Hong Kong’s SFC launches Key Risk Indicator platform

Maria Nikolova

Initially, 22 global financial institutions which are considered as systemically important are in-scope for the purposes of this platform.

Hong Kong’s Securities and Futures Commission (SFC) has earlier today published a circular to licensed corporations (LCs) about the launch of a Key Risk Indicator (KRI) platform.

The platform collects and analyses KRI data from certain LCs. It supplements the SFC’s monitoring tools by enhancing its information gathering and analytical capabilities to better identify and manage both existing and emerging risks. This facilitates the SFC’s supervision of global firms which are exposed to the changing dynamics of global markets and helps address issues identified by the regulator.

Initially, 22 global financial institutions which are considered as systemically important are in-scope for the purposes of this platform. The list includes: Bank of America Merrill Lynch, Bank of New York Mellon, Barclays, BNP Paribas, Citigroup, Credit Agricole, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan Chase, Mitsubishi UFJ FG, Mizuho FG, Morgan Stanley, Nomura, Royal Bank of Canada, Societe Generale, Standard Chartered, State Street, Sumitomo Mitsui FG, UBS and Wells Fargo.

LCs from the in-scope global financial institutions are required to complete a KRI survey with data relating to their business operations (eg, financial information), conduct issues and prudential risk exposures on a monthly, quarterly and annual basis. The survey covers all the regulated activities conducted by the participating LCs and their licensed representatives in Hong Kong, regardless of where the risk positions resulting from the associated regulated activities are ultimately booked.

The first submission of data has to be made on or before end-January 2020 for the reporting period ending December 31, 2019.

All the in-scope LCs of global financial institutions took part in pre-launch soft consultations and pilot tests of the KRI platform. The SFC will refine the platform and may consider expanding the scope of data collection and including additional LCs to enhance its regulatory oversight.

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