HKMA Revised Capital and Liquidity Rules Under Banking Ordinance
The Banking (Capital) (Amendment) Rules 2017 (BCAR 2017), the Banking (Liquidity) (Amendment) Rules 2017 (BLAR 2017), and the Banking (Specification of Multilateral Development Bank) (Amendment) Notice 2017 (Amendment Notice 2017) were published in the Gazette to implement certain recent international standards on banking regulation in Hong Kong.
- BCAR 2017. The amendments contained in the BCAR 2017 are to implement three Basel III-related capital standards of BCBS. These include the revised securitization framework, the leverage ratio framework, and the interim capital treatment of expected loss provisions under Hong Kong Financial Reporting Standard (HKFRS) 9 (in line with the new International Financial Reporting Standard 9).
- BLAR 2017. BLAR 2017 aims to implement the Basel III net stable funding ratio and a new local Core Funding Ratio to different categories of authorized institutions, with regard to their business size and liquidity risk profile, to ensure that their assets are financed with a sufficiently stable source of funding.
- Amendment Notice 2017. The Amendment Notice seeks to implement the BCBS decision of November 2016 to allow banks to apply a 0% risk-weight to claims on the International Development Association (a member of the World Bank Group) as a multilateral development bank (MDB) under the standardized approach for credit risk. The opportunity is also taken to incorporate the Chinese names of certain MDBs in the existing Notice.
The three pieces of subsidiary legislation will be tabled before the Legislative Council for negative vetting on October 25, 2017. Subject to the views of the Legislative Council, the subsidiary legislation should come into operation on January 01, 2018. These rules seek mainly to implement the Basel III-related capital and liquidity standards that are scheduled to take effect from January 01, 2018, in accordance with the international timeline.
Keywords: Asia Pacific, Hong Kong, Banking, BCAR, BLAR, IFRS 9, Securitization Framework, HKMA
Featured Experts
Scott Dietz
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
Anna Krayn
CECL adoption expert; engagement manager for loss estimation, internal risk capability enhancement, and counterparty credit risk management
Masha Muzyka
CECL, IFRS 9, and IFRS 17 expert; credit risk and insurance risk specialist; strategic planning and credit analytics solutions consultant
Previous Article
ESMA Updates Q&A on Implementation of CSDRRelated Articles
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
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.
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.
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.
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.
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.
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