OTC Derivatives Reform in Hong Kong – Overview

August 2025

Since 2011, the Securities and Futures Commission ('SFC') has released a series of consultation conclusions by phases to strengthen the regulatory framework for the over-the-counter derivatives ('OTCD') market in Hong Kong. These consultations not only introduced amendments to the Securities and Futures Ordinance (SFO) and its subsidiary legislation to address mandatory clearing and reporting obligations but also proposed changes to the licensing and capital regime.

The changes introduced are expected to have a significant impact on Licensed Corporations (LCs) involved in over-the-counter derivatives (OTCD) activities. This paper examines the implications of these reforms from both business and compliance perspectives, highlighting the potential need for LCs to reassess their current booking models and operational frameworks to align with the new regulatory requirements.