Firms said any discretionary powers which Hong Kong resolution authorities might have […] should be limited to circumstances identified in the FSB’s consultation paper on cross-border recognition of resolution actions.
“The authorities remain of the view that, in principle, a coordinated and cooperative approach to the resolution of a cross-border FI has the potential to better protect financial stability across both home and host jurisdictions,” the paper reads.
Local vs. foreign authority
“A resolution authority could therefore be expected to recognise and act in support of a cross-border resolution action if it will deliver a satisfactory outcome for stability in Hong Kong, and will not disadvantage local creditors relative to foreign creditors.”
Hong Kong’s secretary for financial services and the Treasury, KC Chan said establishing a local resolution regime will “bolster the resilience” of Hong Kong’s financial system.
He also said it would “enhance Hong Kong’s position as an international finance centre” while minimising the need to resort to public funds.
“As a major financial centre and host jurisdiction for many global systemically important FIs, Hong Kong should maintain a local regime which is effective at the cross-border level,” he said.
At the end of the consultation period, around 30 submissions had been received from a variety of industry associations, FIs, professional bodies and firms.
