June 23, 2017

HKMA issued a circular on local implementation timeline for market risk capital requirements, announcing that the implementation of these standards in Hong Kong shall be no earlier than January 01, 2020.

The Basel Committee had published the standards on minimum capital requirements for market risk on January 14, 2016 and national supervisors are scheduled to implement these standards by January 01, 2019. However, implementation of these standards in Hong Kong shall be delayed. According to the original timeline, banks would be required to start regulatory reporting based on the revised standardized approach and/or internal models approach from December 31, 2019. However, high complexity of these standards have led to a number of practical implementation questions. These questions involve certain issues of fundamental relevance, which require potential amendments of the standards rather than merely technical clarifications. Thus, it is becoming increasingly challenging for jurisdictions to implement the new standards in accordance with the Basel Committee timeline. HKMA plans to issue two consultation papers on the new standards—one related to the standardized approach later in 2017 and another one focusing on the internal models approach in 2018.

Keywords: HKMA, Hong Kong, Asia Pacific, Market Risk, Banking, FRTB, Capital Requirements

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