In Hong Kong, the banking system is the primary source of financial stability risk. Post-2008 regulatory reforms have focused on financial stability policies and tools while neglecting the design of supervisory models. This book provides a comparative analysis of how supervisory models affect the management of financial stability regulations in Hong Kong's banking system. Regulatory issues discussed span prudential regulations, systemically important banks, unconventional liquidity tools, deposit insurance, lender of last resort, resolution regimes, central clearing counterparties and derivatives, Renminbi infrastructure, stock and bond connect schemes, distributed ledger technology, digital yuan, US dollar sanctions, cryptocurrencies, RegTech, and FinTech. A Regulatory Design for Financial Stability in Hong Kong elucidates the flaws and synergies in Hong Kong's banking regulatory framework and proposes conventional and innovative regulatory reforms. This book will be of great interest to banking, financial, and legal practitioners, central bankers, regulators, policy makers, finance ministries, scholars, researchers, and policy institutes.

This publication explores the use of regulatory technology (regtech) in finance. It discusses how to design an optimal architecture, alongside policy considerations for an integrated regtech and supervisory technology ecosystem. It highlights the interaction of industry use of technology in compliance and risk management; regulator and supervisor use of technology for supervision, monitoring, and enforcement; and use of technology to embed regulatory requirements and systems into financial infrastructure. The publication introduces key policy frameworks that enable ecosystem relationships at national, regional, and international levels, and showcases vital agile data management and standardization frameworks.

In this study, a team of researchers from the University of Hong Kong's Asian Institute of International Financial Law (AIIFL) discuss the current structure of financial regulation in Hong Kong and its performance in the global financial crisis, focusing on major local issues such as structured financial products sold to retail investors called quot;Minibondsquot;. Based on this evaluation, the study recommends a range of regulatory reforms in Hong Kong in order to address existing weaknesses and to enhance Hong Kong's competitiveness as an international financial center. The study concludes that in addition to a range of changes necessary to lessen the likelihood of similar problems in future, that Hong Kong undertake a major reform of its regulatory structure along functional/Twin Peaks lines in order to enhance both financial stability and its international role.

This dissertation, "Managing Financial Stability and Liquidity Risks in Hong Kong''s Banking System: What is the Optimum Supervisory Model?" by Evan Corby, Gibson, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. Abstract: The 2007-8 global financial crisis brought to the fore a new era of liquidity risk. Governments around the globe were forced to intervene to preclude a complete collapse of their respective financial and banking systems. The failure of financial supervision was in part caused by segments of the financial system being either inadequately regulated or unregulated. Thus far the international response - including in Hong Kong - has focused on regulatory tools. However, does this approach reflect the prudent management of liquidity risks which threaten financial stability? This thesis will analyse the optimum supervisory model to manage the financial stability of Hong Kong''s banking system when exposed to substantial liquidity risks. The key elements necessary - financial stability, liquidity, and financial supervision of the banking and monetary systems - will be analysed to form a theoretical basis to determine the optimum supervisory model. Supervisory and regulatory issues influencing the relationship between financial supervision and the regulatory toolkit shall be examined in detail under three broad themes, the unified sectoral supervisory structure, integrated and cross-sectoral supervision, and systemic supervision. Unified sectoral supervision will concentrate on the issue of central banking and whether this should be unified or separated from banking supervision when managing market liquidity. The analysis reveals that the HKMA''s constrained monetary policy powers impairs the capacity to manage financial stability. Further market liquidity tools can be successfully implemented by a central bank without a banking supervisory ambit. A unified structure was beneficial to mitigate co-ordination frictions between supervisors. There was no perceived advantage between the Integrated and Sectoral supervisory models when planning the implementation of market liquidity facilities. However the HKMA''s cross-sectoral supervisory ambit is subject to structural biases with the supervision of hybrid financial instruments suffering from micro-prudential underlap. This flaw can adversely affect the supervision of universal banks'' liquidity ratios. The HKMA is susceptible to a market conduct bias similar to the United Kingdom''s Integrated model. The HKMA does not capture systemic liquidity risks outside the banking system. Systemic macro-prudential supervisory underlap and frictions arise between the HKMA and the Financial Stability Council. The HKMA''s supervision of banks'' short-term liquidity ratios is impeded by systemic cross-sectoral micro-prudential underlap. Supervision of OTC derivative financial infrastructure is constrained by the SFC''s and HKMA''s systemic macro-prudential supervisory underlap. This underlap encapsulates all financial sectors outside the HKMA''s supervisory ambit, notably the shadow banking system. Renminbi infrastructure is subject to a systemic macro-prudential underlap between the HKMA and the People''s Bank of China. Micro-prudential Renminbi banking supervision is inhibited by a supervisory underlap between the HKMA and the China Banking Regulatory Commission. Despite the HKMA''s supervisory structure reflecting Hong Kong''s banking and monetary systems, the design is structurally flawed when exposed to substantial liquidity risks which threaten financial stability in the banking system. On balance, the o

Since the publication of the first edition in 2006, financial regulation around the world has changed dramatically as a result of the 2008 global financial crisis. As one of the world's leading financial centres, international regulatory reforms have had a significant impact on the legal and regulatory system in Hong Kong. This new second edition provides a comprehensive and authoritative single-volume guide to the main areas of financial regulation and financial law in Hong Kong. Given the massive changes in financial regulation globally and in Hong Kong, the second edition has been substantially rewritten and revised to address changes in markets and their legal and regulatory frameworks, as well as the implications of these changes to future market development. The book is in five parts: The first part considers the evolution of Hong Kong's role as a financial centre and the development of its financial regulatory structure, one that is perhaps unusually complex given the size of the jurisdiction. The second part discusses the regulation of the banking, securities, insurance sectors, including the regulatory powers of the Hong Kong Monetary Authority (HKMA), the Securities and Futures Commission of Hong Kong (SFC), the Office of the Commissioner of Insurance (OCI), and the forthcoming Independent Insurance Authority (IIA). The third part covers regulation of financial products and services, including securities offerings and listings, investment products and asset management, financial derivatives, and takeovers and mergers. The fourth part addresses market conduct and misconduct, including corporate governance, market abuse and financial crime. Finally, the fifth part examines the international context, focusing on the relationship between Hong Kong's financial markets and regulation and mainland China as well as key issues for Hong Kong's role as a major global financial centre.

First proposed in 1994, the Twin Peaks model of financial system regulation employs two specialist peak regulators: one charged with the maintenance of financial system stability, and the other with market conduct and consumer protection. This volume, with contributions from over thirty scholars and senior regulators, provides an in-depth analysis of the similarities and differences in the Twin Peaks regimes that have been adopted around the world. Chapters examine the strengths and weaknesses of the model, provide lessons from Australia (the first to adopt the model), and offer a comparative look at the potential suitability of the model in leading non-Twin Peaks jurisdictions. A key resource for central bankers, public policy analysts, lawyers, economists, politicians, academics and students, this work provides readers with a comprehensive understanding of the Twin Peaks model, and a roadmap for countries considering its adoption.

China’s financial regulatory system is crucial to the global economy, but is little understood. This book surveys and explicates the current status, the development, and planned reform of the Chinese financial supervision and regulatory system in a systematic way. From the shadow banking system to commercial banking, securities and the foreign exchange regime, the authors shed light on the different moving parts of the system; meanwhile, they show how reforms have changed the system in recent years, whether in free-trade zones, the Shanghai-Hong Kong stock market connection, or in the registration mechanisms required for new IPOs. The editors and authors are from the Chinese Academy of Social Sciences, the China Banking Regulatory Committee, the China Securities Regulatory Committee and other leading academic and policy organizations.