Featured Product

    HKMA Finalizes BCAR 2022, Issues Policy on Operational Resilience

    May 31, 2022

    The Hong Kong Monetary Authority (HKMA) announced that the subsidiary legislation incorporating capital requirements for banks' equity investments in funds will go into effect on July 01, 2022. The Authority also published the new Supervisory Policy Manual (SPM) module on operational resilience (OR-2) and the revised module on business continuity planning (TM-G-2).

    The subsidiary legislation in the Banking (Capital) (Amendment) Rules 2022 (also known as the BCAR 2022), which implements the capital standard in line with the Basel Committee's capital requirements for banks’ equity investments in funds, will come into operation on July 01, 2022. HKMA published a circular informing all authorized institutions that the 28-day period for the negative vetting of the Banking (Capital) (Amendment) Rules 2022 has expired without extension. The capital standard on equity investments by banks introduced a hierarchy of three approaches, with varying degrees of risk-sensitivity for setting capital requirements for banks’ equity investments in funds. The BCAR 2022 also contains an amendment to designate the Hong Kong Export Credit Insurance Corporation as a domestic public sector entity for preferential risk-weighting treatments by locally incorporated authorized institutions. 

    The recently published supervisory policy module on operational resilience implements the Basel Committee’s Principles for Operational Resilience (POR), which were issued in March 2021. The module on Operational Resilience sets out the the HKMA expectation that every authorized institution should be operationally resilient and provides high-level guidance on how authorized institutions can develop an integrated and holistic operational resilience framework to support this. Additionally, the revised module on business continuity planning incorporates additional requirements related to business continuity planning and testing covered within the POR and aligns the terminology used for business continuity planning and operational resilience purposes to enhance clarity. The revised module on business continuity planning complements the module on operational resilience by providing enhanced guidance on business continuity planning, which is a key component of an effective operational resilience framework. 

    An authorized institution should be compliant with the requirements on the development of its operational resilience framework by May 31, 2023, and with the requirements for the implementation of the framework no later than May 31, 2026. After factoring in industry feedback, and as detailed within the operational resilience module, HKMA will expect every authorized institution to have:

    • developed its operational resilience framework and determined the timeline by which it will become operationally resilient, within one year after the final operational resilience module is issued (that is, May 31, 2023)
    • become operationally resilient as soon as their circumstances allow and no later than three years after the initial one-year planning period (that is, no later than May 31, 2026)

    The afore-mentioned timeline applies to all new requirements related to operational resilience, including those in the revised business continuity planning and the revised operational resilience modules. 


    Keywords: Asia Pacific, Banking, Hong Kong, Basel, Regulatory Capital, BCBS, Operational Resilience, Business Continuity, Supervisory Policy Manual, BCAR 2022, Operational Risk, Equity Investments in Funds, Capital Requirements, Regtech, HKMA

    Featured Experts
    Related Articles
    News

    EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS

    The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.

    February 23, 2024 WebPage Regulatory News
    News

    ECB to Expand Climate Change Work in 2024-2025

    Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.

    February 23, 2024 WebPage Regulatory News
    News

    BIS Bulletin Examines Cognitive Limits of Large Language Models

    The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.

    January 25, 2024 WebPage Regulatory News
    News

    ECB is Conducting First Cyber Risk Stress Test for Banks

    As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.

    January 24, 2024 WebPage Regulatory News
    News

    EBA Continues Momentum Toward Strengthening Prudential Rules for Banks

    A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.

    January 24, 2024 WebPage Regulatory News
    News

    EU and UK Agencies Issue Updates on Final Basel III Rules

    The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards

    December 19, 2023 WebPage Regulatory News
    News

    Industry Agency Expects Considerable Uptake for Swiss Climate Scores

    The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.

    December 18, 2023 WebPage Regulatory News
    News

    BCBS Consults on Disclosure of Climate Risks, Issues Other Updates

    The Basel Committee on Banking Supervision (BCBS) launched consultation on a Pillar 3 disclosure framework for climate-related financial risks, with the comment period ending on February 29, 2024.

    December 18, 2023 WebPage Regulatory News
    News

    US Government Moves to Regulate Development and Use of AI Models

    The U.S. President Joe Biden signed an Executive Order, dated October 30, 2023, to ensure safe, secure, and trustworthy development and use of artificial intelligence (AI).

    December 18, 2023 WebPage Regulatory News
    News

    MAS Launches Gprnt Digital Platform for ESG Reporting for SMEs

    The Monetary Authority of Singapore (MAS) launched an integrated digital platform, Gprnt, also known as “Greenprint.”

    November 29, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8949