HKMA Updates Policy Module for Non-Centrally Cleared OTC Derivatives
HKMA revised the Supervisory Policy Manual module CR-G-14 on margin and other risk mitigation standards for non-centrally cleared over-the-counter (OTC) derivatives transactions. HKMA issued the revised module CR-G-14 as a statutory guideline under section 7(3) of the Banking Ordinance. The module sets out minimum standards that HKMA expects authorized institutions to adopt in relation to margin and other risk-mitigation techniques for non-centrally cleared OTC derivatives transactions. HKMA had consulted on revisions to the module from May 25 to June 25, 2020.
Authorized institutions that are in scope for the margin requirements and risk mitigation standards but have not applied the provisions set out in the revised paragraphs of the module should comply with these requirements from September 01, 2021. Early adoption is also allowed. In the revised module, HKMA:
- Revises the phase-in schedule of initial margin requirements, according to the announcement made by BCBS and IOSCO in April 2020
- Defers the remaining implementation phases of the risk-mitigation standards to align with the updated initial margin implementation phase-in schedule
- Extends the exemption of non-centrally cleared single-stock options, equity basket options, and equity index options from the margin requirements
- Provides clarification on the documentation, reporting, and notification requirements for authorized institutions adopting substituted compliance
- Updates the list of member jurisdictions, of BCBS-IOSCO Working Group on margin requirements, deemed comparable under the margin requirements and risk mitigation standards of HKMA
- Clarifies that genuine amendments made to existing derivatives contracts to give effect to benchmark reforms will not be considered as new contracts subject to the margin requirements
- Introduces new guidance on authorized institutions’ derivatives transactions with leasing entities that are part of manufacturing groups
- Updates the guidance in relation to valuation with counterparties, portfolio reconciliation, dispute resolution, monitoring of model performance, and collateral eligibility
Keywords: Asia Pacific, Hong Kong, Banking, Securities, Supervisory Policy Manual, OTC Derivatives, Counterparty Credit Risk, Initial Margin, Banking Ordinance, Basel, BCBS, IOSCO, HKMA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
ECB to Begin Direct Supervision of Bulgarian and Croatian BanksRelated Articles
ECB Further Reviews Costs and Benefits Associated with IReF
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
IOSCO Welcomes Work on Sustainability-Related Corporate Reporting
The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)
EBA Publishes Funding Plans Report, Receives EMAS Certification
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
BoE Allows One-Day Delay in Statistical Data Submissions by Banks
The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.
ACPR Amends Reporting Module Timelines Under EBA Framework 3.2
The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.
APRA to Modernize Prudential Architecture, Reduces Liquidity Facility
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.
PBC Issues List of Systemic Banks, Adds 2 Foreign Banks to CERB List
The China Banking and Insurance Regulatory Commission (CBIRC) published the administrative measures for internal control of wealth management companies, which come into force on the day of promulgation.
PRA Publishes Discussion Paper on Its Future Approach to Policy
The Prudential Regulation Authority (PRA) proposed its approach to policy-making as it takes on wider rulemaking responsibilities under the Financial Services and Markets Bill.
ECB Publishes Opinion on Proposed Regulation on Data Act
The European Central Bank (ECB) published its opinion on the proposal for a regulation on harmonized rules on fair access to and use of data (Data Act).
