Regulatory Alerts2020-04-08
Added · Updated
Mechanism for calculating reduction in Regulatory Reserve and adjustment to target rate of benchmark regulatory provision
The Hong Kong Monetary Authority establishes a new target rate for benchmark regulatory provision by subtracting 50% of the Regulatory Reserve requirement as of 31 December 2019 from the existing rate. This adjustment modifies the calculation for locally incorporated Authorized Institutions, resulting in a new effective target rate of 0.20% based on the provided illustrative data. The determination of required Regulatory Reserve levels continues to follow a two-step approach comparing the benchmark against HKFRS 9 Stage 1 and 2 provisions to identify any shortfall or excess.