Hong Kong Exchanges and Clearing (HKEx) is planning to boost its risk management system by starting a three month consultation, China Daily reports. As per the proposal, brokerage houses will have to cover standardized daily margin payments for their cash transaction business.

The required margin payment on cash equity transactions will be based on a 5% volatility-based margin methodology. Local brokerage firms may also be required to contribute to pooled fund, the Dynamic Guarantee Fund, which will be used to cover losses arising from the defaults of other brokerage firms.

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