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The Securities and Futures (Amendment) Ordinance 2014 (Amendment Ordinance) was gazetted today (April 4).
"The Amendment Ordinance mainly aims to provide for a regulatory framework for the over-the-counter derivative market in Hong Kong which meets the relevant commitments of the Group of Twenty (G20) and is in line with developments in other international financial centres," a government spokesman said.
The Amendment Ordinance will enable Hong Kong's financial regulators to introduce mandatory reporting, clearing and trading obligations in line with G20 commitments, and a record-keeping obligation to supplement the implementation of the abovementioned obligations. The obligations will apply to those over-the-counter derivative transactions to be specified in subsidiary legislation. These would initially include certain types of interest rate swaps and non-deliverable forwards that could be standardised.
The Amendment Ordinance will provide for the regulation of the relevant market infrastructure and the oversight of key players in the over-the-counter derivative market, including authorised financial institutions, approved money brokers, licensed corporations and other persons to be prescribed by the subsidiary legislation.
In addition, the Amendment Ordinance incorporates other amendments. First, certain specified notifications and reports under Part XV, "Disclosure of Interests" of the Securities and Futures Ordinance, will have to be filed electronically. Second, criminal courts will be empowered under the Organised and Serious Crimes Ordinance to make restraint, charging and confiscation orders over the proceeds of market misconduct offences. The latter will bring Hong Kong's regime in closer alignment with the recommendations made by the Financial Action Task Force on Money Laundering.
The Amendment Ordinance will commence operation on a date to be appointed by the Secretary for Financial Services and the Treasury by notice published in the Gazette.
Details of the regulation of the over-the-counter derivative market will be set out in subsidiary legislation to be made by the Securities and Futures Commission (SFC) with the consent of the Hong Kong Monetary Authority (HKMA). In addition, the Amendment Ordinance empowers the Chief Executive in Council to make subsidiary legislation on fees to be charged by the HKMA for using the trade repository. The HKMA and the SFC will conduct public consultation on the subsidiary legislation in phases. The Government aims to lay before the Legislative Council the first batch of subsidiary legislation by the end of 2014.
Ends/Friday, April 4, 2014
Issued at HKT 12:03
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