The Securities and Futures Commission (SFC) has published its consultation conclusions regarding risk management guidelines for licensed futures brokers. These guidelines provide a comprehensive framework for futures brokers to effectively manage various risks, including market risk, commodity futures trading, client credit risk, concessionary margining, and risk associated with executing or clearing agents. The guidelines also address areas such as funding liquidity risk management, protection of client assets, trading in international futures markets, and stress testing. The SFC has taken into account industry feedback and made adjustments to incorporate more principles-based guidance instead of rigid rules and quantitative thresholds. The objective of these guidelines is to strengthen the ability of futures brokers to navigate volatile market conditions with prudence. Futures brokers are given a six-month transition period to comply with the guidelines, along with an additional 12 months to implement necessary system changes for meeting requirements related to client risk limit controls and stress testing. The guidelines will come into effect on 25 February, 2024.
Consultation Conclusions on Proposed Risk Management Guidelines for Licensed Persons Dealing in Futures Contracts: