Capital requirements for bank risks gazetted

Business | 24 Apr 2020 3:19 pm

The Banking (Capital) (Amendment) Rules 2020 (BCAR 2020) were gazetted to implement the latest international standards on banking regulation promulgated by the Basel Committee on Banking Supervision, the government said.

The BCAR 2020 will be tabled before the Legislative Council at its sitting on April 29 for negative vetting, and will come into operation on June 30, 2021.

The BCAR 2020 seeks mainly to implement two sets of capital standards for the treatment of banks' counterparty credit risk exposures to derivatives trades, as set out in the two documents entitled "The standardized approach for measuring counterparty credit risk exposures" and "Capital requirements for bank exposures to central counterparties" published by the Basel Committee, said the government in a statement.

"Complementing the global over-the-counter derivatives market reforms to promote central clearing of derivatives trades, the Basel Committee's revised capital standards for counterparty credit risk exposures are designed to better address the relevant risks observed in stress periods and reflect the risk management practices of banks," a Hong Kong Monetary Authority spokesman said.

The HKMA has consulted the banking industry in the course of formulating the rules to ensure that they befit the local circumstances and are appropriate for implementation in Hong Kong, said the spokesman.


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