Tuesday July 15 2025
News Source: Global Exchanges
Focus: Stock Exchange Regulation
Type: General
Country: Hong Kong
On 14th July 2025, the Securities and Futures Commission (SFC) launched a public consultation on draft amendments to the Securities and Futures (Financial Resources) Rules (FRR) and related guidelines for implementing a set of internationally comparable capital requirements for licensed corporations (LCs) engaging in over-the-counter derivative activities (OTCD capital requirements).
The Consultation includes the following:
- some minor finetuning of the 2017 Concluded Framework;
- additional proposals for market development purposes;
- a set of draft amendments of the Securities and Futures (Financial Resources) Rules (FRR) for implementing the 2017 Concluded Framework and additional proposals;
- a draft Guidelines for Internal Models Approach for FRR Market Risk Charges Calculation (IMA Guidelines); and
- a draft General Principles for Model Risk Management (MRM Principles).
Under the proposal, the OTCD capital requirements previously proposed have been fine-tuned with reference to recent changes to Hong Kong’s Banking (Capital) Rules and the Basel Framework. The capital requirements for inter-dealer brokers will also be significantly lowered and transfer pricing treatments for LCs will be simplified to reflect the comments received during the SFC’s 2017 consultation.
In addition, the SFC proposed various other FRR changes to support LCs’ business development and diversification. These include measures to facilitate LCs’ trading of stocks in Mainland China and emerging markets. Also, to drive Hong Kong’s development as a regional fixed income and currency hub, the SFC proposed to exempt the capital requirements for centrally-cleared repurchase transactions (repos) to promote their central clearing in Hong Kong and the development of the city’s inter-dealer repo market.
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