Asia

Topic: Banking

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FSB and Basel Committee set out supervisory recommendations for benchmark transition

On 9 July 2020, the Financial Stability Board (FSB) and the Basel Committee on Banking Supervision (Basel Committee) issued a report on supervisory issues associated with benchmark transition. The report includes insights on remaining challenges to LIBOR transition based on surveys undertaken by the FSB, the Basel Committee and the International Association of Insurance Supervisors. … Continue Reading

Basel Committee publication: Targeted revisions to the CVA risk framework

On 8 July 2020, the Basel Committee on Banking Supervision (Basel Committee) published a paper setting out the final targeted revisions to the credit valuation adjustment (CVA) risk framework. In January 2019 the Basel Committee published the revised market risk framework. In November 2019 the Basel Committee consulted on a set of targeted final revisions … Continue Reading

HKMA publishes guidance on range of practices adopted by major banks for managing climate risks

Following the recent publication of a white paper setting out the Hong Kong Monetary Authority’s (HKMA) initial thoughts on supervisory expectations for the management of climate risks (to read our blog post on this, please click here), the HKMA has issued a circular to provide greater detail on the relevant practices adopted by major banks … Continue Reading

HKMA publishes white paper on green and sustainable banking

The Hong Kong Monetary Authority (the HKMA) has published a white paper outlining its initial views on the supervisory expectations for authorized institutions (AIs) in addressing climate-related issues. The development of the supervisory expectations forms part of the work envisaged under phase 2 of the three-phased approach introduced by the HKMA in May 2019, which … Continue Reading

HKMA revises supervisory policy manual modules CA-G-1 “Overview of Capital Adequacy Regime for Locally Incorporated Authorized Institutions” and RE-1 “Recovery Planning”

The Hong Kong Monetary Authority (HKMA) has issued, by notice in the Gazette, revised versions of the Supervisory Policy Manual (SPM) modules CA-G-1 and RE-1 as statutory guidelines under section 7(3) of the Banking Ordinance.[1] CA-G-1 “Overview of Capital Adequacy Regime for Locally Incorporated Authorized Institutions” The changes incorporated in the revised SPM module CA-G-1 … Continue Reading

HKMA publishes feedback from thematic reviews of AML and CFT control measures for remote customer on-boarding initiatives

The Hong Kong Monetary Authority (HKMA) has published a circular setting out key observations and good practices relating to anti-money laundering (AML) and counter-financing of terrorism (CFT) control measures applicable to remote customer on-boarding initiatives. The feedback is based on recent thematic reviews, engagement with authorized institutions (AIs) and technology firms in the Fintech Supervisory … Continue Reading

HKMA publishes guidance on additional measures to alleviate the impact of COVID-19

Following the deferral of the implementation of Basel III announced by the Group of Central Bank Governors and Heads of Supervision on 27 March 2020, the Basel Committee on Banking Supervision (BCBS) issued additional guidance[1] to alleviate the impact of COVID-19 on the global banking system on 3 April 2020.  In light of this, the … Continue Reading

HKMA releases common assessment framework on green and sustainable banking

In May 2019, the Hong Kong Monetary Authority (HKMA) introduced a three-phased approach to support the development of green and sustainable banking in Hong Kong. The HKMA has now released the common assessment framework under Phase 1, following feedback received from the banking industry. The common assessment framework will be used to assess the “greenness” … Continue Reading

Roundup of green and sustainable finance regulatory developments

Earlier this month, a joint statement was issued in relation to the establishment of the Green and Sustainable Finance Cross-Agency Steering Group (the Steering Group). This follows a number of recent announcements aimed at supporting the development of sustainable finance in Hong Kong and highlights that tackling climate change remains a top priority for the … Continue Reading

Revised capital rules gazetted to further enhance resilience of banking system

The Banking (Capital) (Amendment) Rules 2020 (BCAR Rules) were gazetted today (24 April 2020), bringing Hong Kong in line with the latest international standards on banking regulation issued by the Basel Committee on Banking Supervision. The BCAR Rules seek to introduce: a new method for calculating the exposure amount of counterparty credit risk arising from … Continue Reading

HKMA launches temporary US dollar liquidity facility

The Hong Kong Monetary Authority (HKMA) has launched a temporary liquidity facility under which US$10 billion will be made available (the Facility) to assist licensed banks with US dollar liquidity.  The Facility will comprise of funds obtained through the US Federal Reserve’s FIMA Repo Facility (see our previous blog post here). US dollar liquidity will … Continue Reading

SFC reminds management companies and market makers of SFC-authorized ETFs of their regulatory obligations

The Securities and Futures Commission (SFC) has issued a circular reminding management companies and market makers[1] of SFC-authorized exchange traded funds[2] (ETFs) of their regulatory obligations. The SFC has expressed concerns that management companies and market makers of ETFs may not be sufficiently prepared to respond to operational disruptions caused by COVID-19, following an incident … Continue Reading

HKMA lowers regulatory reserve requirement for locally incorporated AIs amid Covid-19

Following earlier announcements, the Hong Kong Monetary Authority (HKMA) has issued a circular confirming that, with immediate effect, the regulatory reserve[1] requirement for locally incorporated authorized institutions (AIs) will be reduced by 50%.  The reserves released by this move will provide AIs with additional lending capacity to support customers impacted by COVID-19.  Reserves released should … Continue Reading

HKMA introduces liquidity measures to assist banking industry in response to COVID-19 outbreak

To ensure the continued smooth operation of the interbank market given current economic conditions, the Hong Kong Monetary Authority (HKMA) has rolled out measures to assist the banking industry in managing liquidity. In its recent circular setting out such measures, the HKMA has noted occasional tightness in the Hong Kong dollar money market, caused principally … Continue Reading

Deferral of Basel III implementation and HKMA’s supervisory actions in response to COVID-19

The Hong Kong Monetary Authority (HKMA) has issued a circular announcing that it will defer the implementation of the Basel III final reform package,[1] in line with the revised timeline announced by the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of the Basel Committee on Banking Supervision (BCBS). The … Continue Reading

HKMA issues guidance to registered institutions on regulatory expectations following circulars published by the SFC

The Hong Kong Monetary Authority (the HKMA) has issued a circular to registered institutions (RIs) drawing their attention to the circulars recently published by the Securities and Futures Commission (the SFC), namely: (i) circular on extended deadlines for implementation of regulatory expectations and reminder of order recording requirements under COVID-19 pandemic (the Order Recording Circular) … Continue Reading

HKMA issues guidance on risk management practices for algorithmic trading

In response to the increasing prevalence of algorithmic trading (algo-trading) in the banking industry (e.g. for executing trade orders and market making for foreign exchange-related transactions), the Hong Kong Monetary Authority (the HKMA) has issued a circular setting out its supervisory expectations with regard to risk management practices for algo-trading activities which authorized institutions (AIs) … Continue Reading

HKMA issues consultation paper on rules for contractual stays on termination rights in non-Hong Kong law governed financial contracts

The Hong Kong Monetary Authority (the HKMA) has published a consultation paper (the Consultation) on rules relating to contractual stays on termination rights in certain financial contracts (Stay Rules) for authorized institutions (AIs) under the Financial Institutions (Resolution) Ordinance (FIRO). The Stay Rules require in scope AIs to adopt appropriate provisions in certain non-Hong Kong … Continue Reading

Asia Pacific market participants respond to APLMA’s IBOR Transition survey

Last September, the LMA published Exposure Drafts of Compounded RFR Facilities Agreements by reference to SOFR and SONIA (being the chosen replacement near risk free rates for USD markets and LIBOR in the Sterling respectively), along with a commentary inviting market participants to consider various structuring issues (see earlier blog). The APLMA recently sought feedback from … Continue Reading

ASIFMA launches new industry white paper on Tokenised Securities

We have recently partnered with the Asia Securities Industry & Financial Markets Association (ASIFMA) on its new industry white paper titled, “Tokenised Securities – A Roadmap for Market Participants and Regulators.” The report analyses how the new value chain will impact market participants, including incumbent financial institutions (FIs) and issuers, and looks at areas they … Continue Reading

The HKMA issues consumer protection guidance for banks using big data analytics and artificial intelligence

Following the guidance issued by the Hong Kong Monetary Authority (HKMA) to authorized institutions (AIs) on use of artificial intelligence earlier this month (to read our previous blog, please click here), the HKMA has issued a further set of guiding principles to AIs, focusing on consumer protection, when adopting big data analytics and artificial intelligence … Continue Reading

The HKMA issues guidance on use of artificial intelligence by banks

In response to the growing use of artificial intelligence (AI) by banks, the Hong Kong Monetary Authority (HKMA) has provided guidance to the banking industry on the use of AI applications.  These are high level principles (set out briefly below) which banks are expected to take into account when designing and adopting their AI and … Continue Reading

The HKMA clarifies consumer protection expectations under Open API Framework

The Hong Kong Monetary Authority (the HKMA) has issued a circular to authorized institutions (AIs) to clarify expectations around the minimum level of consumer protection required under the Open API Framework.  For background information on Hong Kong’s Open API Framework, please refer to our previous blog post on its initial launch here as well as … Continue Reading

The HKMA revises SPM on risk management of e-banking

The Hong Kong Monetary Authority has revised its supervisory policy manual module TM-E-1 (SPM) on risk management of e-banking.  This SPM is a non-statutory guideline issued as a guidance note. The revisions are intended to strengthen risk management controls for e-banking given the rise in cyber threats and fraud risks, introduce changes to cater for … Continue Reading
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