Joint HKMA-SFC consultation on mandatory clearing and reporting for OTC derivatives market

The following is issued on behalf of the Hong Kong Monetary Authority:

     The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) today (September 30) jointly issued a consultation on introducing the first phase of mandatory clearing and the second phase of mandatory reporting under the new over-the-counter (OTC) derivatives regime (Note 1).

     The first phase of mandatory clearing aims to mandate the clearing of certain standardised interest rate swaps entered into between major dealers. Our key proposals identify:

- the types of transactions that will  be subject to mandatory clearing;
- the persons who will be subject to the clearing obligation and in what circumstances;
- the exemptions and reliefs that may apply; and
- the process for designating central counterparties for the purposes of the clearing obligation.

     The second phase of mandatory reporting aims to expand the existing reporting regime. Our key proposals include:

- requiring the reporting of transactions in all OTC derivative products (Note 2);
- widening the scope of transaction information to be reported, including requiring the reporting of daily valuations; and
- identifying the specific data fields to be completed  under the expanded reporting regime (Note 3).

     Interested parties are invited to submit comments to the HKMA or the SFC by:
- October 31, in respect of matters other than the proposed data fields; and
- November 30, in respect of the proposed data fields.

     The joint consultation paper can be downloaded from the HKMA website or the SFC website.


1. In line with global efforts, the HKMA and SFC have been developing a regulatory regime for the OTC derivatives market in Hong Kong. Subsequent to two consultation exercises (in October 2011 and July 2012), the Securities and Futures (Amendment) Ordinance 2014 was passed in March 2014. This legislation introduces mandatory reporting, clearing, and trading and record keeping obligations in respect of OTC derivative transactions.

     Two subsequent consultation exercises were carried out (in July 2014 and November 2014) on the Securities and Futures (OTC Derivative Transactions íV Reporting and Record Keeping Obligations) Rules, which came into effect on  July 10, 2015.

2. The existing reporting regime only mandates reporting transactions in certain interest rate swaps and non-deliverable forwards.

3. The specific data fields are set out in Appendix D to the Consultation Paper.

Ends/Wednesday, September 30, 2015
Issued at HKT 17:17