HKMA and SFC Update OTC Derivatives Services Provider List

The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) issued a joint consultation paper this Friday, which outlines eight additional entities to be included on the Financial Services Providers (FSP) list under the over-the-counter (OTC) derivatives Clearing Clearing Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Read this Term regime.

To be added to the list: “They belong to a group of companies appearing on the list of global systemically important banks published by the Financial Stability Board, or on the list of dealer groups which undertook to the OTC Derivatives Supervisors Group to work collaboratively with central counterparties, infrastructure providers and global supervisors to continue to make structural improvements to the global OTC derivatives markets,” the joint statement from the regulators said.

Otherwise, the entities need to be members of the largest central counterparties offering clearing for interest rate Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term in the US, Europe, Japan, and Hong Kong, the statement said.

In the consultation paper, the two regulators have reviewed the clearing memberships of interest rate swaps (IRS) clearing counterparties (CCPs). As of the 31st of December 2019, they have identified five entities that are part of a global systemically important banks (GSIBs) or a G15-dealers group that have become members of the IRS CCPs since their last review.

The five entities in question are the Bank of China (UK) Ltd, BofA Securities, Inc., Citibank Europe Plc, Mizuho Securities USA LLC, and UBS Switzerland AG.

HKMA and SFC update GSIBs

Furthermore, according to the consultation paper, the two regulators have reviewed the list of GSIBs published by the FSB in November 2018, so see what changes had been made from the year prior.

The FSB identified the Toronto-Dominion Bank as a new GSIB and therefore, have proposed to include the following group entities to the FSP List:

(a) The Toronto-Dominion Bank

(b) TD Bank, N.A.

(c) TD Bank USA, N.A.

Market participants are able to submit their feedback to either of the regulators until the 28th of April, 2020.