HKMA announced that the Banking (Capital) (Amendment) Rules 2020 (BCAR 2020) have been published in the Hong Kong Gazette. The amendments contained in the BCAR 2020 are to implement the two BCBS-issued capital standards for treatment of banks' counterparty credit risk exposures to derivatives trades. These standards are for the standardized approach for measuring counterparty credit risk exposures (SA-CCR) and for the capital requirements for bank exposures to central counterparties. These standards form a part of the Basel III reform package.
These capital standards introduced a new method for measuring the amount of counterparty credit risk incurred by banks from derivative contracts and revised the capital treatment for bank exposures to central counterparties and clearing intermediaries. The BCAR 2020 will be tabled before the Legislative Council for negative vetting on April 29, 2020. Subject to the views of the Legislative Council, the subsidiary legislation should come into operation on June 30, 2021.
Effective Date: June 30, 2021
Keywords: Asia Pacific, Hong Kong, Banking, BCAR, Counterparty Credit Risk, Standardized Approach, Basel III, Derivatives, SA-CCR, Regulatory Capital, HKMA, BCBS
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