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    HKMA Issues Proposal Under Derivatives Regime, Extends SFG Loan Scheme

    April 01, 2022

    The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) concluded a consultation on the addition of new calculation periods and launched a consultation on the annual update to the list of financial services providers, under the over-the-counter (OTC) derivatives regulatory regime. Announcements also included enhancements to the small and medium enterprise (SME) Financing Guarantee Scheme (SFGS), which will take effect from April 01, 2022.

    The Financial Secretary in its 2022-23 budget announced that the maximum loan amount per enterprise under the Special 100% Loan Guarantee will be raised from the total amount of employee wages and rents for 18 months to that for 27 months, subject to a ceiling of HKD 9 million (originally HKD 6 million) and the maximum repayment period will be extended from eight years to ten years. Eligibility criteria for this includes enterprises that have been operating for at least three months as of March 31, 2022 and have suffered at least a 30% decline in sales turnover in any month since February 2020 compared with the monthly average of any preceding quarter from January 2019 to March 2022. In addition, the principal moratorium arrangement for the 80% Guarantee Product, the 90% Guarantee Product, and the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme will be extended by six months to a maximum of 30 months in total. An option for borrowers to resume making partial principal repayment for one year will be provided, allowing borrowers to resume normal repayment gradually if they are willing and capable. The application period of the SME Financing Guarantee Scheme has been also extended to June 30, 2023.

    With respect to the OTC derivatives regime, one new entity (Nomura Financial Products Europe GmbH) is proposed to be included in the financial service provider list. Comment period on the proposed revision to the financial service provider list ends on May 14, 2022 and the conclusion paper for this consultation is expected in June 2022. The updated list targeted to become effective on January 01, 2023. HKMA also informed that the consultation on addition of new calculation periods to the clearing rules received three submissions and the respondents did not have any comments on the proposed amendments. The proposed legislative amendments for adding eight calculation periods to the clearing rules were submitted before the Legislative Council for negative vetting. The amended rules are expected to come into effect on March 01, 2023, subject to the legislative process. 


    Keywords: Asia Pacific, Hong Kong, Banking, OTC Derivatives, Financial Service Providers, G-SIBs, Clearing Regime, Credit Risk, SMEs, Loan Guarantee, Basel, Regulatory Capital, Reporting, SFGS, SFC, HKMA

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