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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 on draft amendments to the FRR accompanied by guidelines for the Internal Models Approach (IMA) for market risk charge calculations and general principles for model risk management (2025 consultation paper). Several key changes are introduced by the SFC in the consultation above including the upcoming transition timeline for the institutions eyeing the Type 11 license application or planning to engage in the OTC derivatives business, including:
- Capital requirements
- Market risk requirements
- Counterparty credit risk requirements
- IMA requirements
- Model risk management requirements
- Other notable change highlights
Industry participants should stay aware of these developments, thoroughly analyze the changes against their operations, prepare business plans for Type 11 applications and submit any comments to the SFC by 13 October 2025.
Download our latest publication on the 2025 key updates related to the revamping FRR for OTC derivatives in Hong Kong（简体中文）
Download our latest publication on the 2025 key updates related to the revamping FRR for OTC derivatives in Hong Kong（繁體中文）