[SFC] SFC concludes consultation on margin requirements for non-centrally cleared OTC derivatives

The Securities and Futures Commission (SFC) today released consultation conclusions on proposals to impose margin requirements for non-centrally cleared over-the-counter (OTC) derivatives (Note 1).

The proposals will be adopted with some amendments and clarifications. A licensed corporation which is a contracting party to a non-centrally cleared OTC derivative transaction entered into with an authorized institution, a licensed corporation or another defined entity would be required to exchange margin with the counterparty if the notional amount of their outstanding non-centrally cleared OTC derivatives exceeds specified thresholds.

“Imposing margin requirements for these transactions will help reduce systemic risk in our markets,” said Mr Ashley Alder, the SFC’s Chief Executive Officer. “The SFC will continue to work closely with local and international authorities to refine and update the regulatory regime for OTC derivatives in Hong Kong.”

Amendments to the Code of Conduct (Note 2) to effect the changes will be gazetted in due course. The initial margin requirements (Note 3) will be phased in starting from 1 September 2020, which is also the date the variation margin requirements (Note 4) will take effect.

Read More: https://www.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=19PR119

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