SFC and HKMA conclude consultation on OTC derivative clearing rules amendments, aiming for implementation by 1 March 2027.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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On June 05, 2026, the Securities and Futures Commission ("SFC") and the Hong Kong Monetary Authority ("HKMA") issued joint consultation conclusions on standardising the calculation periods for each year under the Clearing Rules for the over-the-counter ("OTC") derivatives regulatory regime.
Regulatory Consultation and Market Consensus
To enhance operational efficiency, the SFC and HKMA consulted the public in early 2026 on proposals to designate, once and for all, standard calculation periods for each year with effect from 1 March 2027. Respondents expressed broad support for the proposed approach to accommodate future Calculation Periods and the corresponding Prescribed Days under the Clearing Rules. There was general consensus that the proposal increases certainty on the clearing obligation, thus enabling more effective internal planning for market participants.
Legislative Implementation and Effective Date
In view of broad market support, the SFC and HKMA will proceed with the legislative process to introduce the proposed amendments to the Clearing Rules, and aim to bring the amendments into effect on 1 March 2027, i.e., the starting date of the proposed new series of Calculation Periods. This initiative improves on the current approach where the existing list of calculation periods specified in the Clearing Rules needs to be updated by legislative amendments regularly to facilitate the central clearing of OTC derivative transactions.
Technical Definitions and Prescribed Periods
Under the Clearing Rules, specifically the Securities and Futures (OTC Derivative Transactions – Clearing and Record Keeping Obligations and Designation of Central Counterparties) Rules, a calculation period is used to determine whether a person is subject to mandatory clearing obligation, based on the size of its applicable position in relevant OTC derivative transactions for a specified period as calculated in accordance with the Rules. Under the proposed approach to be effective from 1 March 2027 onwards, the Clearing Rules will be amended to designate two calendar periods, i.e., 1 March to 31 May and 1 September to 30 November, in each year as calculation periods.
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