Hong Kong proposed fresh liquidity rules
24 November 2016 Hong Kong
Image: Shutterstock
The Hong Kong Securities and Futures Commission (SFC) is aiming to reinforce market stability through new regulatory proposals that would require securities lending participants to ensure cash reinvestment strategies are “sufficiently liquid”.
In a consultation paper on asset management regulation, the SFC proposed that all cash collateral should be “sufficiently liquid with transparent pricing and low risk to meet reasonably foreseeable recalls of cash collateral”. Specifics on what constitutes “reasonably foreseeable” were not clarified in the paper.
Fund managers “should stress test the ability of a cash collateral reinvestment portfolio to meet foreseeable and unexpected calls for the return of cash collateral on an ongoing basis”.
The securities regulator focused its proposals on managers active in the securities lending, repo and over-the-counter markets, adding that “a collateral valuation and management policy which should include certain minimum valuation and margin requirements”.
The SFC also aimed enhance transparency, a comprehensive summary of all aspect of the fund’s lending strategy should be disclosed in the offering documents.
The SFC is now open to industry comment on the proposals until 22 February 2017
In a consultation paper on asset management regulation, the SFC proposed that all cash collateral should be “sufficiently liquid with transparent pricing and low risk to meet reasonably foreseeable recalls of cash collateral”. Specifics on what constitutes “reasonably foreseeable” were not clarified in the paper.
Fund managers “should stress test the ability of a cash collateral reinvestment portfolio to meet foreseeable and unexpected calls for the return of cash collateral on an ongoing basis”.
The securities regulator focused its proposals on managers active in the securities lending, repo and over-the-counter markets, adding that “a collateral valuation and management policy which should include certain minimum valuation and margin requirements”.
The SFC also aimed enhance transparency, a comprehensive summary of all aspect of the fund’s lending strategy should be disclosed in the offering documents.
The SFC is now open to industry comment on the proposals until 22 February 2017
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