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

    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.

    January 04, 2023 WebPage Regulatory News

    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.

    January 01, 2023 WebPage Regulatory News

    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.

    December 30, 2022 WebPage Regulatory News

    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.

    December 29, 2022 WebPage Regulatory News

    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.

    December 29, 2022 WebPage Regulatory News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News

    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.

    December 22, 2022 WebPage Regulatory News

    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.

    December 22, 2022 WebPage Regulatory News

    FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates

    The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.

    December 20, 2022 WebPage Regulatory News

    FSB Reports Assess NBFI Sector and Progress on LIBOR Transition

    The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.

    December 20, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8697