The Securities and Futures Commission of Hong Kong is consulting on optimizing the rules of financial resources to promote the development of the market for over-the-counter derivatives and other products.

On July 14th, the Hong Kong Securities and Futures Commission launched a public consultation on the draft revised version of the Securities and Futures (Financial Resources) Rules and related guidance to implement a set of capital requirements for licensed corporations engaged in over-the-counter derivatives activities (OTC derivatives capital requirements), aligning with international standards. Based on feedback, the previously proposed OTC derivatives capital requirements have been refined with reference to recent amendments to the Hong Kong Banking (Capital) Rules and the Basel framework. Capital requirements for dealing broker activities will be significantly reduced, and the transfer pricing treatment for licensed corporations will be simplified to reflect feedback collected during the Commission's consultation in 2017. Furthermore, to support the business development and diversification of licensed corporations, the Commission has proposed multiple other amendments to the Financial Resources Rules, including facilitating the trading of Chinese and emerging market stocks, commodities, and carbon products, as well as trading of digital asset futures and options on licensed virtual asset trading platforms. Additionally, to promote Hong Kong as a hub for fixed income and currency in the region, the Commission has proposed exempting central clearing repurchase transactions from capital requirements to facilitate central clearing in Hong Kong and promote the development of the interdealer repo market. Dr. Thomas Tse, Executive Director of the Commission's Intermediaries Division, stated: "Aligning our OTC derivatives capital requirements with global standards is crucial to strengthening Hong Kong's position as an international financial center. We believe that these forward-looking and inclusive proposals will promote innovation and drive the continued development of Hong Kong's offshore RMB, fixed income, forex, commodities markets, and the digital asset market." At the same time, the Commission has issued a consultation summary on the previous amendments to the Financial Resources Rules.