Published On: Mon, Apr 8th, 2013

HK SFC Commits to Global Regulatory Standards on Financial Market Infrastructures

Ashley Alder, HK SFC CEO

Ashley Alder, HK SFC CEO

The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) jointly announced March 28 their commitment to comply with the new international regulatory standards on financial market infrastructures (FMIs) (Note 1).

The new standards are contained in a report “Principles for financial market infrastructures” (PFMIs), issued jointly by the Committee on Payment and Settlement Systems (CPSS) of the Bank for International Settlements and the International Organization of Securities Commissions (IOSCO) in April 2012. The report contains 24 principles for FMIs and five responsibilities of regulatory authorities to provide for the effective regulation, supervision and oversight of FMIs. The PFMIs replace, harmonise and strengthen various earlier standards on FMIs, and aim at making the FMIs more resilient to financial crisis and fostering their safety and efficiency. All CPSS-IOSCO member jurisdictions, including Hong Kong, are expected to apply the PFMIs to FMIs which are systemically important as soon as practicable (Note 2 & 3).

The FMIs overseen by the HKMA are those systems designated under the Clearing and Settlement Systems Ordinance and the trade repository established and operated by the HKMA. The FMIs under the purview of the SFC are clearing houses recognized under the Securities and Futures Ordinance.

Both the HKMA and the SFC will implement the PFMIs within their respective regulatory frameworks through their regulatory guidelines. After consultation with the relevant parties, the HKMA has revised its oversight guideline on the designated systems, adding new or more elaborate requirements on governance, disclosure and risk management, etc. The SFC will issue its guidelines for recognized clearing houses, after consultation with relevant stakeholders. Preparatory work on the guidelines is underway (Note 4).

The HKMA and the SFC will continue to monitor the compliance of their FMIs against the international standards.

1. Financial Market infrastructure (FMI) is defined as a system that facilitates the clearing, settling, or recording of payments, securities, derivatives or other financial transactions. There are five major types of FMIs: payment systems, central securities depositories, securities settlement systems, central counterparties and trade repositories.
2. The CPSS-IOSCO PFMIs report is available on the Bank for International Settlements and IOSCO respective website:;
3. The previous standards for various FMIs were: the “Core Principles for Systemically Important Payment Systems” issued by CPSS in 2001, the “Recommendations for Securities Settlement Systems” issued by CPSS-IOSCO in 2001, and the “Recommendations for Central Counterparties” issued by CPSS-IOSCO in 2004. Trade repository was not covered in these standards.
4. The oversight guideline is available on the HKMA website:

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