The Securities and Futures Commission (SFC) has announced that the introduction of the initial margin (IM) requirements for non-centrally cleared OTC derivative transactions, initially scheduled to be phased-in from 1 September 2020, will be deferred by one year. To read our previous blog post on the SFC’s consultation conclusions on margin requirements for non-centrally cleared … Continue Reading
The Securities and Futures Commission (the SFC) has issued a circular to provide guidance to licensed corporations (LCs) on managing cybersecurity risks associated with remote working arrangements. The circular sets out some examples of controls and procedures that LCs can implement to protect their internal networks and data under remote working arrangements. The SFC expects … Continue Reading
Amid concerns about extreme market conditions caused by volatility in the crude oil futures markets, the Securities and Futures Commission (SFC) has issued a circular directed at management companies of SFC-authorized exchange traded funds (ETFs) and intermediaries, reminding them of their regulatory obligations, particularly in relation to activities involving futures-based ETFs. A separate circular directed … Continue Reading
The Securities and Futures Commission (SFC) has published a circular directed at commodity futures brokers (brokers) requiring them to take precautionary measures to manage the risks of trading crude oil futures contracts amid unprecedented volatility seen in the crude oil futures markets. The SFC has cautioned brokers not to open new positions for clients who … Continue Reading
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
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
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
The bills amending the Insurance Ordinance (Cap.41) (the IO) which are expected to help Hong Kong grow its insurance sector have now been published in the Gazette. The bills – namely, the Insurance (Amendment) Bill 2020 (the First Bill) and the Insurance (Amendment) (No.2) Bill 2020 (the Second Bill), seek to (i) introduce a new … Continue Reading
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
Due to the current COVID-19 pandemic and ensuing disruption to the securities industry, the Securities and Futures Commission (SFC) has announced, in its recent circular, that it will extend various upcoming regulatory compliance deadlines by a period of six months. In the same circular, the SFC has also reminded intermediaries of the alternative order recording … Continue Reading
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
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
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
The Securities and Futures Commission (SFC) has published a set of frequently asked questions (FAQs) on licensing related matters to facilitate intermediaries and licensing applicants in navigating their compliance challenges during the COVID-19 pandemic. The SFC aims to provide regulatory flexibility whilst ensuring that market integrity and investor protection principles are maintained. The FAQs cover … Continue Reading
In view of the current volatility in local and international markets caused by the COVID-19 outbreak, the Securities and Futures Commission (the SFC) has issued a circular aimed at management companies (Managers) and trustees and custodians of SFC-authorized funds (funds) reiterating best practices with which they are expected to comply, in order to look after … Continue Reading
The Securities and Futures Commission (SFC) has issued a circular to intermediaries reminding licensed and registered persons to take extra care to comply with their Code of Conduct[1] obligations to ensure that they are acting in their clients’ best interests given the potential impact of the COVID-19 outbreak on market volatility and liquidity, as well … Continue Reading
Further to the Phase 1 temporary facilitative measures (TFMs) introduced by the Insurance Authority (IA) on 21 February 2020, the IA has announced the second phase of TFMs in view of the development of the COVID-19 pandemic, in order to reduce the risk of infection from in person meetings during the sales process for insurance … Continue Reading
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
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
The Securities and Futures Commission (SFC) has issued its consultation conclusions on the proposed margin requirements for non-centrally cleared OTC derivative transactions set out in its consultation paper issued on 19 June 2018 (the Consultation Paper) following submissions from industry associations, market participants and other stakeholders. By way of recap, the Consultation Paper contains proposals … Continue Reading
On 7 January 2020, the SFC issued guidance on the licensing obligations of private equity (PE) firms and family offices which conduct business in Hong Kong. This guidance took the form of two circulars, the first of which relates to PE firms (the First Circular) and the second relates to family offices (the Second Circular). … Continue Reading
The Monetary Authority of Singapore (MAS) recently issued a consultation paper setting out its proposed regulatory approach for derivatives contracts that reference payment tokens as underlying assets (Payment Token Derivatives). What is this approach meant to address? A well-regulated market for derivatives – particularly one anchored by institutional investors with sophisticated risk management and investment … Continue Reading
The SFC has identified a growing number of arrangements and transactions involving dubious private funds or discretionary accounts during recent inspections conducted on asset managers, raising concerns that asset managers are simply following investor’s instructions when structuring private funds or discretionary accounts and effecting transactions, and turning a blind eye to potential red flags. The … Continue Reading
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