15 January 2020
Hong Kong Monetary Authority publishes conclusions to consultation on rules on contractual stays on termination rights in financial contracts
31 December 2020, the Hong Kong Monetary Authority published the conclusions to its January 2020 consultation paper on proposals for making rules relating to contractual stays on termination rights in financial contracts of authorized institutions under the Financial Institutions (Resolution) Ordinance (Cap. 628).
In addition to the conclusions paper, the HKMA also published for consultation the draft rules for the banking sector. The consultation on the draft rules closes on 31 January 2021.
The conclusions paper clarified the HKMA’s approach on how it intends to implement rules to require covered entities to include contractual provisions in certain of their non-Hong Kong law financial contracts to provide for the agreement of the contractual parties to be bound by the temporary stay that may be imposed by the HKMA (as the resolution authority) under the FIRO.
Hong Kong financial institutions in scope of the new rules and their counterparties may have to amend their PRC-law governed NAFMII agreements and other in-scope agreements accordingly to comply with the new HKMA requirements.
For further information, please contact:
Sonia Lim, Linklaters
sonia.lim@linklaters.com
