Since the 1997 handover to Mainland China, Hong Kong has endured pandemics, recessions, and financial crises. Hong Kong’s financial supervisory architecture performed relatively well following the speculative attacks on the Hong Kong dollar and the Hang Seng Index during the 1997–8 Asian Financial Crisis, the liquidity crunch in the 2008–9 global financial crisis, and the economic shutdown from the Covid-19 pandemic. There have been no major supervisory failures or financial instability despite several international financial assessments and reviews recommending structural reforms. This chapter argues that these recent crises call for Hong Kong’s financial supervisory architecture to reflect on the financial system, rather than wait for a market failure to incentivize a redesign. The ongoing financial system integration with Mainland China is placing more reliance on supervisory coordination and cooperation to manage financial stability. Hong Kong is critical to Mainland China’s financial market liberalization and internationalization which will be a key driver of financial market growth in the future. As an international financial centre, Hong Kong is actively involved in market and regulatory developments. Hong Kong has taken a leading role to ensure its financial markets evolve and are fertile to embrace prevailing market trends.

Hong Kong is Mainland China’s international financial centre and capital market gateway, being home to the largest offshore renminbi hub. Cross-boundary connect schemes have significantly boosted capital flows between Hong Kong and the Mainland. Hong Kong’s role in the internationalization of the renminbi and offshore investment is supported by cross-boundary financial market infrastructure and complicated by the dual supervisory and regulatory systems in each jurisdiction. Hong Kong and the Mainland operate under the sectoral model with some key design differences. This chapter argues these differences produce cross-boundary macro-prudential and systemic supervisory underlap across the renminbi and connect scheme infrastructure. To overcome design flaws inherent to the sectoral model, both jurisdictions have created composite systemic supervisors. Cross-boundary underlap constricts these composite systemic supervisors from mitigating systemic risk outside their home jurisdiction. Moreover, Hong Kong and the Mainland have begun adopting regulatory technology to enhance financial market supervision. However, technology does not change the functionality of financial market infrastructure nor the cross-boundary supervisory functions. Technology risks are introduced that expand rather than change the supervisory roles. Cross-boundary supervisors should not reduce risk management requirements merely because technology automates compliance requirements or supposedly eliminates orthodox financial risks.