On 17 May 2017, FIA responded to the Hong Kong Monetary Authority (HKMA) consultation paper on the implementation of the Basel III Leverage Ratio Framework in Hong Kong.
FIA has been actively engaged on the leverage ratio component of the Basel III capital requirements, which could have a significant negative impact on client clearing. FIA's letter to the HKMA further highlights these concerns.
In July 2016, FIA shared information with the Basel Committee that showed the current proposal’s lack of offset for initial margin would substantially increase clearing members’ total leverage exposure and, as a result, would significantly reduce clearing services to clients, increase concentration of client clearing services and negatively affect the portability of client accounts, especially in times of systemic stress. Further details of FIA’s work on this issue can be found here.
The full HKMA response letter is available below Submission letter to HKMA - Basel III Implementation - 17May2017.pdf.