‘Business As Usual’ for Hong Kong Banks, says HKMA Chief
Source: Regulation Asia Editors, Regulation Asia
Chief executive Eddie Yue said the HKMA does not see that the national security law would affect the normal conduct of business in Hong Kong, provided it is permissible under existing regulations.HKMA (Hong Kong Monetary Authority) chief Eddie Yue has written to banks, SVF licensees and payment system operators in the city saying that the new national security law will not affect the central bank’s supervisory policies or regulatory guidance, or the normal functioning of the financial markets.“To put it simply, it should be business as usual for the ongoing operations of our city’s financial institutions,” he said, adding that the HKMA does not see that the national security law would affect the normal conduct of business in Hong Kong, provided it is permissible under the existing regulatory framework.According to Yue, the law will not affect the sharing of market intelligence or commercial information with overseas operations; the publication of research reports expressing a pessimistic economic or market view of Hong Kong; or the trading, hedging or short selling of any financial asset or currency in accordance with relevant regulatory rules.“It is natural for financial institutions to assess operational risks,” he said. “Such assessments inevitably have to take into consideration the most extreme scenarios and focus on whether there are issues that require clarification.”Yue cited the robustness of Hong Kong’s financial system, the strength of the Hong Kong dollar, net inflows of close to USD 14 billion since April, and the stock market’s recent high turnover as some of the factors that attest to city’s resilience.His comments follow similar assurances from the SFC (Securities and Futures Commission) and Hong Kong Financial Secretary Paul Chan Mo-po, who had asked the city’s financial regulators to explain to their respective stakeholders the pledges made by the Hong Kong government to preserve rights and freedoms, the autonomy of the legal and judicial system, and the monetary and financial system.“Hong Kong is a free and pluralistic society. As an international financial center, Hong Kong’s success is based on factors such as a good rule of law, free flow of information and capital, and freedom of speech and press. The Hong Kong national security law safeguards these important values and ensures the long-term prosperity and stability of Hong Kong,” Chan had said.On Wednesday (22 July), a Nikkei report said Hong Kong financiers have not been convinced they are out of danger from the new law, which sets penalties of up to life imprisonment with the possibility of prosecution and trial in mainland China for breaches.“What the SFC fails to address is that the new security law is all-encompassing and if authorities want to use it say against a financial institution or executive, the SFC can’t stop it,” said one senior markets executive at a global bank in Hong Kong.The executive said caution is being exercised when communicating with clients and that his team has been asked not to comment directly on the law. “Any opinions, including research recommendations, go through an increased round of checks from compliance teams, including keyword searches, before they are issued.”A hedge fund trader also told Nikkei, “The SFC’s reassurance notwithstanding, we accept the way we function here has fundamentally changed.”
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