Regulatory Alerts2013-02-19
Added · Updated
Revised SPM Module TA-2: Foreign Exchange Risk Management
The Hong Kong Monetary Authority issued this letter to announce the revision of Supervisory Policy Manual module TA-2 to align with the Basel Committee on Banking Supervision's 2013 guidance on managing foreign exchange settlement risks. The updated framework requires authorized institutions to effectively manage a broader spectrum of risks, including principal, replacement cost, liquidity, operational, and legal risks, while emphasizing the use of payment-versus-payment arrangements and legally enforceable netting. Banks are encouraged to review their current practices against these new standards to address any material deficiencies and ensure adequate capital is held against potential exposures.
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