Proposed margin rule to hurt global banks’ trades with China
Industry dislikes HKMA rule on initial margin for uncleared trades with non-netting countries
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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