Other International Regulatory Standards

Margin and Risk Mitigations Standards for Non-centrally Cleared OTC Derivatives (NCCDs)

In September 2013, the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) jointly issued global minimum standards on margin requirements for NCCDs (implementation schedule was subsequently updated in March 2015). These standards are designed to contain systemic risk by reducing counterparty credit risk and the potential for contagion arising from NCCDs.

In January 2015, IOSCO issued risk mitigation standards for NCCDs. The standards encourage the adoption of sound risk mitigation techniques to promote legal certainty over the terms of NCCDs, to foster effective management of counterparty credit risk and to facilitate timely resolution of disputes. Specifically, these techniques cover trading relationship documentation and trade confirmation, process and/or methodology for determining valuation, portfolio reconciliation and compression, and dispute resolution.

In January 2017, the HKMA issued a new Supervisory Policy Manual module CR-G-14 “Non-centrally Cleared OTC Derivatives Transactions – Margin and Other Risk Mitigation Standards”, which sets out the minimum standards that the HKMA expects authorized institutions to adopt in respect of the margin and other risk mitigation standards for NCCDs. The phase-in of the respective standards started from 1 March 2017, subject to a 6-month transitional period.

Comparability Determinations for Margin and Risk Mitigation Standards
  • Requested Comparability Assessments in relation to Jurisdictions other than Members of the Working Group on Margin Requirements (referred to in footnote 24 of CR-G-14)
    (Nil at this stage)
  • Comparability Assessments
    (Nil at this stage)

Last revision date : 26 August 2019