On July 14, 2025, the SFC consults on draft amendments to the Securities and Futures (Financial Resources) Rules ("FRR") to align with global standards for over-the-counter derivative capital requirements, simplifying transfer pricing treatments, and supporting LCs' business development. Comments are invited by October 13, 2025.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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On July 14, 2025, the Securities and Futures Commission ("SFC") initiated a public consultation on proposed amendments to the Securities and Futures (Financial Resources) Rules ("FRR") and associated guidelines. These amendments aim to introduce internationally comparable capital requirements for licensed corporations ("LCs") engaging in over-the-counter derivative activities (OTCD capital requirements). The proposed changes include adjustments based on recent updates to Hong Kong's Banking (Capital) Rules and the Basel Framework, as well as a reduction in capital requirements for inter-dealer brokers and streamlining of transfer pricing treatments for LCs.
In addition to the OTCD capital requirements, the SFC has proposed several modifications to the FRR to support the business development and diversification of LCs. These changes facilitate LCs’ trading of stocks in Mainland China and emerging markets, commodities, carbon products, and digital asset futures and options on licensed virtual asset trading platforms. To bolster Hong Kong's development as a regional fixed-income and currency hub, the SFC has also proposed exempting capital requirements for centrally-cleared repurchase transactions (repos) to encourage central clearing and the growth of the city’s inter-dealer repo market.
Dr. Eric Yip, the SFC's Executive Director of Intermediaries, emphasized the importance of aligning Hong Kong's OTCD capital requirements with global standards to reinforce the city's status as an international financial center. He expressed confidence in the forward-looking and inclusive nature of these proposals, anticipating they will promote innovation and support the sustainable development of Hong Kong’s offshore RMB, FICC, and digital asset markets.
Simultaneously, the SFC has published conclusions on certain previously consulted changes to the FRR. The public is invited to submit written comments on this consultation by October 13, 2025, via the SFC website (www.sfc.hk), by email to
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