What happened? . COMMISSIONS: SingTao (reported via BBG) reports that the Hong Kong Insurance Authority will propose a cap on first year commissions paid to insurance agents. The cap will apply to regular premium participating savings products. The cap will be at 65% in year 1, with the remaining 35% commission distributed evenly over the 2nd to 6th year. . TIMING: implementation will take place from the middle to 3rd quarter 2025, and there is likely to be a transitional period of 6 to 9 months. . CONTEXT: this developing news is most relevant for Prudential Plc within our coverage. HK made up c.33% of its new business volumes in 2023. While Pru has a preference for Health and Protection products, these are often sold as ''riders'' (or add-ons) to a base participating savings product (see, for instance, the ''Evergreen'' product series), so we think it is likely that a large part of Pru''s products are in scope. BNPP Exane View: . BNPPE VIEW: it is usually unhelpful for the regulator to impose restrictions on distribution practices. And to the extent Pru has to defer the commissions it pays to its agents, this may disincentivise new business sales. But we understand from previous conversations with management that the company already has a trailing commission structure; it''s possible the new measures force further deferral, but the starting point may mitigate the impact. There may even be a positive effect, if other companies currently have more accelerated commission structures than Pru, and the new rules encourage more consistent practices. Nonetheless, given that other recent regulatory interventions on distribution practices have had a negative effect on Pru''s sales (e.g. banca distribution in China, Linked sales in Indonesia), we would expect the market to take this negatively.