Hong Kong Financial Authority (HKMA) Circulars/Pointers

TITLESUMMARY

DATE

LINK

REMARKS

1
Extension of Pre-approved Principal Cost Vacation Scheme for one more 6 monthsThe HKMA and the Banking Sector SME Lending Coordination Mechanism (“Mechanism”) introduced that the Pre-approved Principal Cost Vacation Scheme (“Scheme”) will likely be prolonged for one more six months to October 2021.

All principal funds of loans falling due between Could and October 2021 by eligible company clients will likely be deferred by one other six months (apart from repayments of commerce loans, which will likely be deferred by 90 days). Just like the Scheme extension in November 2020, banks is not going to subject particular person notifications to eligible clients relating to the deferment association. company clients might contact their banks. Deferment requests will likely be dealt with on a “pre-approved” foundation. Banks might request clients to supply up-to-date operational and monetary info to raised perceive their wants when processing their requests.

Because the Scheme has been rolled out for practically one 12 months, so as to strike a stability between catering for the distinctive circumstances going through clients and the necessity for prudent danger administration, the Mechanism has agreed that, for loans which have been prolonged for 540 days or extra cumulatively since first being drawn down (or commerce loans which have been prolonged for 270 days or extra cumulatively since first being drawn down), banks can undertake a versatile strategy and take into account, on a case-by-case foundation and topic to prudent danger administration rules, whether or not different types of aid are extra appropriate to assist the shoppers journey out the present difficulties.

4 March 2021
Click on right hereThe above announcement has been lined in merchandise 5 beneath.

2
Reimbursement of Commerce Services Deferred by the Banking Sector for One other 90-day Interval90-day deferral for commerce amenities below the Pre-approved Principal Cost Vacation Scheme

The HKMA and the Banking Sector SME Lending Coordination Mechanism (“Mechanism”) introduced a 90-day reimbursement deferment for commerce amenities below the Pre-approved Principal Cost Vacation Scheme (“Scheme”).

Below the Scheme (which was lined in a earlier round (please see “Remarks”)), commerce loans have been granted 90-day extension respectively in Could, August and November 2020. A few of these loans will fall due in February 2021. The Mechanism has agreed that in mild of the COVID-19 pandemic, company clients can additional lengthen their commerce amenities for one more 90-day interval. Eligible company clients also can apply for a 90-day extension of commerce amenities drawn down from November 2020 to end-January 2021.

Just like earlier extensions of the Scheme, company clients might contact their banks, which in flip will deal with reimbursement deferment requests on a “pre-approved” foundation. Nevertheless, you will need to notice some extra options for commerce amenities below the Scheme:

• For amenities that are self-liquidating in nature, banks might require the mortgage to be settled when the underlying fee has been obtained by the shopper.
• For commerce loans prolonged for 270 days or extra cumulatively since their first draw-downs, banks can undertake a versatile strategy and take into account on a case-by-case foundation whether or not different types of aid (akin to repaying the commerce loans by instalments) are extra appropriate to assist the shoppers (topic to prudent risk-management rules).

Flexibility below the Scheme for purchasers within the transportation sector

The HKMA and the Mechanism additionally mentioned numerous difficulties going through clients within the transportation sector and recognized the next help that banks can present:

• Banks will likely be extra versatile in dealing with new financing functions by public mild bus (“PLB”) operators to finance the improve of their autos from 16 seats to 19 seats.
• Banks don’t have to rigidly adhere to the 85% loan-to-value ratio cap (offered that prudent risk-management rules are noticed) for brand new loans used just for the acquisition of latest autos.
• As regards new loans granted for taxis, PLBs and different non-franchised buses, banks agreed that they might actively take into account extending the utmost mortgage tenors for taxis and PLBs to 30 years, and the utmost mortgage tenors for non-franchised buses to 10 years, on a brief foundation for the subsequent two years.
• Banks might present different types of aid to assist alleviate the reimbursement burden of related business automobile house owners, topic to prudent risk-management rules.

The HKMA reminded banks to be sympathetic to clients who aren’t eligible for the Scheme to assist tide them over this troublesome time (whereas observing prudent risk-management rules).

29 January 2021
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3
An Replace on COVID-19 and Cash Laundering and Terrorist Financing risksHKMA revealed a round to attract the eye of all Approved Establishments (AIs) and Saved Worth Facility (SVF) Licensees to the newest replace from the Monetary Motion Job Power (FATF) on COVID-19-related cash laundering / terrorist financing (ML/TF) dangers (please discover the hyperlink to FATF’s replace in Remarks column). The replace highlights developments since FATF’s earlier reviews and supply particulars on how criminals proceed to try to take advantage of the worldwide monetary programs, with case research (together with some offered by Hong Kong), and illustrate how the dangers have developed together with the COVID-19 pandemic.

The FATF replace reinforces the persevering with significance of a risk-based response which doesn’t disrupt important and legit companies. HKMA has already articulated its regulatory expectations on this respect in earlier circulars (please discover the hyperlinks to these circulars in Remarks column). This round additionally gives updates on efforts of HKMA and different organisations on combating ML/TF dangers:

• HKMA has been monitoring COVID-19 associated influence on ML/TF dangers and dealing intently with AIs and SVF Licensees to deal with the developments;
• the Fraud and Cash Laundering Intelligence Taskforce, the public-private partnership for info sharing in Hong Kong which consists of regulation enforcement company, banking supervisor and ten retail banks in Hong Kong, has been delivering alerts and case-based intelligence on COVID-19 associated deceptions;
• the Fraud Threat Administration Taskforce established below the Hong Kong Affiliation of Banks (HKAB) broadcasted a video clip on tv to remind the general public to remain alert of COVID-19 associated fraudulent actions and shared good practices on fraud prevention and detection with the business; and
• HKAB additionally held a sharing session, with HKMA’s help, to share monetary crime developments noticed and challenges encountered throughout COVID-19, and good practices of AIs in managing and mitigating ML/TF dangers.

HKMA reminds AIs and SVF Licensees to review the FATF replace at the side of the ML/TF danger info offered by way of the above boards, and take into account the related implications for his or her ML/TF danger administration.

31 December 2020
Click on right hereThe above circulars have been lined in objects 9 and 10 beneath respectively.

The above circulars have been lined in objects 22 and 23 beneath respectively.

4
Extension of Principal Moratorium for 80% and 90% Assure Merchandise
HKMC Insurance coverage Restricted (a wholly-owned subsidiary of the Hong Kong Mortgage Company Restricted) introduced that the appliance interval for principal moratorium for the 80% Assure Product and the 90% Assure Product below the SME Financing Assure Scheme (SFGS) is prolonged for six months to 31 March 2021. The utmost period of principal moratorium is elevated from 12 months to 18 months and the mortgage assure interval may also be prolonged correspondingly.
2 September 2020
Click on right herePlease see the press launch revealed on HKMA’s web site dated 29 Could 2020 right here.

5
Pre-approved Principal Cost Vacation Scheme prolonged by an extra 6 monthsThe HKMA revealed a round saying the extension of the Pre-approved Principal Vacation Scheme by 6 months.

As lined in a earlier round (please see “Remarks”), the HKMA and the Banking Sector SME Lending Coordination Mechanism had put in place the Pre-approved Principal Cost Vacation Scheme for its authorised establishment contributors (AI) to alleviate money move difficulties confronted by small and medium measurement companies. Below the Scheme, eligible small and medium measurement company clients may make deferred repayments on mortgage principal funds.

The Scheme has now been prolonged for an extra 6 months so that every one mortgage principal funds falling due between November 2020 and April 2021 will likely be deferred by six months (apart from repayments of commerce loans, which will likely be deferred by 90 days). Taking part AIs will deal with every eligible buyer’s case on a “pre-approved” foundation, and will request clients (particularly those that have been granted a number of extensions of fee holidays) to supply up-to-date enterprise and monetary info to raised perceive their wants when processing their instances.

2 September 2020
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6
Prudential Measures for Mortgage Loans on Non-residential PropertiesThe HKMA revealed a round on changes launched by the HKMA on 19 August 2020 to the prudential measures for mortgage loans on non-residential properties.The HKMA famous that on account of the COVID-19 outbreak, non-residential property markets have seen main corrections, with the costs of places of work, flatted factories and retail premises declining by 15%, 11%, and 10% respectively. The transaction quantity of non-residential properties additionally contracted within the first half of 2020, and can probably stay below stress attributable to lowered enterprise confidence and rising geopolitical tensions.

In mild of this, the HKMA has determined to regulate the countercyclical macroprudential measures for mortgage loans on non-residential properties. The relevant loan-to-value ratio caps below completely different situations for non-residential properties have been adjusted upward by 10%. These adjustments will take impact from 20 August 2020 and can apply to all transactions the place the provisional sale and buy settlement is signed on or after that date.

The HKMA reiterated that these measures are meant to use to mortgage loans for the aim of financing property transactions or the refinancing of current properties. They aren’t meant to use to credit score amenities secured by properties for the aim of financing the enterprise operation of corporates, as these credit score amenities are topic to a set of complete credit score underwriting requirements and common credit score critiques by licensed establishments. AIs might ship any questions they’ve relating to this round to [email protected].

19 August 2020
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7
Reminder of Investor Safety MeasuresThe HKMA revealed a round reminding Approved Establishments (AI) of some essential investor safety measures in mild of the present volatility within the markets.

In view of the current worth volatility of assorted markets and funding merchandise (together with shares, bonds, commodities, treasured metals, FX, and so forth.) in addition to the operational challenges caused by COVID-19, AIs are reminded to stay vigilant, and proceed to deal with clients pretty and act in the perfect curiosity of their clients within the sale of funding merchandise, in keeping with the Code of Banking Apply and the Deal with Clients Pretty Constitution. AIs ought to train further care when dealing with leveraged transactions the place the shopper may have potential losses exceeding the invested quantity.

Registered establishments are additionally reminded to watch the next necessities when making solicitations or suggestions on funding merchandise regulated by the Securities and Futures Ordinance:

1. guarantee correct product due diligence, considering, amongst others, the market circumstances amid the COVID-19 state of affairs, which can influence on the danger return profile and prospect of an funding. The place the continual overview by an RI of the danger score of an funding product leads to the next danger score being attributed to the product, the RI ought to comply with the present requirement of revealing such improve in danger score to clients to whom it has beneficial and offered the product;
2. give due consideration to related circumstances of a buyer when assessing the suitability of an funding product for the shopper. The place an RI is conscious of fabric adjustments to a buyer’s circumstances (e.g. influence arising from the COVID-19 state of affairs), such adjustments needs to be taken into consideration within the evaluation;
3. clarify to the shopper the dangers and options of the funding product; and
4. current balanced views: don’t focus solely on advantageous phrases akin to excessive coupon charges or yields, however ought to clarify additionally the disadvantages and potential draw back dangers.

On the subject of leveraged transactions, AIs ought to

• make satisfactory disclosure of the character, key options and phrases, and the related dangers of leveraged merchandise or transactions, particularly the danger of dropping greater than the shopper’s invested quantity (and the place relevant the danger of getting limitless loses, e.g. a buyer writing a unadorned name possibility)
• be certain that the shopper is prepared and has adequate web price to imagine the dangers and bear the potential losses of the leveraged transactions.

In follow, AIs are anticipated to place in place insurance policies and controls to make sure that focused clients have been supplied with satisfactory disclosure of, and are able to understanding the danger of leveraged or margin buying and selling, and the potential of being topic to margin-calls inside a short while interval. AIs are additionally anticipated to place in place mechanism to observe clients’ margin maintained with the AIs. The HKMA will proceed to observe AIs’ compliance with the regulatory necessities as a part of its on-going supervision.

7 August 2020
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8
90 day extension of Commerce Loans below the Pre-approved Principal Cost Vacation SchemeThe HKMA revealed a round saying that in mild of the problems attributable to the COVID-19 outbreak, all Approved Establishments (AI) are requested to increase the principal fee for commerce loans below the Pre-approved Principal Cost Vacation Scheme (Scheme) for one more 90 days.

Based on the HKMA, the deferment ought to cowl commerce loans each at present topic to the Scheme in addition to these drawn between 1 Could 2020 to 31 July 2020 by eligible clients with no excellent funds overdue for greater than 30 days as at 1 August 2020. For amenities that are self-liquidating in nature, AIs might require the mortgage to be settled when the underlying fee has been obtained by the shopper. All different phrases of the Scheme acknowledged within the Annex to the HKMA’s round on 17 April 2020 will proceed to use.

As solely between 10% to twenty% of eligible company clients have chosen to take up the Scheme and with AIs adopting work-from-home preparations in response to the pandemic, AIs is not going to subject particular person notifications to clients relating to the deferment association. company clients are requested to contact their AIs, which can deal with principal deferment requests on a “pre-approved” foundation. AIs might request clients to supply up-to-date operational info to raised perceive their wants when processing their requests.

The HKMA reiterated that this extension of the Scheme is not going to by itself render a commerce mortgage to be downgraded, nor will it trigger the mortgage to be categorised as “rescheduled” so long as the phrases of the extension are “business”. This precept applies no matter whether or not or not the commerce mortgage is already on a fee vacation. That stated, debtors who’re unable to fulfill the restructured fee schedule ought to proceed to be acknowledged in a well timed method and the classification of their loans ought to consult with the HKMA’s Guideline on Mortgage Classification System in addition to beforehand issued FAQs.

The HKMA will proceed to interact banks and the business sectors by way of the Mechanism and expects to reach at a call relating to follow-up preparations for the Scheme, which can finish in October, as quickly as attainable.

5 August 2020
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9
Coronavirus illness (COVID-19) and Anti-Cash Laundering and Counter-Financing of Terrorism (AML/CFT) measures – An UpdateThe HKMA revealed a round highlighting some key observations and business practices to help Approved Establishments (AI) in growing sustained efforts to deal with the evolving COVID-19 state of affairs and help operational responses that are in line with the risk-based strategy (RBA).

The HKMA acknowledged that because the state of affairs continues to evolve, it has change into clear that measures initially meant to be short-term might now need to be saved in place by AIs for comparatively longer, or in some instances reintroduced as new clusters of COVID-19 instances emerge. Key observations and practices highlighted by the HKMA embrace: 1. Buyer due diligence below social distancing and journey restrictions

The HKMA famous that social distancing and a big discount in journey have considerably impacted the power of AIs to work together with current and potential clients. AIs are more and more utilizing video conferencing to work together with clients in the midst of on-boarding and ongoing buyer due diligence critiques. Some AIs have utilised the flexibleness offered within the Anti-Cash Laundering and Counter-Terrorist Financing Ordinance to delay verifying the shopper’s id, whereas adopting acceptable danger mitigating measures. Along with distant on-boarding for particular person retail clients at present provided by greater than 10 AIs, some AIs have additionally expedited testing of comparable initiatives for company clients. 2. Stress on AML/CFT sources

The HKMA famous that every one AIs have some type of enterprise continuity planning in place to keep up sound operations. To deal with the stress on sources, AIs have been adopting a variety of responses, which collectively have minimised potential influence to AML/CFT processes. These embrace reprioritising work on the idea of ML/TF dangers, reallocation of workers, staggering workplace hours and equipping workers with work-from-home capabilities. Some AIs are additionally expediting their exploration of regulatory expertise (RegTech) options (e.g. machine studying) to cut back the variety of false positives generated from transaction monitoring and screening programs, and thus enhancing effectivity and effectiveness. The HKMA continues to observe useful resource allocation as a part of AIs’ operational responses to ML/TF danger administration and reiterates by way of this engagement the significance of making use of the rules of the RBA, sustaining satisfactory information of choices made and that related controls or danger urge for food needn’t be compromised within the course of. 3. Rising threats and adjustments in clients’ behaviour

The HKMA famous that AIs have elevated their understanding of and vigilance to rising COVID-19 associated monetary crime dangers, together with by way of the Fraud and Cash Laundering Intelligence Taskforce (FMLIT) and a not too long ago established Fraud Threat Administration Taskforce below the Hong Kong Affiliation of Banks. In keeping with world developments, some AIs have additionally recognized adjustments in buyer behaviour, akin to digital funds and on-line transactions, and have been working to include their understanding of rising dangers into transaction monitoring guidelines and situations. The HKMA additional famous that it had noticed examples the place RegTech helps to construct out a extra collaborative, intelligence-led strategy to monetary crime danger administration and that some AIs are making use of superior analytics to assist detect networks and customary vulnerabilities.

The HKMA will proceed to work intently with AIs to help ongoing business efforts, in keeping with the rules of RBA. AIs might strategy the HKMA by way of their typical contacts on the AML & Monetary Crime Threat Division or at [email protected] for any questions on this round.

30 July 2020
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Please see the Annex to this round setting out additional particulars relating to the important thing observations and practices highlighted by the HKMA right here.

10
Coronavirus illness (COVID-19) and Anti-Cash Laundering and Counter-Financing of Terrorism (AML/CFT) measures – An Replace The HKMA revealed a round updating Saved Worth Facility (SVF) Licensees on some key observations and business practices which the HKMA shared with the banking sector in a round dated 30 July 2020 relating to the continuing AML/CFT response to COVID-19 associated challenges.

The HKMA acknowledged that because the state of affairs continues to evolve, it has change into clear that measures initially meant to be short-term might now need to be saved in place by SVF Licensees for comparatively longer, or in some instances reintroduced as new clusters of COVID-19 instances emerge. The HKMA will proceed to work intently with SVF licensees to help ongoing business efforts, and reiterated that the rules of the RBA present the flexibleness to be each pragmatic and attentive to the evolving COVID-19 state of affairs and the challenges it presents.

30 July 2020
Click on right herePlease see the HKMA’s round on key observations and business practices at right here.

11
US Greenback Liquidity FacilityThe HKMA revealed a press launch saying the extension of the non permanent US Greenback Liquidity Facility to 31 March 2021. The US Greenback Liquidity Facility was initially launched by the HKMA in a round dated 22 April 2020 in response to a brief repurchase settlement facility (FIMA Repo Facility) launched by the US Federal Reserve on 31 March 2020, with the intention of offering licensed banks with a further channel to acquire US greenback liquidity in mild of the tightness within the world US greenback interbank cash markets amid volatilities and uncertainties within the world monetary markets caused by the unfold of COVID-19. Given the choice by the US Federal Reserve to increase the FIMA Repo Facility to 31 March 2021, the HKMA has determined to increase the non permanent US Greenback Liquidity Facility accordingly.

The operational parameters of the non permanent US Greenback Liquidity Facility will stay unchanged. A complete of US$10 billion is at present obtainable to banks below the Facility within the type of repurchase transactions for a time period of seven days by way of aggressive tenders held by the HKMA each week.

30 July 2020
Click on right here
Please see the HKMA round saying the launch of the US Greenback Liquidity Facility on 22 April 2020 at right here. (additionally lined beneath in merchandise 16)

12
Enhancement Measures to 80% and 90% Assure Merchandise below SME Financing Assure SchemeThe HKMA revealed a press launch on the enhancement measures to the 80% and 90% Assure Merchandise below the SME Financing Assure Scheme (SFGS). The enhancement measures have been included within the second spherical of the Anti-epidemic Fund introduced by the Hong Kong Authorities in April 2020. Now Hong Kong Mortgage Company Insurance coverage Restricted (HKMCI) introduced that the enhancement measures will take fast impact from 29 Could 2020.

The enhancement measures are meant to permit extra enterprises affected by COVID-19 to use for assured loans to alleviate their money move burden in mild of the present financial challenges.

Below the enhancement measures, the utmost mortgage quantity per enterprise for the 80% Assure Product is elevated from HK$15 million to HK$18 million, whereas the utmost mortgage quantity per enterprise for the 90% Assure Product is elevated from HK$6 million to HK$8 million. All borrowing enterprises below the SFGS can profit from the enhancements. The eligibility protection of each assure merchandise can be prolonged to listed firms in Hong Kong. As well as, for the requirement of private assure by particular person shareholder(s) below the Particular 100% Mortgage Assure, the relevant proportion of fairness curiosity is diminished from over 70% to over 50%, which is in keeping with that for the 80% and 90% Assure Merchandise.

The Hong Kong Authorities will present curiosity subsidy for the 80% and 90% assured loans, with the quantity of subsidy capped at 3%. Every mortgage is entitled to an curiosity subsidy for a most interval of 12 months. HKMCI has reached a consensus with the Authorities and the lenders on the implementation particulars, that are as follows:

• All excellent loans as of 30 April 2020 will obtain the primary batch of curiosity subsidy for as much as 3 months, of which fee will likely be successively made ranging from the top of June 2020 (Please consult with the Annex for particulars);

• The fee of subsequent curiosity subsidy will likely be made on a month-to-month foundation thereafter;

• Curiosity subsidy is relevant to new mortgage functions efficiently submitted earlier than 31 Could 2021.

The curiosity subsidy will likely be routinely deposited into related financial institution accounts, and no utility will likely be required, to expedite the help to the borrowing enterprises.

29 Could 2020
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Please see the Annex to this press launch setting out a listing of lenders which pays curiosity subsidy by the top of June 2020 at right here.

13
Extra measures to alleviate the influence of COVID-19The HKMA revealed a round setting out the appliance of extra steering issued by the Basel Committee on Banking Supervision (BCBS) on 3 April 2020 relating to alleviation of the influence of COVID-19 on the worldwide banking system within the context of Hong Kong. The round centered on the next 3 measures:

1. Clarifications on the therapy of extraordinary help measures associated to COVID-19 Governments and public authorities in lots of jurisdictions have launched extraordinary help measures to alleviate the monetary and financial influence of COVID-19. These measures embrace, amongst others, assure programmes for financial institution loans and fee holidays provided by banks to debtors. To make sure that AIs mirror the risk-reducing impact of those measures when calculating their regulatory capital necessities, the HKMA has additionally enclosed an Annex to this round setting out a number of technical clarifications.
2. Anticipated credit score loss provisioning The HKMA expects AIs to proceed to use the related anticipated credit score loss (ECL) frameworks for accounting functions, and in addition expects ECL estimates to mirror the mitigating impact of the numerous financial help and fee aid measures put in place by public authorities and the banking sector. The availability of aid measures to debtors shouldn’t routinely end in exposures transferring from a 12-month ECL to a lifetime ECL measurement. Moreover, AIs are anticipated to train knowledgeable judgement and to make use of the flexibleness inherent in HKFRS/IFRS 9, for instance, to present due consideration to long-term financial developments in estimating ECL. Nevertheless, the BCBS transitional preparations for the regulatory capital therapy of ECL accounting is not going to be adopted in Hong Kong. As a substitute, the HKMA has lowered the regulatory reserve requirement by half to supply AIs with extra room on their stability sheets to cater for future financing wants, as per a round dated 8 April 2020.
3. Margin necessities for non-centrally cleared OTC derivatives Following the announcement made by the BCBS and the Worldwide Group of Securities Commissions (IOSCO) on 3 April 2020, the HKMA will defer the ultimate two implementation phases of margin necessities for non-centrally cleared OTC derivatives by a further 12 months. With this extension, the ultimate implementation part will begin on 1 September 2022, at which level lined entities with a mean mixture notional quantity (AANA) of non-centrally cleared OTC derivatives higher than HKD 60 billion will likely be topic to the necessities. As an intermediate step, from 1 September 2021, lined entities with an AANA of non-centrally cleared OTC derivatives higher than HKD 375 billion will likely be topic to the necessities.

The HKMA will proceed to observe the banking and supervisory implications of COVID-19, and coordinate with the BCBS and different related standard-setting our bodies on responses to the pandemic.

25 Could 2020
Click on right herePlease see the Annex to this round setting out clarifications on the therapy of extraordinary help measures associated to COVID-19 right here.

Please additionally see the HKMA’s earlier round dated 8 April 2020 for additional particulars relating to the lowered regulatory reserve requirement right here.

Please additionally see the SFC’s round dated 7 Could 2020 relating to the SFC’s measures with respect to margin necessities for non-centrally cleared OTC derivatives right here.

14
Hong Kong Financial Authority launches a devoted e mail account and enquiry hotline on the Pre-approved Principal Cost Vacation Scheme for Company Clients
The HKMA revealed a press launch saying the launch of a devoted e mail account and enquiry hotline to obtain feedback and reply queries relating to the Pre-approved Principal Cost Vacation Scheme for Company Clients (Scheme), which was launched on 17 April 2020. The e-mail account and hotline will assist the HKMA monitor the operation of the Scheme. Additional particulars might be discovered on the HKMA’s devoted COVID-19 webpage titled “Collectively, We Battle the Virus!”.
24 April 2020
Click on right herePlease additionally see the HKMA’s earlier round dated 17 April 2020 for additional particulars relating to the Scheme right here.

15
Postponement of 2020 Supervisor-Pushed Stress Check
The HKMA revealed a round informing all regionally included licensed banks that the HKMA determined to postpone the 2020 Supervisor-Pushed Stress Check to 2021. The HKMA’s determination was meant to supply extra operational capability for banks to answer the challenges introduced by the COVID-19 outbreak and to proceed to help their clients. In making the choice, the HKMA took into consideration the present capital ranges of banks and the passable outcomes of earlier stress exams.
22 April 2020
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16
US Greenback Liquidity FacilityThe HKMA revealed a round offering info on the non permanent US Greenback Liquidity Facility (Facility), which was introduced on the identical day. The Facility was launched to supply licensed banks with extra US greenback liquidity to fulfill their US greenback funding wants. That is a part of the concerted efforts by central banks to assist alleviate tightness within the world US greenback interbank cash markets in mild of the appreciable volatilities and uncertainties within the world monetary markets attributable to the unfold of COVID-19. In precept, the Facility is underpinned by the Federal Reserve’s FIMA Repo Facility.

The US greenback liquidity will likely be offered to licensed banks by way of aggressive tender within the type of repurchase transactions for a time period of seven days, settled on the day following the tender.

From 6 Could 2020, the HKMA will conduct a aggressive tender each week (usually on Wednesday) for licensed banks to submit bids for US greenback liquidity. At the moment a complete of US$10 billion is on the market below the Facility. A licensed financial institution might submit one legitimate bid in every tender, and the bid should be a minimum of US$100 million or an integral a number of of US$100 million. The HKMA will contact profitable banks to substantiate and organize switch of eligible belongings as collateral to the HKMA, and tender notices and tender outcomes will likely be revealed on a delegated web page on the HKMA web site. The names of the banks taking part within the tenders or these allotted with funds, and particular person allotment quantities is not going to be disclosed.

The HKMA intends to keep up the Facility till 30 September 2020, and can make a separate announcement if the top date adjustments. The HKMA might revise any of the parameters of the Facility at any time as needed, considering market circumstances, use of the Facility and different related elements. Banks might contact the Financial Operations Division of the HKMA at 2878 8104 or at [email protected] if they’ve any questions in regards to the operation of the Facility.

22 April 2020
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17
Round to issuers of SFC-authorized paper gold schemesThe HKMA revealed a round referring to the SFC’s round to issuers of SFC licensed paper gold schemes (PGS). The HKMA reminded licensed establishments (AI) offering PGS companies to adjust to the SFC’s round, the Code of Banking Apply, and the Deal with Clients Pretty Constitution. Particularly, the HKMA reminded AIs to

1. deal with clients actually and pretty;
2. keep in mind clients’ curiosity and be chargeable for upholding monetary client safety;
3. present acceptable info in any respect levels of the connection with the shoppers (together with any untoward circumstances referring to PGS companies and corresponding influence on clients); and
4. rectify any operational incident having important influence on continued provision of PGS companies.

The HKMA additional reminded AIs which subject PGS to right away report back to the HKMA and SFC any untoward circumstances referring to PGS companies that will have materials buyer influence, together with any determination to droop subscription and/or redemption, and uplift suspension/resume dealing.

20 April 2020
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18
Enhancements to Particular 100% Mortgage Assure
The HKMA revealed a press launch saying that the Finance Committee of the Legislative Council had accepted the rise of the entire assure dedication of the Particular 100% Mortgage Assure below the SME Financing Assure to HK$50 billion. Different adjustments embrace growing the utmost mortgage quantity per enterprise to HK$4 million, the extension of the principal moratorium association to cowl the primary 12 months, and the extension of the appliance interval to 1 12 months.
18 April 2020
Click on right herePlease additionally see the HKMA’s earlier press launch dated 16 April 2020 for additional particulars of the Particular 100% Mortgage Assure right here

19
Pre-approved Principal Cost Vacation Scheme for Company CustomersThe HKMA revealed a round saying the launch of the Pre-approved Principal Cost Vacation Scheme (Scheme) on 1 Could 2020. The Scheme is meant to supply fast aid to eligible small-to-mid-sized corporates going through monetary points within the wake of the COVID-19 outbreak.The HKMA expects all licensed establishments (AIs) to take part within the Scheme, and has confirmed that all the 11 main lenders within the Banking Sector SME Lending Coordination Mechanism will take part.

Below the Scheme, taking part AIs will pre-approve deferment of mortgage principal funds falling due between 1 Could 2020 and 31 October 2020 of eligible small-to-mid-sized corporates for as much as 6 months. All company debtors which have an annual gross sales turnover of HK$800mn or much less (estimated to cowl greater than 80% of all company debtors in Hong Kong), and that haven’t any excellent mortgage funds overdue for greater than 30 days are eligible for the Scheme. Functions by debtors aren’t required in order that monetary aid might be offered to corporates within the timeliest method. In accordance with the HKMA’s mortgage classification pointers, deferments of principal funds below the Scheme is not going to by themselves render a mortgage account to be downgraded to a decrease class.

For company clients not at present lined by the Scheme or have fee falling due earlier than 1 Could 2020, the HKMA expects AIs to undertake a sympathetic stance and proactively attain out to these clients to know whether or not they require comparable help and assess, on a case-by-case foundation, whether or not it’s in keeping with established danger administration rules to supply such preparations.

The HKMA will subject FAQs in regards to the operation of the Scheme. AIs might strategy the HKMA by way of their typical contacts on the Banking Supervision Division for any query about this round.

17 April 2020
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Please additionally see the Annex containing the phrases of the Scheme right here.

20
Particular 100% Mortgage Assure to Obtain ApplicationsThe HKMA revealed a press launch reporting that Hong Kong Mortgage Company Insurance coverage Restricted (HKMCI) had introduced the launch of its Particular 100% Mortgage Assure below the SME Financing Assure Scheme (SFGS) and would start receiving functions from 20 April 2020. The assure association is meant to assist ease the money move problems with enterprises affected by the COVID-19 outbreak.

HKMCI welcomes all lenders below the SFGS to take part within the assure association. The next lenders will obtain functions from 20 April 2020: Financial institution of China (Hong Kong) Restricted, Financial institution of Communications (Hong Kong) Restricted, Chong Hing Financial institution Restricted, DBS Financial institution (Hong Kong) Restricted, Grasp Seng Financial institution Restricted, Nanyang Industrial Financial institution, Ltd., OCBC Wing Grasp Financial institution Restricted, Customary Chartered Financial institution (Hong Kong) Restricted, The Financial institution of East Asia, Restricted and The Hongkong and Shanghai Banking Company Restricted. Different lenders have additionally indicated their curiosity in becoming a member of.

16 April 2020
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21
Regulatory reserveThe HKMA revealed a round informing regionally included licensed establishments (AI) of its determination to decrease the regulatory reserve (RR) requirement on regionally included AIs by 50% with fast impact. The HKMA famous that the choice was taken partly in mild of the necessity to present AIs with extra lending headroom to help clients in dealing with the COVID-19 outbreak, and inspired AIs to take action. The HKMA expects that AIs shouldn’t use the RR launch for dividend distribution, share buyback or fee of bonus to senior administration. The HKMA will proceed to evaluate the state of affairs to find out if any additional changes are needed. AIs might strategy the HKMA by way of their typical contacts on the Banking Supervision Division for any query about this round.

The RR requirement was carried out below the Hong Kong Monetary Reporting Customary 9 (HKFRS 9) since January 2018. The HKMA observes that regionally included AIs have made good progress in enhancing their anticipated loss provisioning fashions, programs and controls, and basically reported notable will increase of their accounting provisions for the second half of 2019 given the deterioration within the financial atmosphere. This means that the “anticipated loss” provisioning requirement below HKFRS 9 is powerful and attentive to adjustments in exterior circumstances. Accordingly, the necessity for regionally included AIs to keep up an RR on high of accounting provisions has diminished. This additionally performs a component within the HKMA’s determination to decrease the RR requirement.

8 April 2020
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Please additionally see the mechanism for calculating the discount in RR and adjustment to focus on fee of benchmark regulatory provision at right here.

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Coronavirus illness (COVID-19) and Anti-Cash Laundering and Counter-Financing of Terrorism (AML/CFT) measures (For AIs)
The HKMA revealed a round setting out measures which needs to be taken by Approved Establishments (AI) towards cash laundering and terrorist financing in mild of the COVID-19 outbreak, and the HKMA’s help in implementing such measures. The measures centered on three foremost parts, particularly distant on-boarding and simplified due diligence, continued vigilance to COVID-19 associated monetary crime dangers, and ongoing outreach and recommendation. The HKMA will proceed to work constructively with AIs to maintain its evaluation of the state of affairs up-to-date and tackle sensible AML/CFT points that could be associated to COVID-19 in essentially the most pragmatic method, together with by way of the supply of additional steering to help the present business efforts within the mild of evolving state of affairs. AIs might strategy the HKMA by way of their typical contacts within the AML & Monetary Crime Threat Division or [email protected] for any query about this round.
7 April 2020
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Coronavirus illness (COVID-19) and Anti-Cash Laundering and Counter-Financing of Terrorism (AML/CFT) measures (For SVF Licensees)
The HKMA revealed a round setting out measures which needs to be taken by Saved Worth Facility (SVF) Licensees towards cash laundering and terrorist financing in mild of the COVID-19 outbreak, and the HKMA’s help in implementing such measures. The measures centered on three foremost parts, particularly buyer due diligence, continued vigilance to COVID-19 associated monetary crime dangers, and ongoing outreach and recommendation. The HKMA will proceed to work constructively with SVF licensees to maintain its evaluation of the state of affairs up-to-date and tackle sensible AML/CFT points that could be associated to COVID-19 in essentially the most pragmatic method, together with by way of the supply of additional steering to help the present business efforts within the mild of evolving state of affairs. SVF licensees might strategy the HKMA by way of their typical contacts within the AML & Monetary Crime Threat Division or [email protected] for any query about this round.
7 April 2020
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The HKMA and the banking sector be a part of forces to assist Hong Kong’s financial system overcome the outbreak of COVID-19

The HKMA revealed a press launch summarizing the outcomes of a gathering with Hong Kong Mortgage Company Insurance coverage Restricted (HKMCI), main banks, and representatives from the business sector relating to measures by banks and the HKMA to help SMEs within the wake of the COVID-19 outbreak. The HKMA famous that a variety of earlier measures had seen success and offered statistics on this regard. The HKMA and HKMCI additionally steered 5 extra measures to additional help SMEs in addressing cash-flow stress.

3 April 2020

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Please additionally see Authorized Replace right here.

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Liquidity measures in response to Covid-19 outbreak

The HKMA revealed a round outlining liquidity measures taken to make sure the continued operation of the interbank market and banking system. The measures taken deal with three facets, particularly the HKMA’s Liquidity Services Framework, the Federal Reserve’s non permanent Monetary Companies On the spot Messaging Affiliation (FIMA) Repo Facility, and the HKMA’s supervisory expectations on using liquidity buffers below the liquidity protection ratio (LCR) and liquidity upkeep ratio (LMR) regimes. The HKMA additionally reminded licensed establishments (AI) to make sure they’ve the suitable inner insurance policies and processes in place when utilizing the HKMA’s liquidity amenities and buffers, and the HKMA will attain out to AIs to make sure compliance.

3 April 2020

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Please additionally see the Annex to the round containing clarifications on the HKMA’s Standby Liquidity Services (SLF) framework right here.

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Deferral of Basel III implementation and HKMA’s supervisory actions in response to COVID-19

The HKMA revealed a round in response to the choice by the Group of Central Financial institution Governors and Heads of Supervision (GHOS) to defer the implementation of Basel III by one 12 months, to permit banks time to take care of present points arising from the COVID-19 outbreak. The HKMA acknowledged that it might accordingly delay its personal implementation of Basel III to 1 January 2023, in keeping with GHOS.

30 March 2020

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Necessities below part 60 of the Banking Ordinance (Cap. 155) and disclosure necessities below the Banking (Disclosure) Guidelines (Cap. 155M)

The HKMA revealed a round relating to the requirement for licensed establishments (AIs) included in or outdoors Hong Kong to file audited annual accounts and different paperwork with the HKMA below part 60 of the Banking Ordinance. The HKMA will enable AIs to use in writing for an extension of the deadline to take action, if needed attributable to operational difficulties attributable to the COVID-19 outbreak.

7 February 2020

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Measures to alleviate influence of the novel coronavirus

The HKMA revealed a round outlining measures that licensed establishments (AI) ought to implement to alleviate the influence of COVID-19 on their clients. The measures embrace non permanent aid measures to minimize the influence of economic stress, akin to principal moratorium for residential and business mortgages and payment discount for bank card borrowing. The HKMA additionally steered AIs ought to undertake a sympathetic stance in coping with clients going through monetary stress, and talk their insurance policies to related workers to make sure constant therapy of consumers.

6 February 2020

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