Resolution Regime for Financial Firms Commences Operation in Hong Kong
The resolution regime established under the Financial Institutions (Resolution) Ordinance (Cap. 628) commenced operations on July 07, 2017 in Hong Kong. Under the Ordinance, HKMA, IA, and SFC will be the resolution authorities. These agencies are vested with a range of necessary powers to effect orderly resolution of non-viable systemically important financial institutions in Hong Kong.
The resolution will be undertaken in such a way that risks posed by the non-viability to the stability and effective working of the Hong Kong financial system, including the continuity of critical financial services, can be mitigated while losses are imposed on the institution’s shareholders and creditors. Additionally, HKMA has been designated by the Financial Secretary, under the Ordinance, as the lead resolution authority for 25 cross-sectoral groups, which include both banking sector entities and securities and futures sector entities. The Ordinance was enacted by the Legislative Council on June 22, 2016. The Secretary for Financial Services and the Treasury has appointed July 07, 2017 as the commencement date of the Ordinance, with the exception of certain provisions that will commence operation pending the making of the relevant rules.
Following the commencement, the government, along with the resolution authorities, will maintain close liaison with the industry and the relevant stakeholders in the formulation of regulations and rules to be made under the Ordinance as well as on the implementation of resolution planning requirements. This Ordinance establishes a resolution regime that is designed to meet the international standards set by the FSB.
Effective Date: July 07, 2017
Keywords: Asia Pacific, Hong Kong, HKMA, IA, SFC, Resolution Regime, Resolution Ordinance, Banking, Insurance, Securities
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