Management Summary
- Purpose / Background: The HKMA is proposing an update to SPM module CR-G-14 regarding the identification of "deemed comparable" jurisdictions for non-centrally cleared OTC derivatives margin requirements, as the current 2020 references have become outdated.
- One-line conclusion: The HKMA proposes replacing the existing "WGMR member" reference with "BCBS member jurisdictions" to maintain alignment with current global standards.
- Key Changes:
- Shift from WGMR member jurisdictions to BCBS member jurisdictions as the benchmark for "deemed comparable" status under paragraph 2.3.2.
- Reference points for AIs updated to the BIS website for membership status and the BCBS Basel III implementation dashboard for monitoring compliance progress.
- Future-proofing the SPM to ensure criteria remain dynamic as Basel Committee membership evolves.
- Key Dates / Deadlines:
- 30 June 2026: Deadline for HKAB to submit comments on the proposed amendment.
- Second half of 2026: Planned industry consultation for the broader revised SPM CR-G-14 module.
- Applicability / Impact scope: All Authorized Institutions (AIs) conducting non-centrally cleared OTC derivatives transactions that rely on jurisdictional comparability for margin and risk mitigation requirements.
- Recommended management actions:
- Review internal policy frameworks that currently map against "WGMR member" lists to assess the impact of a switch to "BCBS member" lists.
- Provide feedback to the HKAB by the 30 June 2026 deadline if the transition to BCBS membership creates specific operational or compliance conflicts.
- Prepare for a comprehensive review of internal margin protocols in anticipation of the broader SPM CR-G-14 update later this year.
Detailed Summary
- Document overview
- Nature: Regulatory consultation letter regarding technical amendments to SPM CR-G-14.
- Purpose: To modernize the definition of "deemed comparable jurisdictions" used for margin and risk mitigation standards in non-centrally cleared OTC derivatives.
- Scope: Applies to all AIs subject to SPM CR-G-14.
- Main requirements
- Current status: The current SPM references WGMR members in footnote 27 of paragraph 2.3.2.
- Proposed requirement: Replace current references with "BCBS member jurisdictions."
- Verification: AIs are directed to use the BIS website for current BCBS membership and the Basel III implementation dashboard to verify the specific status of margin requirements in those jurisdictions.
- Key changes
- Transition from a WGMR-based definition to a BCBS-based definition.
- Improved reliance on official, up-to-date BIS monitoring tools rather than static list references within the SPM text.
- Important dates & transition
- 30 June 2026: Consultation feedback due to HKMA.
- H2 2026: Upcoming release of a fully revised SPM CR-G-14 for industry consultation.
- Impact and risks
- Compliance Risk: AIs must ensure their internal "comparable jurisdiction" lists are updated to align with the proposed BCBS membership criteria.
- Operational Risk: Potential impact on collateral management systems if the change in jurisdiction lists affects the eligibility or treatment of counterparties in non-centrally cleared trades.
- Compliance action checklist
- [ ] Conduct internal impact assessment of the switch from WGMR to BCBS criteria.
- [ ] Review current list of counterparties/jurisdictions currently categorized as "deemed comparable."
- [ ] Submit industry comments via HKAB before the 30 June 2026 deadline.
- [ ] Monitor the HKMA website for the upcoming full consultation of SPM CR-G-14 in H2 2026.
- Appendices/attachments summary
- There are no formal appendices attached to this letter; however, the text references two external URLs (BIS membership and Basel III implementation dashboard) which serve as the definitive source for regulatory compliance under the proposed change.