HKMA Consults on Draft Stay Rules on Financial Contracts Under FIRO
HKMA is consulting, until January 31, 2021, on the draft rules on contractual stays on termination rights in financial contracts for authorized institutions (Stay Rules) to be made under the Financial Institutions (Resolution) Ordinance (Cap. 628)—also known as FIRO. HKMA also released conclusion to its consultation on the Stay Rules that were published in January 2020. After reviewing feedback from the consultation, HKMA has adopted appropriate refinements in developing the draft Stay Rules. In addition, HKMA published a consultation on the revised Supervisory Policy Manual module (IC-6) that specifies the minimum standards that authorized institutions should observe in relation to the sharing and use of consumer credit data through credit reference agencies; this consultation is open until February 01, 2021.
In response to the January consultation on Stay Rules, HKMA had received a total of 14 submissions from industry associations, professional associations, banks, an accounting firm, and law firms. All respondents indicated broad support for the proposed approach to the Stay Rules and provided constructive comments on the proposals set out in the consultation paper. Some sought additional clarity on the details of the proposals in the consultation paper. The Stay Rules require authorized institutions incorporated in Hong Kong and certain of their group companies to include an appropriate provision in certain non-Hong Kong law governed financial contracts to the effect that the parties to the contracts agree to be bound by a temporary suspension of termination rights that may be imposed by HKMA under section 90 of the FIRO.
The Stay Rules are designed to address the cross-border risks to orderly resolution arising from the early termination of financial contracts governed by non-Hong Kong law, in line with the contractual approach to giving effect to cross-border resolution actions advocated by FSB. It is intended to introduce the Stay Rules into the Legislative Council for negative vetting within the current legislative year of 2020-21, with a view to bringing the Stay Rules into operation shortly after the completion of the vetting process in 2021.
Comment Due Date: January 31, 2021/February 01, 2021
Keywords: Asia Pacific, Hong Kong, Banking, Securities, Stay Rules, FIRO, Financial Contract, Resolution Framework, FSB, HKMA
Previous Article
CMF Consults on Reporting Requirements for Basel III StandardsRelated Articles
APRA Publishes Results of Climate Risk Self-Assessment Survey
The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.
ACPR Publishes Updates Related to CRD IV and Covered Bonds
The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).
BIS Paper Contributes to Debate on Regulating NBFIs and Big Techs
The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.
EIOPA Publishes Guidance on Climate Change Scenarios in ORSA
The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).
EBA and ECB Respond to Proposals on Sustainability Disclosures
The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.
BIS Report Notes Existing Gaps in Climate Risk Data at Central Banks
A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.
EBA Publishes Multiple Regulatory Updates for Regulated Entities
The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.
EIOPA Issues SII Taxonomy and Guide on Sustainability Preferences
The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.
EESC Opines on Proposals on CRR and European Single Access Point
The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).
HM Treasury Publishes Multiple Regulatory Updates in July 2022
HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.
