HKMA Consults on Draft Stay Rules on Financial Contracts Under FIRO
HKMA is consulting, until January 31, 2021, on the draft rules on contractual stays on termination rights in financial contracts for authorized institutions (Stay Rules) to be made under the Financial Institutions (Resolution) Ordinance (Cap. 628)—also known as FIRO. HKMA also released conclusion to its consultation on the Stay Rules that were published in January 2020. After reviewing feedback from the consultation, HKMA has adopted appropriate refinements in developing the draft Stay Rules. In addition, HKMA published a consultation on the revised Supervisory Policy Manual module (IC-6) that specifies the minimum standards that authorized institutions should observe in relation to the sharing and use of consumer credit data through credit reference agencies; this consultation is open until February 01, 2021.
In response to the January consultation on Stay Rules, HKMA had received a total of 14 submissions from industry associations, professional associations, banks, an accounting firm, and law firms. All respondents indicated broad support for the proposed approach to the Stay Rules and provided constructive comments on the proposals set out in the consultation paper. Some sought additional clarity on the details of the proposals in the consultation paper. The Stay Rules require authorized institutions incorporated in Hong Kong and certain of their group companies to include an appropriate provision in certain non-Hong Kong law governed financial contracts to the effect that the parties to the contracts agree to be bound by a temporary suspension of termination rights that may be imposed by HKMA under section 90 of the FIRO.
The Stay Rules are designed to address the cross-border risks to orderly resolution arising from the early termination of financial contracts governed by non-Hong Kong law, in line with the contractual approach to giving effect to cross-border resolution actions advocated by FSB. It is intended to introduce the Stay Rules into the Legislative Council for negative vetting within the current legislative year of 2020-21, with a view to bringing the Stay Rules into operation shortly after the completion of the vetting process in 2021.
Comment Due Date: January 31, 2021/February 01, 2021
Keywords: Asia Pacific, Hong Kong, Banking, Securities, Stay Rules, FIRO, Financial Contract, Resolution Framework, FSB, HKMA
Previous Article
CMF Consults on Reporting Requirements for Basel III StandardsRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
