SFC concludes further consultation on the financial resources rules

19 Oct 2018

The Securities and Futures Commission (SFC) today released conclusions to the further consultation on proposed amendments to update the Securities and Futures (Financial Resources) Rules (FRR) (Note 1). After considering the comments received, the SFC will implement the proposed changes, the main purpose of which is to update the computation basis of the financial resources requirements in response to market developments and to facilitate the business operation of licensed corporations (Note 2).

Key changes include relaxing the treatment for foreign currencies subject to exchange control, clarifying the treatment for non-freely floating foreign currencies, introducing and updating haircut percentages for certain types of securities and investments and refining the treatments for amounts receivable arising from securities transactions. A number of futures and stock exchanges will also be added to the list of specified exchanges in the FRR.

"These changes are necessary to catch up with latest market developments," said Mr Ashley Alder, the SFC’s Chief Executive Officer. "They will also streamline the existing financial resources requirements and facilitate licensed corporations’ participation in Mainland and overseas markets."

The proposed amendments, gazetted today, will be submitted to the Legislative Council for negative vetting. Subject to the legislative process, the amended rules will come into effect on 1 April 2019, with the exception of amendments related to a new accounting standard which will take effect on 1 January 2019, the effective date of the new standard.



  1. See the Consultation Conclusions and Further Consultation on Proposed Changes to the Securities and Futures (Financial Resources) Rules issued by the SFC on 24 July 2017. This consultation covered the proposed capital regime for regulating over-the-counter derivatives (OTCD) activities as well as other proposed changes to the FRR which apply generally to all licensed corporations and are not specific to OTCD.
  2. The further consultation ended on 23 August 2017. A total of eight written submissions were received from market practitioners, professional firms and industry associations in response to the proposed FRR changes which are not specific to OTCD. The SFC will respond to comments on the proposed FRR changes which are specific to OTCD when it consults on the draft amendment rules to implement those changes.


Page last updated : 19 Oct 2018