HKMA holds public consultation on proposed banking ordinance enhancements

It aims to align local regulations with international standards.

The Hong Kong Monetary Authority (HKMA) has launched a public consultation on proposed enhancements to the Banking Ordinance (Cap. 155), which commenced on 5 December. 

Whilst the Hong Kong banking system is robust and well-regulated, rapid developments in the sector and evolving regulations require periodic reviews to ensure the framework effectively addresses challenges and aligns with global financial hubs, HKMA noted.

The review seeks to reflect advancements in banking industry practices, address issues from Hong Kong’s supervisory experience, and further align local regulations with international standards. The proposed changes focus on six priority areas, aiming to enhance the ordinance to better meet emerging risks and challenges.

Previously, the HKMA held consultations on two proposals, including the simplification of the three-tier banking system into two-tier, and information sharing amongst authorised institutions (AIs) to combat financial crime. 

The current consultation paper highlights enhancements in three additional areas: statutory regulation and supervision of designated locally incorporated holding companies of locally incorporated AIs, flexibility for the HKMA to engage skilled persons for specific supervisory tasks, and a  series of technical amendments to streamline operations and improve regulatory clarity.

Additionally, the paper proposes amendments to two other ordinances related to the banking sector: the Financial Institutions (Resolution) Ordinance (Cap. 628) and the Hong Kong Association of Banks Ordinance (Cap. 364).

The public consultation will run until 28 January 2025, and the consultation paper is available on the HKMA website. Stakeholders are encouraged to submit comments via email or post before the deadline.