Hong Kong’s SFC approves amendments to recovery plan of OTC Clear

Maria Nikolova

The enhancements to the recovery plan concern voluntary recapitalization and contract termination.

Hong Kong’s Securities and Futures Commission (SFC) has approved the modifications to the recovery plan of OTC Clearing Hong Kong Limited (OTC Clear), a subsidiary of Hong Kong Exchanges and Clearing Limited. In a circular published today, HKEX explains that the approval applies to amendments to the OTC Clear Rates and FX Derivatives Clearing Rules and OTC Clearing Hong Kong Limited Clearing Procedures relating to the enhancements to recovery plan of OTC Clear.

The enhanced recovery plan, along with the rules amendments, will come into effect on October 15, 2018.

The enhancements to OTC Clear’s recovery plan concern voluntary recapitalization and contract termination.

Voluntary recapitalization is an existing recovery tool of OTC Clear, and will be enhanced by specifying the detailed recapitalization mechanism. Under the amended recovery plan, OTC Clear will determine the amount of voluntary recapitalization based on the remaining realized loss out of the default event. If the total amount provided voluntarily by Clearing Members (CMs) is not sufficient, any amounts received will be refunded to the relevant CMs.

Contract termination is currently available in the rulebook of OTC Clear, but it can only be applied under events of force majeure or illegality. Under the enhanced recovery plan, the application of this tool will be expanded to cover situations where OTC Clear is unable to re-establish a matched book after an event of CM default where the auction process is not successful.

This change will allow OTC Clear to terminate some or all open positions, and such termination can be applied to specific contracts, a subset of contracts or all contracts in a particular product or market. In such case, the contracts identified for termination shall be cash-settled with reference to prevailing market prices.

Read this next

Institutional FX

Marex completes acquisition of TD Cowen’s PB business

London-headquartered commodities broker Marex has completed the acquisition of TD Cowen’s prime brokerage and outsourced trading business, which will be integrated into Marex’s capital market division. This division was established following the acquisition of ED&F Man Capital Markets in 2022.

Digital Assets

Talos introduces decentralized liquidity and onchain settlement with Uniswap and Fireblocks

“At the cornerstone of the DeFi ecosystem, Uniswap has the breadth of assets and depth of liquidity that institutional traders need. And to have this partnership powered by Fireblocks, a digital assets infrastructure provider trusted by some of the most renowned institutions, is very fitting.”

Digital Assets

FINMA-regulated crypto bank SEBA Bank rebrands to AMINA

“As we look forward to 2024, our ambition is to accelerate the growth of our strategic hubs in Switzerland, Hong Kong, and Abu Dhabi, and to continue our global expansion, building on all the successes we have laid down over the past years.”

Retail FX

Good For New Traders: Free Crypto Sign Up Bonus No Deposit Required

In cryptocurrency trading, where innovation knows no bounds and the stakes are as dynamic as the digital assets themselves, the concept of no-deposit bonuses comes off as an enticement both for old and new traders. 

Digital Assets

Binance announces banking triparty agreement

“We’ve developed a solution that ensures our institutional clients can optimize their collateral and cryptocurrency investments, modeled after the traditional markets’ trading conduct. We are in close discussions with an array of banking partners and institutional investors who have also expressed strong interest in participating.”

Digital Assets

CoinEx fined $2 million in Québec, Canada

“This new decision follows the important decision obtained in XT.com earlier this year and is part of the AMF’s offensive against crypto asset trading platforms operating illegally in Québec that have not entered into pre-registration undertakings.”

Industry News

FINRA fines BofA Securities $24 million for spoofing in US Treasuries

BofA Securities failed to detect spoofing due to inadequate supervisory systems. These systems were not equipped to identify manual spoofing by traders.

Retail FX

Belgium regulator blacklists FXP360, Appex Finance, and Wise-Markets

Belgium’s financial watchdog, the Financial Services and Markets Authority ‎‎(FSMA), has issued a warning against the unauthorized activities of multiple ‎ platforms that are offering investments in the country without ‎complying with Belgian financial legislation.‎

Digital Assets

MicroStrategy piles on Bitcoin, acquiring 0.90% of circulating supply

MicroStrategy, the world’s largest Bitcoin corporate holder, has further increased its holdings of the primary cryptocurrency. According to a recent filing, the company acquired an additional 16,130 bitcoins between November 1 and November 29, spending $593.3 million at an average price of $36,785 per bitcoin.

Display only crypto