HONG KONG: HKEX Announces Margin Requirements and Adjustment of Routine Intra-day Variation Margin Calls

Thursday April 2 2020

On 30^th March 2020, the Hong Kong Stock Exchange (HKEX) announced that the following risk management measures will be applied by OTC Clearing Hong Kong Limited to cover potential market volatility during Easter Holidays:

• Holiday Margin will be applied to each Clearing Member’s portfolio. An amount equal to 19% of a Clearing Member’s Initial Margin requirement will be added to the End-of-Day Initial Margin call to be collected on 9 April 2020. Clearing Members will be required to settle the margin call amount within 1 hour after the End-of-Day Initial Margin call issued at 08:30 hours Hong Kong time on 9 April 2020.
• The Holiday Margin as mentioned in (1) above will be reduced to 10% of a Clearing Member’s Initial Margin requirement after the close of business on 10 April 2020 and subsequently reduced to zero after the close of business on 13 April 2020.

Below is an illustrative example:

• There will be no Routine Intra-day Variation Margin Calls from 10 April 2020 to 13 April 2020 pursuant to Chapter 4 of the OTC Clearing Hong Kong Limited Clearing Procedures.
• Clearing Members still need to settle End-of-day Variation Margin with regard to applicable non-HKD currency during the aforesaid period. Clearing Members are reminded the importance of having proper arrangement in place before and after the holiday period as those days are normal settlement days.
• The application of Holiday Margin will increase Clearing Members’ Margin requirements. The impact will vary depending on individual Clearing Member’s portfolios.

Click on the above link for further information.