HKMA and SFC Consult on Enhancing OTC Derivatives Regulatory Regime
HKMA and SFC issued a joint consultation paper on further enhancements to the over-the-counter (OTC) derivatives regulatory regime in Hong Kong. The paper proposes to mandate the use of a Legal Entity Identifier (LEI) for reporting obligation, expand the clearing obligation, and adopt a trading determination process for introducing a platform trading obligation. Comments are invited by April 27, 2018.
To align with global standards, all entities contained in a transaction report to be submitted to the Hong Kong Trade Repository would be required to be identified by their LEI. The timeline for implementation will be staggered for different types of entities. As the second phase of the OTC derivatives clearing regime, the regulators propose to expand the clearing obligation to specified standardized interest rate swaps denominated in Australian Dollars. The paper also sets out proposed factors for determining the products that would be appropriate for a platform trading obligation in Hong Kong.
In line with the G20 commitment to reform the OTC derivatives market, HKMA and SFC have been working on implementing a regulatory regime for OTC derivatives in Hong Kong. The regime provides for the introduction of reporting, clearing, trading, and recordkeeping obligations in respect of OTC derivative transactions. In line with other markets, the OTC derivatives regulatory regime is being implemented in phases. Phase 1 reporting came into force on July 10, 2015 and Phase 2 Reporting on July 01, 2017 while Phase 1 clearing became effective on September 01, 2016.
Comment Due Date: April 27, 2018
Keywords: Asia Pacific, Hong Kong, Securities, OTC Derivatives, Reporting, LEI, Clearing Obligation, SFC, HKMA
Featured Experts
David Fihrer
Skilled life insurance actuary; subject matter expert on IFRS 17 and source of earnings
Salman Siddiqui
ESG and climate expert for P&C insurance; IFRS 17 specialist and chartered accountant; extensive experience in both life and non-life insurance, with focus on capital management, financial performance, and financial reporting.
Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.