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Financial and Monetary Affairs
global, asset management, booking of transactions by financial institutions and human capital. The government seeks to implement such recommendations where appropriate to boost the financial services industry and will strengthen support for the council's work as a high-level, cross-sectoral government advisory body in collecting industry views to formulate strategic proposals for the development of the industry.
Improving Market Quality and Financial Consumer Education and Protection
Adequate investor protection is essential to promote confidence in the financial system. International financial centres have pursued a series of regulatory reform initiatives to enhance the resilience and stability of the global financial system. The government will continue to drive, facilitate and co-ordinate initiatives to ensure the overarching framework would enhance protection for investors and promote market development in the face of both global needs and local circumstances.
Basel III Implementation
Hong Kong follows the international timeline of the Basel Committee on Banking Supervision (BCBS) in implementing the Basel III reform package. Amendments to the Banking (Capital) Rules, and the Banking (Liquidity) Rules, came into effect on 1 January to introduce capital buffers and a new liquidity framework.
Regulation of Over-the-counter Derivatives
The Securities and Futures (OTC Derivative Transactions Reporting and Record Keeping Obligations) Rules were gazetted in May and implemented in July, beginning the first phase of mandatory reporting and related record-keeping obligations for over-the-counter (OTC) derivative transactions. In September, the SFC and the HKMA began a joint consultation on introducing the first phase of mandatory clearing and the second phase of mandatory reporting.
The SFC also published a consultation paper on proposed changes to update the Guidelines for the Regulation of Automated Trading Services, which reflect regulatory and market developments and provide more specific requirements for central counterparties that wish to provide clearing services for OTC derivative transactions.
In July, the SFC launched a consultation on proposed changes to the Securities and Futures (Financial Resources) Rules relating to capital and other prudential requirements for licensed corporations engaged in OTC derivatives activity. The proposals aim to ensure licensed corporations maintain their capital and liquidity at levels which are commensurate with the risks they undertake as well as to encourage them to adopt more advanced risk management standards.
Developing an Effective Resolution Regime for Financial Institutions
Following substantial publicly funded bailouts of financial institutions in the global financial crisis, the Financial Stability Board (FSB) issued its 'Key Attributes of Effective Resolution Regimes for Financial Institutions' in 2011 and reissued them in October 2014. The key attributes set standards in respect of those powers that FSB member jurisdictions are expected to have in
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