Over the past few years, the Financial Stability Board (FSB) worked with authorities and standard-setting bodies to develop and implement reform proposals to enhance the robustness of interest rate benchmarks. In accordance with the timeline set out by the UK Financial Conduct Authority (FCA), the publication of all sterling, euro, Swiss franc and Japanese yen LIBOR settings, as well as the 1-week and 2-month US dollar LIBOR settings ceased after 31 December 2021. The remaining US dollar LIBOR settings ceased publication after 30 June 2023.
To ensure an orderly transition away from all LIBOR settings, the HKMA maintained regular dialogue with AIs on their transition progress and collaborated with industry associations to develop tools to assist AIs in supporting their customers’ migration to alternative reference rates. The International Monetary Fund examined the Hong Kong banking sector’s readiness for the LIBOR transition in its Financial Sector Assessment Program and concluded that transition risks were well-managed.1 Overall, the Hong Kong banking sector has smoothly transitioned away from all LIBOR settings.
In Hong Kong, the Hong Kong Interbank Offered Rate (HIBOR) has been in place for many years and is still widely recognised by market participants as a credible and reliable benchmark. While the Hong Kong Dollar Overnight Index Average (HONIA) has been identified as an alternative to HIBOR, there is no plan to discontinue HIBOR. Many other jurisdictions adopt a similar multi-rate approach.
The HKMA is the central banking institution of Hong Kong. As the administrator of specific financial benchmarks2, the HKMA maintains control over the provision of the benchmarks, while the Treasury Markets Association (TMA) operates the daily benchmark determination process and related work in accordance with established guidance, and serves as the usual contact for financial institutions in terms of benchmark-related matters.
The HKMA does not fall within the scope of the EU Benchmarks Regulation (Regulation) for its administration of financial benchmarks, as Article 2(2) of the Regulation specifies that it shall not apply to a central bank and/or a public authority, among other types of exemptions. Nevertheless, the HKMA and the TMA commit to ensure the process of benchmark administration meets the standards of the international best practice set out in the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks. The TMA has published our statement of compliance with these principles.
1 International Monetary Fund, People’s Republic of China – Hong Kong Special Administrative Region: Financial System Stability Assessment, June 2021, page 25. See https://www.imf.org/en/Publications/CR/Issues/2021/06/04/Peoples-Republic-of-China-Hong-Kong-Special-Administrative-Region-Financial-System-Stability-50197.
2 These benchmarks include HKD Interest Settlement Rates (HKD HIBOR), CNH Hong Kong Interbank Offered Rate (CNH HIBOR), HKD Overnight Index Average (HONIA), US Dollar / Chinese Renminbi Yuan spot rate (USD/CNY(HK) Spot Rate), and US Dollar / Hong Kong Dollar spot rate (USD/HKD Spot Rate). The daily fixing rates of the above benchmarks are published on the TMA website.
