Featured Product

    HKMA Updates Policy Module for Non-Centrally Cleared OTC Derivatives

    September 11, 2020

    HKMA revised the Supervisory Policy Manual module CR-G-14 on margin and other risk mitigation standards for non-centrally cleared over-the-counter (OTC) derivatives transactions. HKMA issued the revised module CR-G-14 as a statutory guideline under section 7(3) of the Banking Ordinance. The module sets out minimum standards that HKMA expects authorized institutions to adopt in relation to margin and other risk-mitigation techniques for non-centrally cleared OTC derivatives transactions. HKMA had consulted on revisions to the module from May 25 to June 25, 2020.

    Authorized institutions that are in scope for the margin requirements and risk mitigation standards but have not applied the provisions set out in the revised paragraphs of the module should comply with these requirements from September 01, 2021. Early adoption is also allowed. In the revised module, HKMA:

    • Revises the phase-in schedule of initial margin requirements, according to the announcement made by BCBS and IOSCO in April 2020
    • Defers the remaining implementation phases of the risk-mitigation standards to align with the updated initial margin implementation phase-in schedule
    • Extends the exemption of non-centrally cleared single-stock options, equity basket options, and equity index options from the margin requirements
    • Provides clarification on the documentation, reporting, and notification requirements for authorized institutions adopting substituted compliance
    • Updates the list of member jurisdictions, of BCBS-IOSCO Working Group on margin requirements, deemed comparable under the margin requirements and risk mitigation standards of HKMA
    • Clarifies that genuine amendments made to existing derivatives contracts to give effect to benchmark reforms will not be considered as new contracts subject to the margin requirements
    • Introduces new guidance on authorized institutions’ derivatives transactions with leasing entities that are part of manufacturing groups
    • Updates the guidance in relation to valuation with counterparties, portfolio reconciliation, dispute resolution, monitoring of model performance, and collateral eligibility

    Keywords: Asia Pacific, Hong Kong, Banking, Securities, Supervisory Policy Manual, OTC Derivatives, Counterparty Credit Risk, Initial Margin, Banking Ordinance, Basel, BCBS, IOSCO, HKMA

    Featured Experts
    Related Articles
    News

    APRA Issues Interim Update to Policy Priorities for 2021 and Beyond

    In a letter addressed to the industry, the Australian Prudential Regulation Authority (APRA) set out an updated schedule of policy priorities for the banking, insurance, and superannuation industries.

    September 24, 2021 WebPage Regulatory News
    News

    EC Adopts Solvency II and Resolution Rules Package for Insurers

    The European Commission (EC) adopted a comprehensive review package of Solvency II rules in the European Union.

    September 22, 2021 WebPage Regulatory News
    News

    OCC Issues Booklets on Regulatory Reporting and Earnings

    The Office of the Comptroller of the Currency (OCC) issued Versions 1.0 of the "Earnings" and "Regulatory Reporting" booklets of the Comptroller's Handbook.

    September 22, 2021 WebPage Regulatory News
    News

    ECB Sets Out Results of Economy-Wide Climate Stress Tests

    The European Central Bank (ECB) published results of its economy-wide climate stress test, which aimed to assess the resilience of non-financial corporates and euro area banks to climate risks.

    September 22, 2021 WebPage Regulatory News
    News

    EBA Examines Implications of Increasing Use of Digital Platforms in EU

    The European Banking Authority (EBA) published a report on the use of digital platforms in the banking and payments sector in European Union.

    September 21, 2021 WebPage Regulatory News
    News

    HKMA Issues Updates on Policy Measures Intended to Ease COVID Impact

    The Hong Kong Monetary Authority (HKMA) published updates on the policy measures that were announced in context of the ongoing pandemic.

    September 21, 2021 WebPage Regulatory News
    News

    ISDA Responds to BCBS Proposal on Treatment of Cryptoasset Exposures

    The International Swaps and Derivatives Association (ISDA), along with several other associations, submitted a joint response to the Basel Committee on Banking Supervision (BCBS) consultation on preliminary proposals for the prudential treatment of cryptoasset exposures.

    September 21, 2021 WebPage Regulatory News
    News

    BIS Quarterly Review Discusses Developments in Fintech and ESG Space

    BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.

    September 20, 2021 WebPage Regulatory News
    News

    BCBS to Consult on Supervisory Practices for Climate Risks by Year-End

    The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards

    September 20, 2021 WebPage Regulatory News
    News

    OCC Identifies Operational Risk Deficiencies in MUFG Union Bank

    The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.

    September 20, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7494