The Financial Services Development Council (FSDC), a semi-official organization tasked with promoting Hong Kong’s financial sector, plans to launch a consultation on proposed relaxation of rules on trading of structured products.
The council aims to kick-start the consultation in the first half of this year in a bid to get the regulations relaxed by the end of 2016, the Hong Kong Economic Journal reported, citing Council member Vincent Lee.
The current holding restriction has forced many fund managers to hedge over the counter, increasing the transaction costs.
Such over-the-counter hedging, meanwhile, induces opacity that constrains the ability of ordinary investors to unwind their positions without acknowledgment of the situation over the counter, the report noted.
This actually makes effective scrutiny more difficult, Lee said, adding that a reform is needed for the long term despite present market volatility.
The FSDC is calling for a waiver for hedging while revising the bar on position requirements and enhancing the risk control measures of the clearing house.
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