Hong Kong has reached a modest milestone in its journey to comply with G20 OTC derivatives rules. However, it still has a long way to go before the task is complete.
The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) have published conclusions on a joint consultation regarding the scope of OTC derivatives activities to be regulated, and the oversight of systemically important participants.
The SFC and HKMA consider that respondents to the consultation support the proposals and recognise the need to extend Hong Kong’s licensing regime so that it adequately covers intermediaries conducting OTC derivatives activities.
They also support the HKMA and the SFC being allowed to wield sufficient regulatory powers in respect of participants, given the perceived risk they may pose to the financial stability of markets.
The plan is to introduce transitional arrangements for implementing the new licensing regime and some respondents said they were concerned that the duration of the transitional arrangements might be too short, and the eligibility to benefit from them was not clear.
Revised proposals have been incorporated into a bill that was introduced into the Legislative Council in July 2013. More consultation is planned for later this year.