OTC dealers face tighter clearing tests under fixed annual periods

Fixed annual periods proposed under Clearing Rules.

The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) issued a joint consultation on standardising calculation periods under the OTC derivatives Clearing Rules, proposing fixed annual periods for determining mandatory clearing obligations, according to a press release.

Under the Clearing Rules, a calculation period determines whether a person is subject to mandatory clearing based on the size of its applicable OTC derivatives position, as calculated in accordance with the rules.

The regulators said the current approach requires the list of calculation periods to be updated regularly, while a fixed framework would improve operational efficiency and provide greater certainty for derivative dealers in identifying future periods for compliance.

Subject to consultation outcomes, the proposed standard calculation periods would take effect from 1 March 2027, with comments invited by 27 February 2026, according to the SFC and HKMA.