Hong Kong issues consultation paper on draft rules for mandatory reporting and related record keeping in relation to OTC derivatives

The Hong Kong Monetary Authority (“HKMA”) and the Securities and Futures Commission (“SFC”) have recently issued a joint consultation paper (“CP”) detailing their proposed requirements relating to the mandatory reporting and record keeping obligations for over-the-counter (“OTC”) derivative transactions in Hong Kong. The CP sets out the draft proposed Securities and Futures (OTC Derivative Transactions – Reporting and Record Keeping) Rules (“Draft Rules”) and is the first of a series of further consultations on the subsidiary legislation under the Securities and Futures (Amendment) Ordinance 2014 (“Amendment Ordinance”). The Amendment Ordinance was enacted in response to the 2008 global financial crisis, which highlighted the importance of regulating the OTC derivatives market. The Amendment Ordinance was enacted by the Legislative Council (“LegCo”) in April 2014 after the conclusion of two prior consultations. It is anticipated that the Amendment Ordinance will come into effect in 2015.

Mark Johnson, Will Hallatt and Jojo Fan look at the history of the regulatory reform in respect of the OTC derivates market and review the current proposals set out in the CP here.