Derivatives bail-in raises questions in Hong Kong
Banks seek clarity, but regulator wants maximum flexibility for its bail-in decisions
Hong Kong's new bank resolution regime is unlikely to include any explicit mention of when derivatives should be bailed in, as the Hong Kong Monetary Authority (HKMA) sticks to its intended consistency with the Financial Stability Board's (FSB) total loss-absorbing capacity (TLAC) standards.
Hong Kong's framework bill on recovery and resolution was passed by the Legislative Council (LegCo) on June 22, but the HKMA has yet to issue specific guidance as to which liabilities are most likely to be
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