Proposed margin rule to hurt global banks’ trades with China

Industry dislikes HKMA rule on initial margin for uncleared trades with non-netting countries

China shares
There is a lack of clarity on how proposed rules would apply to global banks doing business in China

A new proposal from the Hong Kong Monetary Authority (HKMA) on margining of uncleared over-the-counter derivatives trades with non-netting jurisdictions could deter Chinese banks from trading with their global counterparts, according to market participants.

In a consultation paper published in early December, the HKMA recommended that dealers should have only to collect – not post – initial margin from counterparties in markets where legal certainty cannot be given that all of the collateral

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