Management Summary
- Purpose / Background: The HKMA has updated SPM module CR-G-14 regarding the "deemed comparable jurisdictions" for non-centrally cleared OTC derivatives. The update aligns the regulatory reference from "WGMR member jurisdictions" to "BCBS member jurisdictions."
- One-line conclusion: Authorized Institutions (AIs) must now recognize BCBS member jurisdictions as "deemed comparable" for margin and risk mitigation standards, effective immediately.
- Key Changes:
- Replaced the scope of "deemed comparable jurisdictions" from WGMR members to BCBS members.
- Standards set by BCBS member jurisdictions are now formally recognized as comparable from their date of entry into force.
- Updated reference resources for AIs to verify jurisdictional status and implementation via the BIS website and BCBS Basel III implementation dashboard.
- Key Dates / Deadlines: Effective immediately (as of 7 August 2026).
- Applicability / Impact scope: All Authorized Institutions (AIs) engaging in non-centrally cleared OTC derivatives.
- Recommended management actions:
- Update internal policy documentation and compliance manuals to reference BCBS membership instead of WGMR membership.
- Review existing counterparty margin processes to ensure they align with the current BCBS member list.
- Monitor the BIS Basel III implementation dashboard for updates on specific jurisdictional progress.
- Prepare for further consultations on the full revision of SPM CR-G-14 expected in H2 2026.
Detailed Summary
1) Document overview
This circular announces a targeted amendment to SPM module CR-G-14 "Non-centrally Cleared OTC Derivatives Transactions - Margin and Other Risk Mitigation Standards." The HKMA has transitioned the benchmark for "deemed comparable jurisdictions" from the Working Group on Margining Requirements (WGMR) to the Basel Committee on Banking Supervision (BCBS) member jurisdictions.
2) Main requirements
- AIs are required to apply the updated definition of "deemed comparable jurisdictions" when assessing margin and risk mitigation standards for non-centrally cleared OTC derivatives.
- Jurisdiction comparability is granted automatically from the date of the respective BCBS member jurisdiction’s standards entering into force.
3) Key changes
- Terminology Shift: The reference in paragraph 2.3.2 of SPM CR-G-14 has been officially migrated from "WGMR member jurisdictions" to "BCBS member jurisdictions."
- Resource Update: AIs are directed to the official BIS website for the definitive list of BCBS members and the BCBS Basel III implementation dashboard for specific status reports on margin requirement adoption.
4) Important dates & transition
- Effective Date: The change is effective immediately (7 August 2026).
- Future Consultation: A wider review of the SPM CR-G-14 module is underway; the HKMA intends to release a revised version for industry consultation in the second half of 2026.
5) Impact and risks
- Operational: AIs need to update their internal "comparable jurisdiction" lists to match the BCBS member list to avoid misclassification of counterparty risk and margin collateral requirements.
- Compliance: Failure to align with the BCBS membership list may lead to inconsistencies in the application of margin standards for cross-border OTC derivatives.
6) Compliance action checklist
- [ ] Review and revise internal policy documents to replace "WGMR" with "BCBS" regarding comparable jurisdictions.
- [ ] Verify that current counterparties in "deemed comparable" jurisdictions are still covered under the BCBS membership list.
- [ ] Subscribe to or bookmark the BCBS Basel III implementation dashboard for ongoing monitoring of jurisdictional compliance status.
- [ ] Brief relevant front-office and compliance teams on the immediate shift in regulatory reference.
7) Appendices/attachments summary
- No formal appendices were attached to this circular; however, the HKMA provided direct links to the BIS website and the Basel III implementation dashboard, which serve as the definitive reference tools for compliance under the updated policy.