Derivatives Market

Derivatives market Hong Kong

The global financial crisis in 2008 triggered a global movement to improve transparency and reduce counterparty risks in the over-the-counter (OTC) derivatives markets, resulting in reforms to the OTC derivatives markets on various fronts. The reform measures adopted by the international regulatory community include requiring all OTC derivatives transactions be reported to trade repositories (TRs) and all standardised OTC derivatives transactions be cleared at central counterparty (CCP) clearing facilities.

TR is a centralised registry that maintains an electronic database of records of OTC derivatives transactions. By collecting and providing OTC derivatives transaction information to regulatory authorities, TR plays a vital role in supporting authorities to carry out their market surveillance responsibilities, which will help maintain financial stability. It also helps improve market transparency, promotes standardisation and ensures availability and quality of transaction data.

To meet international standards, the HKMA announced in December 2010 to develop a TR in Hong Kong (HKTR), and that a link would be developed between the HKTR and the CCP for OTC derivatives to be launched by Hong Kong Exchanges and Clearing Limited (HKEx) to allow eligible transactions to be passed to the CCP for central clearing. At the same time, the HKMA worked in concert with the Securities and Futures Commission and other stakeholders to develop a regulatory regime for OTC derivatives markets (OTC Regulatory Regime) under the Securities and Futures Ordinance (SFO), including mandatory requirements for reporting specified OTC derivatives transactions to the HKTR and clearing specified transactions at designated CCPs. In response to the call of international financial community to speed up on the implementation of TR reporting, the HKMA introduced a set of interim reporting requirements in August 2013. Under the interim reporting requirements, licensed banks are required to report specified OTC derivatives transactions among themselves to the HKTR. The interim reporting requirements will remain in effect until the OTC Regulatory Regime comes into force.

To prepare for the commencement of central clearing of OTC derivatives transactions in Hong Kong, the HKTR launched the link with the CCP of the HKEx in December 2012. In July 2013, the HKTR activated the reporting function to support the commencement of reporting under the interim reporting requirements. To cope with evolving international and local reporting and regulatory standards, further enhancements will be made to the HKTR.

HKTR Info Page Website

Launched in May 2014, the HKTR Info Page website provides a one-stop access to a comprehensive range of information relating to the operation of the HKTR. The new website can be accessed through the following web address:

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