Market Infrastructure

Basel’s new capital rules have impacted global derivatives markets by purging participants and liquidity. Whether or not this was the intended outcome, it will create onerous costs for entire markets and consumers.

Proposals include introduction of auction protocol for liquidating defaulted derivatives clearing members’ positions, with a mechanism to distribute the resulting losses.

The bill covers winding up administration for corporate collective investment vehicles, and director liabilities for contraventions of the law, among others.

Optimising settlement and moving beyond T+2 will enable firms to reduce capital requirements, systemic risk and operational costs while preserving resiliency of existing infrastructure.

The HKMA is set to launch an Open API on its website to make financial data more accessible to consumers and facilitate client onboarding by banks starting 23 July; the API will begin with providing 50 sets of financial data.

Under the new proposals, fiduciaries providing false information in audit or valuation reports will face stringent penalties, including bans from securities markets and forced repayment of any gains deemed unlawful.

Investment management firms with operations in Hong Kong must turn their attention to the new SFC Fund Manager Code of Conduct, which comes into force in four months.

ISDA proposes adjustment options that will be applicable to fallback rates in the event a derivative references an IBOR that has been permanently discontinued; FSB cautions on the use of overnight RFR to replace term IBORs.

In a research paper, the SSE envisions DLT efficiency in post-trade settlement and securities issuance and trading, calling on regulators to “adapt to evolving technology.”

In intragroup transactions involving a third country entity, ESMA is seeking to extend its temporary clearing exemption for derivatives transactions.