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On 14 July 2025, the Securities and Futures Commission (SFC) released a consultation conclusion for the Financial Resources Rules (FRR) and a consultation paper on draft amendments to the FRR accompanied by guidelines for the Internal Models Approach (lMA) for market risk charge calculations and general principles for model risk management.
In this consultation paper, the SFC for the first time formally introduced requirements on Model Risk Management (MRM) – a completely new area in its regulatory history – laying out detailed governance and control requirements on MRM, which have been benchmarked to similar principles published by regulators of other international financial centres. Notably, building on prior SFC expectations for applications such as the Standard Initial Margin Model (SIMM), these MRM requirements explicitly extend to such use cases, ensuring comprehensive model risk oversight across relevant frameworks.