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Joint HKMA-SFC consultation on the OTC derivatives regulatory regime
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 (April 27) issued a joint consultation on the prescription of additional markets and clearing houses, and the prescription of Delta One Warrants (Note 1), for the purpose of the over-the-counter (OTC) derivatives regulatory regime.

     This consultation is in response to a recent request from market participants that certain products be excluded from the upcoming second phase of mandatory reporting (Note 2).

     The proposed prescriptions seek to address the concerns raised by excluding the following products from the definition of "OTC derivative product", and consequently from the mandatory reporting obligation:
  • products traded on, and cleared through, the additional markets and clearing houses proposed to be prescribed; and
  • Delta One Warrants, a certain type of warrant with a strike price set at zero or near zero.

     Interested parties are invited to submit comments to the HKMA or the SFC by May 26, 2017.

     The joint consultation paper can be downloaded from the websites of the HKMA or the SFC.
  1. Delta One Warrants are call warrants with a strike price set at zero or very close to zero, and they simply replicate price fluctuations in the underlying asset(s) until the exercise date. They enable clients to gain synthetic exposure to assets in closed or difficult-to-access markets.
  2. The first phase of mandatory reporting came into force on July 10, 2015. The second phase of mandatory reporting is scheduled to come into force on July 1, 2017.
Ends/Thursday, April 27, 2017
Issued at HKT 17:15
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