Financial and Monetary Affairs | 83
derivatives contracts be required to be reported to trade repositories (TRS), and non- centrally cleared contracts be subject to higher capital charges.
Building on the existing regulatory framework, the Government has been working closely with the HKMA and the SFC to develop a regulatory regime for the OTC derivatives market in Hong Kong. The proposed regulatory regime will require the reporting of certain specified OTC derivatives transactions, particularly those which are relevant to the Hong Kong market, to a designated TR to be established. by the HKMA and the clearing of certain specified standardised OTC derivatives transactions through designated CCPs. In October 2011, the HKMA and the SFC issued a joint consultation paper which detailed how the regime is likely to be cast, and invited the public to provide feedback on the proposals. Valuable comments have been received and will be taken into account when finalising the proposed regulatory framework. A second joint consultation will be conducted in 2012 to consult the public on the detailed requirements. Meanwhile, the HKEX has announced its intention to establish a local CCP to provide central clearing services. for certain products.
Proposed Statutory Regulatory Regime for Mandatory Provident Fund Intermediaries
Preparation for the implementation of the Employee Choice Arrangement (ECA) is in full swing. Under the ECA, MPF scheme members will be allowed to transfer the accrued benefits derived from their own (i.e. employees') portion of mandatory contributions made during their current employment to an MPF scheme of their own choice, and hence will be conducive to greater market competition.
Before implementing the ECA, the Government introduced into the Legislative Council a bill on December 14, 2011 to put in place a statutory regulatory regime for MPF intermediaries to enhance the protection of scheme members' interests. The statutory regime is modelled on the existing administrative regulatory regime adopted since the inception of the MPF system in 2000. It will introduce criminal sanctions against the sales and marketing of MPF products by unregistered MPF intermediaries and a range of sanctions against registered MPF intermediaries for breaches of the statutory conduct requirements.
The bill is being scrutinised by the Legislative Council. Subject to the bill being approved by the Legislative Council by July 2012, the ECA will be implemented on November 1, 2012.
Anti-Money Laundering and Counter Financing of Terrorism
Hong Kong has put in place an effective anti-money laundering (AML) and counter financing of terrorism (CFT) regulatory regime to maintain a safe business and investment environment. A high-level Central Co-ordinating Committee on AML and CFT, chaired by the Financial Secretary, is in place to steer policy in this area. Following enactment of the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Bill by the Legislative Council in June 2011 to enhance the AML/CFT regime applicable to the financial sectors, preparations for implementation are being finalised and the new legislation will commence operation on April 1, 2012 as scheduled.