Regulatory Alerts1996-03-27
Added · Updated
Guideline on Risk Management of Derivatives and Other Traded Instruments
The Monetary Authority of Hong Kong issued this guideline to supplement its 1994 framework by addressing risk management weaknesses exposed by the Barings and Daiwa Bank collapses. It mandates that authorized institutions implement robust corporate governance, including clear board oversight, segregation of duties, and risk policies commensurate with their trading complexity. The document further requires rigorous identification, measurement, and monitoring of market, credit, and operational risks through independent valuation and counterparty appraisal procedures.
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