The SFC and HKMA finalized amendments to Hong Kong's OTC derivatives mandatory clearing rules on Friday, extending the scope of products subject to central clearing under the Clearing Rules made under Part IVA of the Securities and Futures Ordinance. OTC Clear, the central counterparty wholly owned by Hong Kong Exchanges and Clearing, holds the matched position on every cleared contract in the market; HKEX's March 2026 quarterly clearing report put notional outstanding in the OTC Clear book at HK$2.1 trillion. Both ledgers live at One Exchange Square.

The OTC derivatives stack is where physical weather risk finds its financial translation. Weather index swaps transfer typhoon exposure. Catastrophe-linked notes and parametric instruments (contracts that pay against a named weather index rather than a surveyed loss, not a loss adjuster's estimate) clear through the same infrastructure the amended rules now reach. Insurers and corporates use them to offload flood and storm losses out of the protection gap, the share of weather-event damage no insurance policy covers. Higher collateral requirements raise the cost of writing that cover. Munich Re's 2025 NatCat report put APAC weather-related insured losses at $93 billion against $217 billion in total economic losses, a protection gap of fifty-seven percent; Munich Re wrote thirty-one percent of the reinsurance sitting behind those insured figures. The SFC's next scheduled annual review of mandatory clearing obligations falls in the fourth quarter of 2026.