The Securities and Futures Commission (SFC) is surveying the views of participants in the Hong Kong OTC Derivatives Market, as part of its moves towards compliance with G-20 rules on OTC derivatives.
This survey is designed to assist market participants in identifying changes to the law that might affect them.
It also intends to facilitate a smooth transition from an unregulated OTC market in Hong Kong to one which is regulated.
Replies are sought from all corporations in Hong Kong that either provide automated trading services for OTC derivatives, or manage, deal, and advise on portfolios of OTC derivatives, or provide clearing services for OTC derivatives.
The Securities and Futures (Amendment) Bill 2013, was introduced into Hong Kong’s Legislative Council on 10 July 2013.
The bill provides for the regulation of participants in the Hong Kong OTC derivatives market with the establishment of two new types of regulated activity under Schedule 5 of the Securities and Futures Ordinance.
Type 11 regulated activity (dealing in OTC derivative products or advising on OTC derivative products).
Type 12 regulated activity (providing clearing agency services for OTC derivative transactions).
In addition, the scope of Type 9 regulated activity (asset management) will be expanded to cover the management of a portfolio of OTC derivative products and Type 7 regulated activity (providing automated trading services) will be expanded to cover the provision of automated trading services for OTC derivative products.
The bill also provides for the introduction of mandatory OTC reporting and clearing obligations.