On 05 Dec 2024, the HKMA published the revised CA-D-1 Guideline to provide interpretative guidance on the Banking (Disclosure) Rules, superseding the 2019 version. The guidance clarifies exemption criteria, enshrines five disclosure principles for market discipline, and details specific requirements for Hong Kong-incorporated and non-Hong Kong-incorporated Als regarding disclosure frequency, format, and basis. It emphasizes alignment with Basel Framework Pillar 3 standards while permitting tailored disclosures where meaningful to users.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Introduction
On 05 Dec 2024, the Hong Kong Monetary Authority (HKMA) issued the revised Guideline on the Application of the Banking (Disclosure) Rules (CA-D-1) (V.4), superseding the previous version dated 16.08.19, to provide interpretative guidance to Authorized Institutions (Als) on the application of the Banking (Disclosure) Rules (Cap. 155M). This non-statutory guideline clarifies the HKMA's implementation approach for the BDR, which establish minimum public disclosure standards for Als' financial position, profit and loss, and capital and liquidity resources under the Basel Framework's Pillar 3 requirements.
Exemptions from Disclosure Requirements
The guideline details two exemption grounds: (i) 'de minimis' exemption for Als meeting specified asset/deposit thresholds (using a 12-month relevant average calculation), granted only if the Al demonstrates sustainable operations below the threshold for several years; and (ii) exemption for Als not yet commenced business, requiring written justification, evidence of 'not-in-business' status, and a proposed business commencement date. The HKMA may withdraw exemption if criteria are no longer met or if business commences.
Disclosure Principles
The guideline mandates adherence to five core disclosure principles: (1) clarity through accessible presentation and simple language; (2) comprehensiveness covering significant risks and management responses; (3) meaningfulness highlighting material risks and avoiding redundant information; (4) consistency over time to enable trend analysis; and (5) comparability across banks to facilitate cross-institutional assessment. Als must ensure disclosures align with these principles to promote market discipline.
Guidance for Hong Kong-Incorporated Als
For Als incorporated in Hong Kong, the guideline requires a documented disclosure policy (established within six months of authorization), web-based disclosure with mandatory archive maintenance, and internal verification prior to publication. It specifies consolidated disclosure basis (generally regulatory consolidation, with exceptions for capital, liquidity, and specific disclosures), materiality assessment aligned with HKFRS, and frequency requirements (quarterly, semi-annual, or annual) using standard templates and tables specified by the HKMA.
Guidance for Non-Hong Kong-Incorporated Als
For Als incorporated outside Hong Kong, the guideline prescribes disclosure timing (8 weeks for quarterly, 3 months for interim, 4 months for annual), mandatory use of standard liquidity disclosure templates for category 1 institutions, and flexibility to publish a prescribed summary referencing complete disclosures. It mandates web-based archives covering disclosures from 30 June 2018 (or 31 December 2014 for liquidity), with verification through internal review, and alignment with IFRS-based materiality concepts.
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