HKMA and the Securities and Futures Commission (SFC) announced conclusions of a joint consultation on the annual update to the list of financial services providers, or FSPs, under the clearing obligation for over-the-counter (OTC) derivative transactions. Appendix B to the conclusions paper presents an updated list of financial services providers. Following the current approach for the annual update, HKMA will gazette the updated list during the fourth quarter of 2020 for implementation on January 01, 2021.
In March 2020, HKMA and SFC had issued a joint consultation paper on the annual update to the list of financial services providers under the OTC derivatives regime, with the consultation period ending on April 28, 2020. Based on the feedback received to the consultation, it was found that, as a result of reorganization related to the provision of broker-dealer services within the Bank of America (BofA) group in 2019, BofA Securities, Inc. now provides the institutional services previously provided by Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S). As BofA Securities, Inc. has already been identified as a new financial services provider in this annual update, HKMA will remove MLPF&S from the updated list. Other than the above, HKMA did not receive any other objection to the proposed list of financial services providers. The consultation paper had proposed to include eight additional entities on the list. These entities were Bank of China (UK) Ltd, BofA Securities Inc., Citibank Europe Plc, Mizuho Securities USA LLC, TD Bank, N.A, TD Bank USA, N.A., The Toronto-Dominion Bank, and UBS Switzerland AG.
The financial services provider list includes entities that meet the following two criteria:
- They belong to a group of companies appearing on the FSB-published list of global systemically important banks, or on the list of dealer groups that undertook to the OTC Derivatives Supervisors Group to work collaboratively with central counterparties, infrastructure providers, and global supervisors.
- They are members of the largest central counterparties offering clearing for interest rate swaps in the US, Europe, Japan, and Hong Kong.
Keywords: Asia Pacific, Hong Kong, Banking, Securities, OTC Derivatives, Financial Service Providers, G-SIBs, Clearing Regime, FSB, SFC, HKMA
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