Featured Product

    HKMA Consults on Stay Rules on Financial Contracts Under FIRO

    January 22, 2020

    HKMA published proposals for making rules related to contractual stays on termination rights in financial contracts for authorized institutions under FIRO or the Financial Institutions (Resolution) Ordinance (Cap. 628). The proposals encompass the rules that HKMA intends to make in its capacity as a resolution authority. Comments are requested by March 22, 2020.

    FIRO, which came into effect in 2017, establishes a cross-sectoral resolution regime for financial institutions that is in line with the international standards. Disorderly termination of contracts by counterparties of a financial institution in a resolution would cause significant contagion effect to the financial markets. FIRO contains a provision that provides a resolution authority with the power to suspend (that is, stay), for a specified period, the termination right of a counterparty to a qualifying contract under certain circumstances. For ensuring the effective implementation of this provision, a resolution authority may make rules that impose a requirement for contractual recognition of the temporary stay power under FIRO

    The consultation sets out detailed proposals for the stay rules HKMA intends to make, which will require the entities subject to the rules to adopt appropriate provisions in certain financial contracts to the effect that the parties to the contracts agree to be bound by a temporary stay that may be imposed by HKMA under FIRO. The proposals are designed to be aligned with the relevant principles set by FSB. In drawing up the proposals, HKMA has taken these principles into account and made reference to the approaches adopted in key jurisdictions. 

    The consultation paper sets out the relevant FIRO provisions and the international context. It also sets out the proposed scope of the stay rules, operational and implementation matters in relation to the stay rules, along with the next steps intended to be taken in relation to the stay rules. The Annex to the consultation paper sets out the full list of consultation questions. Subject to outcome of the public consultation, the intention is to introduce the rules as subsidiary legislation under FIRO into the Legislative Council for negative vetting in the 2020-2021 legislative session. 

     

    Comment Due Date: March 22, 2020

    Keywords: Asia Pacific, Hong Kong, Banking, Securities, Stay Rules, FIRO, Termination of Contracts, Financial Contract, Resolution Framework, FSB, HKMA

    Related Articles
    News

    EBA Updates Filing Rules for Supervisory Reporting

    The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    EBA Publishes Standards on Disclosure of Investment Policy Under IFR

    The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).

    October 19, 2021 WebPage Regulatory News
    News

    APRA Finalizes Guidance for New Prudential Standard on Remuneration

    The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.

    October 18, 2021 WebPage Regulatory News
    News

    OCC Updated LIBOR Self-Assessment Tool for Banks

    The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).

    October 18, 2021 WebPage Regulatory News
    News

    TCFD Updates Guidance for Financial Disclosures on Climate Risk

    The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

    October 14, 2021 WebPage Regulatory News
    News

    BCBS Report Examines Progress on Adoption of Basel III Framework

    The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.

    October 14, 2021 WebPage Regulatory News
    News

    ACPR Implements Updates Related to DPM Version 3.1

    The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.

    October 14, 2021 WebPage Regulatory News
    News

    EBA Note Examines Transition Risks of Benchmark Rates

    The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.

    October 14, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7571