, Hong Kong

SFC strengthens policy after Archegos incident

It eyes stricter regulation over prime brokers, amongst others.

The Securities and Futures Commission (SFC) will strengthen its regulatory measures, following the Archegos incident that led to a multi-billion sell-off and large losses.

SFC CEO Ashley Alder said whilst the Commission does not have direct regulatory power over Archegos, it can regulate prime brokers.

“The focus for now is on how potential red flags can be identified before problems occur,” Alder said. “We will consider additional guidance for prime brokers if we identify shortcomings.”

The SFC has so far communicated their expectations of licensed firms to properly manage risks and establish procedures for stress testing.

Another point of improvement, Alder said, is the scope and effectiveness of some post-crisis reforms to the derivatives market.

“Archegos used multiple prime brokers, so it seems each only had limited visibility over the positions it had taken,” he said.

“This seems to have resulted in an increase in the concentration risk as well as the counterparty risk.”

According to Alder, international margin requirements need in-scope firms to collect and post margin to reduce systemic impact of a counterparty default. The requirements have already started to roll out, and is scheduled to complete implementation for September 2022.

Follow the links for more news on

Join Hong Kong Business community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!