Monday August 28 2023
News Source: Global Exchanges
Focus: Derivative Market Segment
Type: General
Country: Hong Kong
On 25th August 2023, the Securities and Futures Commission (SFC) published consultation conclusions on its proposed risk management guidelines for licensed futures brokers.
The guidelines set out a comprehensive risk management framework for futures brokers which covers market risk management, commodity futures trading, client credit risk management, concessionary margining and risk management over executing or clearing agents. Requirements for funding liquidity risk management, safeguarding client assets, trading in futures markets outside Hong Kong and stress testing are also included.
Respondents generally appreciated the SFC’s guidance on the risk management practices expected of futures brokers and their feedback has been incorporated in the guidelines where appropriate. To address the market’s comments, the SFC has provided more principles-based guidance in place of some prescriptive rules and quantitative thresholds.
Futures brokers have a transitional period of six months to comply with the guidelines and an additional 12 months to implement system changes for compliance with requirements relating to the automation of client risk limit controls and stress testing.
The guidelines were gazetted and will become effective on 25th February 2024.
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