Page 34 - Annual Report 2022 EN

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In 2022, the PLE Division focused on delivering the QFCRA’s policy work programme, strengthening
its relationships with peer regulators and international standard setting bodies, and raising public
awareness of the importance of investor education and protection. In addition, Data Protection was
a key focus for 2022 given the enactment of the new QFC Data Protection Regulations in June 2022.
Policy and Legislative Counsel
A key focus of work for the Policy and Legislative Derivatives market
Counsel departments in 2022 was to develop a regulatory framework
derivatives market regulatory rules framework and
to consult on strengthening the prudential banking In November 2022, the QFCRA issued a Consultation
business framework with the development of Paper on the proposed Derivatives Markets and
new rules on regulatory adjustments to capital to Exchange Regulatory Rules Framework.
complement the credit risk and counterparty credit
risk framework proposals consulted on in 2021. The QFCRA’s proposals include the development of
a single market and exchange rulebook applicable to an
authorised Derivatives Exchange (Authorised Exchange)
for trading derivative transactions and an Authorised
Central Counterparty (CCP) to clear and settle
derivative transactions in the QFC. The rulebook also
provides for a recognition framework for international
exchanges, CCPs and their respective members.
The draft Rules were benchmarked against best practice
regulatory jurisdictions. In addition, the draft Rules were
prepared to align with key regulatory standards including
the Committee on Payments and Market Infrastructures
(CPMI) and the International Organization of Securities
Commissions’ (IOSCO) Principles for Financial Market
Infrastructures (PFMIs); the Qualifying CCP criteria
in the Basel Committee on Banking Supervision’s
Capital requirements for banks exposures to central
counterparties and the European Union (EU) framework
for non-EU CCPs regulations, as recognised through the
European Securities and Markets Authority (ESMA).
The QFCRA anticipates bringing the framework into force
in March 2023.
Prudential banking framework
The QFCRA continues its ongoing policy work on the
implementation of the Basel Accords framework
as set out in the standards published by the Basel
Committee on Banking Supervision (BCBS) and
the Islamic Financial Services Board (IFSB).
Following public consultations in June 2021 and
December 2021 to amend the Banking Business
Prudential Rules (BANK) in respect of credit
risk, counterparty credit risk and exposures to
central counterparties, in September 2022, the
QFCRA issued a related Consultation Paper on the
proposed Banking Business Prudential (Regulatory
Adjustments to Capital) Amendments Rules 2022.
The proposals amend BANK to introduce a
revised system of regulatory adjustments to
banking business firms’ regulatory capital, in
line with the recommendations of the BCBS.
The QFCRA intends to combine the results of this latest
consultation with the earlier BANK consultations as
well as the outputs from its various quantitative impact
studies to assess the impact of the BANK proposals
on conventional QFC banks. In that connection, the
QFCRA anticipates approving the updated BANK
Rules in 2023 with commencement in 2024.
T ABLE OF C ONTENT S
Professional Investor Funds
Following public consultation in 2021 on
proposals to introduce an updated regulatory
framework for professional investor funds in
the QFC, in April 2022, the QFCRA issued the
Professional Investor Fund Rules 2022 (PROF).
The PROF Rules take into account developments in
international best practice and promote the creation
of a competitive framework for QFC funds marketed
to professional and sophisticated investors. The
PROF Rules broaden and redefine the class of
individuals who can invest in a Professional Investor
Fund. In setting up a Professional Investor Fund,
investment managers can elect to establish either
(i) a Standard Professional Investment Fund with no
minimum investment requirement, but subject to
the full customer protection regime; or (ii) an Exempt
Professional Investor Fund with minimum investment
limits and a more tailored regulatory framework.