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The Government gazetted today (May 15) three pieces of subsidiary legislation under the Securities and Futures (Amendment) Ordinance 2014 (Amendment Ordinance) to implement the first phase of the new over-the-counter (OTC) derivatives regulatory regime from July 10, 2015.
The three pieces of subsidiary legislation are:
(a) the Securities and Futures (Amendment) Ordinance 2014 (Commencement) Notice 2015 (Commencement Notice);
(b) the Securities and Futures (OTC Derivative Transactions - Reporting and Record Keeping Obligations) Rules (Reporting Rules); and
(c) the Securities and Futures (Stock Markets, Futures Markets and Clearing Houses) Notice (Prescription Notice).
The Commencement Notice will bring into effect the provisions relating to the first phase of the OTC derivatives regulatory regime, covering the general framework and the mandatory reporting and related record keeping obligations, as well as Parts 3, 5 and 6 of the Amendment Ordinance from July 10, 2015.
"The mandatory reporting obligation will cover certain types of interest rate swaps and non-deliverable forwards, and apply to authorised institutions, approved money brokers, licensed corporations and central counterparties that provide clearing services to persons in Hong Kong. The mandatory reporting requirements will be supplemented by related record keeping requirements," a spokesman for the Financial Services and the Treasury Bureau said.
The precise ambit of the mandatory reporting and related record keeping obligations is specified in the Reporting Rules, which set out details such as the product scope, reporting entities, reportable transactions, types of information to be reported, the manner of reporting and records to be kept.
Products that are traded on the stock markets or futures markets and cleared through the clearing houses prescribed in the Prescription Notice will be excluded from the regime.
With the commencement of Part 5 of the Amendment Ordinance, criminal courts will be empowered under the Organized and Serious Crimes Ordinance (Cap. 455) to make restraint, charging and confiscation orders over the proceeds of market misconduct offences. This will bring Hong Kong's regime into alignment with the recommendations made by the Financial Action Task Force on Money Laundering.
The three pieces of subsidiary legislation will be tabled before the Legislative Council on May 20, 2015, for negative vetting. The Reporting Rules and the Prescription Notice will come into operation together with the provisions of the Amendment Ordinance set out in the Commencement Notice.
Ends/Friday, May 15, 2015
Issued at HKT 11:06
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