On 05 Sep 2025, the HKMA superseded its 2013 benchmark submission guidelines with CG-7, establishing mandatory organizational accountability for treasury executives, structured rate corroboration processes using transaction data hierarchies, and rigorous independent review requirements. The module mandates 7-year record retention, segregation of duties between rate submitters and derivatives traders, and immediate reporting of manipulation concerns to ensure benchmark integrity for HKD HIBOR and CNH HIBOR.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Introduction
On 05 Sep 2025, the Hong Kong Monetary Authority (HKMA) issued Supervisory Policy Manual module CG-7 Benchmark Submission, replacing the previous version dated 23.08.13, to establish minimum standards for banks submitting rates for financial benchmarks, including HKD HIBOR and CNH HIBOR, under its statutory authority under the Banking Ordinance.
Regulatory Requirements for Benchmark Submitters
The module mandates that all banks submitting benchmark rates must establish robust organizational arrangements, with senior treasury executives bearing primary responsibility for ensuring the integrity and credibility of the submission process. It requires clear segregation of duties between rate corroboration staff and derivatives traders, prohibiting interest rate derivatives traders from acting as benchmark submitters. Banks must implement ethical standards, including staff sign-off on conduct codes, and establish procedures for handling complaints and whistleblower reports related to benchmark manipulation.
Rate Corroboration and Data Management
Banks must develop a structured rate corroboration process supported by transaction data, adhering to a defined hierarchy of HKD/CNH interest rate instruments. Directly relevant transactions (e.g., prime bank interbank transactions) must be prioritized, with adjustments to indirectly relevant data only permitted when justified and documented. Reference banks must maintain a clear audit trail of all data used, adjustments made, and expert judgments applied, with techniques for adjustments requiring approval by independent reviewers.
Compliance and Oversight Mechanisms
Banks must retain all benchmark submission records for at least seven years (audio communications for two years) and make them readily available to the HKMA. Independent review processes are required, including quarterly reviews assessing rate reasonableness through back-testing, annual audit reviews, and external audits every 2-3 years. Material breaches or unethical conduct must be immediately reported to senior management, the benchmark administrator, and the HKMA.
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