HKMA Extends Repayment for Trade Facilities, Consults on Crypto-Assets

HKMA and the Banking Sector SME Lending Coordination Mechanism jointly announced a further 90-day repayment deferment (until April 2022) for trade facilities under the Pre-approved Principal Payment Holiday Scheme. As for the way forward for the whole Scheme, which is due to expire at the end of April, the HKMA and the Mechanism are considering ways to strike a balance between banks’ need for prudent risk management and supporting corporates that are still hard-pressed by the pandemic. Corporate customers participating in the repayment deferment for trade facilities under the Scheme can, if in need, extend trade facilities falling due between February and April this year for a further 90 days. Eligible corporate customers can also apply for a 90-day extension of trade facilities drawn down from November 2021 to the end of January this year. For facilities which are self-liquidating in nature, banks may require the loan to be settled when the customer has received the underlying payment. For trade loans which have been successively extended for 270 days or more since first being drawn down, banks may adopt a flexible approach and consider whether other forms of relief are more suitable to help the customers ride out the current difficulties on a case-by-case basis, subject to prudent risk management principles.

The discussion paper on crypto-assets and stablecoins sets out HKMA’s thinking on the regulatory approach for crypto-assets, particularly payment-related stablecoins, with the comment period ending on March 31, 2022. The approach has considered, among other things, the international recommendations; the market and regulatory landscape, locally and in other major jurisdictions; and the characteristics of payment-related stablecoins. HKMA aims to introduce the new regime no later than 2023-24. HKMA and the Securities and Futures Commission are working together to set out our supervisory expectations on the investor protection aspects of authorized institutions’ provision of intermediary services to customers related to crypto-assets. HKMA is also deliberating its regulatory approaches regarding AIs’ growing business interface with crypto-assets. Authorized institutions should critically evaluate their exposures to different types of risks and put in place appropriate risk-mitigation measures before establishing their relationship with crypto-asset service providers. HKMA will soon issue a circular to provide more detailed regulatory guidance on these issues.

Keywords: Asia Pacific, Hong Kong, Banking, Reporting, Compliance Risk, Code of Banking Practice, Crypto-Assets, Stablecoins, Loan Repayment, SMEs, Payment Deferrals, COVID-19, Principal Payment Holiday Scheme, Credit Risk, Lending, HKMA