On 26 Sep 2024, the HKMA issued Completion Instructions for Form MA(BS)1F(a), mandating quarterly compliance reporting for HK-incorporated authorized institutions on large exposures, capital adequacy, and liquidity requirements under the Banking Ordinance and BELR. The instructions specify submission timelines, Tier 1 capital reporting methodologies, compliance certification for BELR sections and liquidity ratios, and detailed requirements for exposure and asset charge disclosures, including exemptions for letter of comfort arrangements and initial margin charges.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Introduction
On 26 Sep 2024, the Hong Kong Monetary Authority (HKMA) issued updated Completion Instructions for the Certificate of Compliance with the Banking Ordinance (Form MA(BS)1F(a)), providing detailed reporting requirements for authorized institutions incorporated in Hong Kong regarding large exposures, capital adequacy, and liquidity compliance under the Banking Ordinance and Banking (Exposure Limits) Rules (BELR).
Submission Requirements
On 26 Sep 2024, authorized institutions (AIs) incorporated in Hong Kong must submit Form MA(BS)1F(a) on a solo basis (covering Hong Kong offices and overseas branches) or consolidated basis (covering the AI and consolidated entities), as required. Submissions are due within 14 days after each quarter-end (31 March, 30 June, 30 September, or 31 December), with deadlines deferred to the next working day if falling on a public holiday. All figures must be reported to the nearest thousand in HK$ or HK$ equivalents using closing middle market T/T rates for foreign currency conversion.
Capital and Compliance Reporting
On 26 Sep 2024, Part I requires reporting Tier 1 and Adjusted Tier 1 capital amounts as at the end of the previous quarter for BELR compliance calculations. Part II mandates certification of compliance with the Banking Ordinance, including: (i) contraventions of BELR sections (using daily ratio calculations based on Tier 1 capital; quarterly figures may be used if no significant capital reduction occurred); (ii) compliance with minimum capital adequacy ratios (accounting for HKMA-issued notices under section 97F(1)); and (iii) liquidity requirements under the Banking (Liquidity) Rules (BLR), differentiated by institution category (Category 1: LCR/NSFR; Category 2: LMR/CFR).
Exposure and Asset Charge Reporting
On 26 Sep 2024, Part III requires reporting maximum exposures under each BELR Part (e.g., aggregate linked counterparty group exposure or single counterparty exposure), excluding exempted transactions. Part IV mandates reporting the maximum ratio of assets under charge to total assets (after provisions), including details of all charges created during the period (date, value, aggregate value, total assets). Part V requires disclosure of exempted/approved transactions, including limits approved by HKMA, counterparty details, and exposure amounts, with specific instructions for letter of comfort arrangements and initial margin charges.
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