HKMA Concludes Consultation on Loss Absorbing Capacity Requirements
HKMA released the consultation conclusion on the public consultation related to rules prescribing loss-absorbing capacity (LAC) requirements for authorized institutions. The rules were proposed to be made as subsidiary legislation under section 19(1) of the Financial Institutions (Resolution) Ordinance (Cap. 628).
The core of the HKMA’s LAC policy proposal is that authorized institutions whose failure could pose a risk to the financial system in Hong Kong should be required to have sufficient LAC to facilitate the orderly failure of such entities, should they reach the point of non-viability. To this end, requiring authorized institutions to maintain sufficient LAC is a pre-requisite to enabling the Monetary Authority, as resolution authority for the banking sector, to use the powers under the resolution regime established by the Ordinance to manage any future failure of an authorized institution in an orderly manner that avoids disruption to financial stability and minimizes the risk to public funds.
At the end of the consultation period (January 17, 2018 to March 16, 2018), 10 submissions had been received, including from industry associations (both domestic and international), authorized institutions, and financial market infrastructures. Respondents provided constructive comments on the proposals set out in the consultation paper. While some sought additional clarity on the details of the proposals, no respondents challenged the basic principle of the policy proposal. HKMA has carefully reviewed all comments and its responses are set out in the consultation conclusion, with appropriate changes adopted in developing the draft rules. The intention is to consult industry on the text of the draft rules before introducing the rules as subsidiary legislation under the Ordinance into the Legislative Council for negative vetting later in 2018. The Ordinance was enacted by the Legislative Council on June 22, 2016. The main provisions of the Ordinance came into operation on July 07, 2017.
Keywords: Asia Pacific, Hong Kong, Banking, Loss Absorbing Capacity, Resolution Regime, Consultation Conclusions, HKMA
Previous Article
IAIS Publishes Newsletter for July 2018Related Insights
|
News
US Agencies Propose Revisions to FFIEC Reports 031, 041, 051, and 101US Agencies (FDIC, FED, and OCC) propose to extend for three years, with revision, FFIEC 031, FFIEC 041, FFIEC 051, and FFIEC 101.
February 21, 2019
WebPage
Regulatory News
|
|
News
OFR Adopts Data Collection Rule on Centrally Cleared Repo TransactionsOFR adopted a final rule to establish a data collection covering centrally cleared funding transactions in the U.S. repurchase agreement (repo) market.
February 20, 2019
WebPage
Regulatory News
|
|
News
FHFA Finalizes Rule on Federal Home Loan Bank Capital RequirementsFHFA published, in Federal Register, the final rule to adopt, as its own, portions of the regulations of the Federal Housing Finance Board pertaining to the capital requirements for the Federal Home Loan Banks.
February 20, 2019
WebPage
Regulatory News
|
|
News
PRA Publishes PS4/19 on Loss-Absorbency Mechanism Under Solvency IIPRA published a policy statement (PS4/19) that provides feedback on responses to the consultation paper (CP27/18) on adjusting for the reduction of loss absorbency where own fund instruments are taxed on write down under Solvency II.
February 20, 2019
WebPage
Regulatory News
|
|
News
SRB Publishes Framework for Performing Valuations in ResolutionThe framework provides independent valuers and the general public with an indication of the expectations of SRB on the principles and methodologies for valuation reports, as set out in the legal framework.
February 19, 2019
WebPage
Regulatory News
|
|
News
BIS Paper on Effect of Securities Lending on OTC Market LiquidityBIS published a working paper that studies how securities lending affects over-the-counter market (OTC) liquidity.
February 19, 2019
WebPage
Regulatory News
|
|
News
US Agencies Extend Consultation Period for the Proposed SA-CCRUS Agencies (FDIC, FED, and OCC) extended the comment period for a proposed rule to update their standards for how firms measure counterparty credit risk posed by derivative contracts.
February 18, 2019
WebPage
Regulatory News
|
|
News
FED Extends Consultation Period for Stress Testing RuleFED has published in the Federal Register a notice proposing amendments to the company run and supervisory stress test rules.
February 15, 2019
WebPage
Regulatory News
|
|
News
EBA Single Rulebook Q&A: Third Update for February 2019EBA published answers to two questions under the Single Rulebook question and answer (Q&A) updates for this week.
February 15, 2019
WebPage
Regulatory News
|
|
News
SEC Proposes Rule on Risk Mitigation Techniques for Uncleared SBSSEC proposed a rule that would require the application of specific risk-mitigation techniques to portfolios of security-based swaps (SBS) that are not submitted for clearing.
February 15, 2019
WebPage
Regulatory News
|
