HKMA Expects Banks to Join Commercial Data Interchange by End-2022
The Hong Kong Monetary Authority (HKMA) plans to amend the Supervisory Policy Manual module IC-7 to reflect its regulatory expectations in respect of the Commercial Data Interchange (CDI) and its Link with the Commercial Credit Reference Agency (CCRA). In this respect, HKMA is seeking comments from the Hong Kong Association of Banks (HKAB) and the Deposit-Taking Companies (DTC) Association until September 15, 2022.
The Supervisory Policy Module IC-7 addresses the sharing and use of commercial credit data through a CCRA for the implementation of CDI. Announced as part of the “Fintech 2025” strategy of HKMA, the CDI is a next-generation financial data infrastructure that aims to enable more efficient financial intermediation in the banking system. HKMA believes that with the ability to enhance banks’ capabilities in risk management, the CDI will become an indispensable tool to the banking industry. All banks with material small and medium-size enterprise financing business are expected to join CDI by the end of 2022. The recent letters to HKAB and DTC Association address two issues in connection with the CDI as well as its link with the CCRA. Additionally, a revised, mark-up version of the Policy Module has been enclosed with the letters to these Associations.
HKMA plans to amend the module IC-7 to reflect its expectations with respect to the CCRA-CDI link and has been working with the operator of CCRA to link up CDI with the CCRA database via an Application Programming Interface. This would enable institutions to access both conventional credit data in the CCRA database as well as alternative credit data via a single connection to the CDI. The link is expected to be launched in the fourth quarter of 2022. This will provide an opportunity for institutions to automate their credit approval process, reduce manual handling and the corresponding risk of human errors, and enhance overall operational efficiency. Institutions are hence strongly encouraged to access the CCRA database via the CDI, particularly for those with frequent access to CCRA data. Subject to comments from the industry, the revised module will take effect from December 30, 2022.
With respect to the protection of information security for alternative credit data obtained via CDI, Section 5 of SPM Module IC-7 will, after revision, provide guidance on institutions’ safeguards to protect information security of commercial credit data disclosed to, or obtained from, a CCRA regardless of whether access is made through CDI or designated terminal(s). For other alternative credit data obtained via CDI, HKMA is reminding authorized institutions joining CDI that they should also adopt reasonable procedures to ensure that such alternative data are properly safeguarded, with regard to the confidentiality, accuracy, and relevant and proper utilization of the information. Authorized institutions should, where relevant and practical, observe the guidance laid out in Section 5 of SPM Module IC-7 when handling alternative credit data obtained via CDI. Institutions should also observe the Rules for CDI, applicable requirements, and relevant terms and conditions for joining CDI. Depending on the development of CDI, HKMA may consider issuing further guidelines on the use of alternative credit data through CDI in the future if necessary.
Keywords: Asia Pacific, Hong Kong, Banking, Lending, Regtech, Open Banking, CCRA, CDI, Credit Risk, SPM IC-7, Fintech 2025, API, HKMA
Previous Article
SRB Publishes Resolution Planning Booklet and MREL DashboardRelated Articles
EBA Proposes Standards for IRRBB Reporting Under Basel Framework
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
FED Issues Further Details on Pilot Climate Scenario Analysis Exercise
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.