the benefits from price improvements and:

• whether the benefits from price improvements would be fully or partially retained by the Platform Operator; and
• whether the Platform Operator would retain any amount of monetary benefits from price improvements in excess of the amount disclosed to clients prior to or at the point of entering into the transaction (Changes).    

If the Platform Operator retained monetary benefits which exceeded that disclosed to the client as a result of price improvements, it should disclose the actual amount of the Changes or the actual amount of the monetary benefit of the transaction to the client on a post transaction basis in writing as soon as possible.

For the avoidance of doubt, the Platform Operator is not required to disclose and/or agree the above with institution professional investors or qualified corporate professional investors. 

(Key references: Paragraph 13.2 of the VATP Guidelines)