HKMA and SFC Update OTC Derivatives Services Provider List

The two regulators have proposed eight new entities be included in the list.

The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) issued a joint consultation paper this Friday, which outlines eight additional entities to be included on the Financial Services Providers (FSP) list under the over-the-counter (OTC) derivatives clearing regime.

To be added to the list: “They belong to a group of companies appearing on the list of global systemically important banks published by the Financial Stability Board, or on the list of dealer groups which undertook to the OTC Derivatives Supervisors Group to work collaboratively with central counterparties, infrastructure providers and global supervisors to continue to make structural improvements to the global OTC derivatives markets,” the joint statement from the regulators said.

Otherwise, the entities need to be members of the largest central counterparties offering clearing for interest rate swaps in the US, Europe, Japan, and Hong Kong, the statement said.

In the consultation paper, the two regulators have reviewed the clearing memberships of interest rate swaps (IRS) clearing counterparties (CCPs). As of the 31st of December 2019, they have identified five entities that are part of a global systemically important banks (GSIBs) or a G15-dealers group that have become members of the IRS CCPs since their last review.

The five entities in question are the Bank of China (UK) Ltd, BofA Securities, Inc., Citibank Europe Plc, Mizuho Securities USA LLC, and UBS Switzerland AG.

HKMA and SFC update GSIBs

Furthermore, according to the consultation paper, the two regulators have reviewed the list of GSIBs published by the FSB in November 2018, so see what changes had been made from the year prior. 

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The FSB identified the Toronto-Dominion Bank as a new GSIB and therefore, have proposed to include the following group entities to the FSP List:

(a) The Toronto-Dominion Bank

(b) TD Bank, N.A.

(c) TD Bank USA, N.A.

Market participants are able to submit their feedback to either of the regulators until the 28th of April, 2020.

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