Code of Conduct for Benchmark Submitters to be gazetted

The Hong Kong Monetary Authority (HKMA) has completed consultation with the banking industry and will publish in the Gazette a statutory guideline on “Code of Conduct for Benchmark Submitters” pursuant to Section 7(3) of the Banking Ordinance on Friday (3 May).   The issuance of the guideline is one of the measures announced by the HKMA to strengthen the fixing mechanism for the HKD Interest Settlement Rate (more commonly known as the Hong Kong Interbank Offered Rate or HIBOR) on 6 February 2013.  The guideline which will come into effect on 3 May is now available to the public under the icon for “Supervisory Policy Manual” on the HKMA’s website (http://www.hkma.gov.hk/).

The guideline sets out the supervisory requirements on the systems of control to be maintained by benchmark submitters.  It is intended to be of generic application to benchmark submitters, although it will be confined to reference banks of HIBOR for the moment.  The Annex to the guideline is the Code of Conduct for reference banks for HIBOR (the Code) developed by the Treasury Markets Association (TMA) and endorsed by the HKMA.  The Code elaborates on the systems of controls that reference banks of HIBOR should put in place and provides comprehensive guidance on the rate corroboration process. 

In endorsing the Code and finalising the guideline, the HKMA has taken into account both comments from the Hong Kong Association of Banks (HKAB) and recent work on financial market benchmarks by overseas regulators and international standard setting bodies such as the International Organization of Securities Commissions (IOSCO). 

An HKMA spokesperson said, “The issuance of the guideline marks a significant step forward in enhancing the robustness of the HIBOR fixing mechanism.  Reference banks should take active steps to comply with the provisions and to achieve full compliance within six months from the date of the Gazette notice.”

Hong Kong Monetary Authority
29 April 2013