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HONG KONG
Currency Language Population GDP Nominal
Purchase power parity Real growth rate
Hong Kong Dollars (HKD) Cantonese 90.8% | English 2.8% | Others 6.4% (2006) 7,153,519 (July 2011) $243.302 billion (2011) $355.6 billion (2011) 5% (2011) Special Administrative Region of the People's Republic of China Legislative Council (LegCo) 426 miles | Eastern Asia, bordering South China Sea and China Hong Kong is a prime example of laissez-faire capitalism, with ample economic license. A major capitalist service economy, it is notable for a low tax rate and free trade. Hong Kongers enjoy one of the highest income per capita in the world. These characteristics make it highly dependent on international trade and finance. GDP composition by sector: Agriculture 0.1% | Industry 6.8% | Services 93.2% (2011).
has been established in Hong Kong for over a decade providing focused professional services around installation of regulatory products for financial institutions in this jurisdiction. We constantly monitor upcoming regulatory changes being imposed in Hong Kong, assessing the impact and working proactively with our clients. Lombard Risk REPORTER for regulatory compliance Lombard Risk business and regulatory compliance experts explain:
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Literally meaning Fragrant Harbour, Hong Kong has secured a place as one of the most important metropolises in the world, alongside New York and London, prompting TIME magazines coinage Nylonkong, representing a global network that facilitates the global economy. Scarcity of space led to denser constructions (now the world's most vertical city), and sophisticated transport systems (public commuting rate > 90%). Economic freedom, financial and economic competitiveness, quality of life, corruption perception, and human development index all rank highly. The political system is governed by a high degree of autonomy.
Regulatory compliance
Reports are submitted electronically including via XBRL. Hong Kong is well on the way to implementing Basel III; there has been considerable industry consultation on regulation and a further draft text of rules is scheduled for the end of 2012 and implementation by January 2013. There has also been a bill passed and published by the legislative council for the creation of rulemaking powers for the implementation of Basel III.
Main regulator
Norman Chan Joseph Yam (2009) Two International Finance Centre (55th floor, Part of 56th Floor, 77th Floor 88th Floor, Central District, Hong Kong www.hkma.gov.hk/
Website
The HKMA was established in April 1993 via the consolidation of the Office of the Exchange Fund and the Office of the Commissioner of Banking. The HKMA is the government authority in Hong Kong responsible for maintaining monetary and banking stability. Its main functions are: Maintaining currency stability within the framework of the Linked Exchange Rate system Promoting the stability and integrity of the financial system, including the banking system Helping to maintain Hong Kong's status as an international financial centre, including the maintenance and development of Hong Kong's financial infrastructure Managing the Exchange Fund The HKMA requires some complex reports, such as: Large exposure returns which require firms to collect both direct and indirect exposure by bank, non-bank and connected parties daily; accruing the daily group exposure data and finding which groups have the largest ten exposures during each quarter Liquidity reporting returns which require gathering information on and computing institutions liquidity ratio and funding sources; identifying all liquefiable assets which refers to assets mature or readily realisable within one month; and qualifying liabilities which refers to liabilities maturing and likely to crystallise within one month Maturity profile returns which require accumulating information on the maturity profile of assets and liabilities of authorised institutions; splitting the assets and liabilities into different product nature; identifying the actual or projected cash flow and slotted into different maturity bucket according to the actual or estimated maturity date; and ensuring the total outstanding reported for each line items tied back to the balance sheet
16 14 12 10 8 6 4 2 0 -2 -4
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Bank composition
Bank composition (262)
Licensed banks
67
Deposit-taking companies
26 19
150
Regulatory compliance
Example bank returns required by the HKMA
Return I W E F M N O P R S V X J U E-CON Z Y K L J1 TA TB G Name HK$ Interbank Transactions Return Mandatory Provident Fund Related Activities Large Exposures Foreign Currency Position Maturity Profile Interest Rate Risk Market Risk Exposures Combined Assets and Liabilities Profit & Loss Account Return Capital Adequacy Ratio Assets & Liabilities Return - Hong Kong Office Assets and Liabilities Return of External Positions Interest Rate Risk Securities Related Activities Return Large Exposures Liquidity Stress Testing Insurance Related Activities Liquidity Position Interest Rate Risk Loans and Advances Summary Interest Rate Risk Interest Rate Risk (Supplemental info) Bank Ordnance Bank Ordnance Monthly Return of Renminbi Business Activities
Lombard Risks REPORTER keeps pace with regulatory requirements, automating end-to-end from data collection to electronic output, so giving you the ideal solution for all automated regulatory reporting requirements. With full support for key supervisory computations and powerful workflow, status dashboards, graphical presentation of trends and validations, REPORTER delivers huge savings in time and effort, reduces operational risk, and delivers significantly improved management information and management oversight. Basel III, EBA / European common reporting COREP and FINREP and transaction reporting, as well as Solvency II for the insurance marketplace Regulatory computation from raw data with comprehensive Capital, Liquidity and Large Exposures engines as well as detailed statistical computations Automation of regulator-mandated and client-defined validation rules Support for all transmission requirements including XBRL, XML and proprietary formats Powerful data management functionality overcomes The Data Problem: fully automated cleansing, consolidation and normalisation of multiple data sources irrespective of data format Automated Straight-Through-Processing (STP) enables exception-based management, ensuring regulatory reporting is automated unless manual intervention is needed Workflow automation job-streams your production process enabling sign-off dependencies to be achieved under strict timetable conditions Full security for all processes Trends and Variance analysis provides automated drill-down comparison tools, significantly accelerating review, reconciliation and sign-off. Regulators enquiries are anticipated and easily answered
For more information on any of these topics visit www.lombardrisk.com and/or email info@lombardrisk.com
August 2012