The November 7, 2022 report of the Financial Stability Board (FSB) shows the implementation status as of September 2022 in a table. In this table, China's entry for final capital requirements was "Stage 3". What does "Stage 3" mean in this table?
Quiz: Asia-Pacific Regulation
Last reviewed: October 3, 2026
This is a draft, shown for review before publication.
6 questions to check your understanding of the chapter “Asia-Pacific Regulation”. Choose an answer and select “Check answer” to see the answer and explanation. You can also open “Answer and explanation” to see the answer first.
Question 1
Answer and explanation
Answer: B
Stage 3 means that the legal framework is in force and the standards have been adopted for some transactions. It is a stage short of implementation.
A legal framework in force with the standards in force for more than 90% of transactions is "implemented". A framework that is in force, or has been published as a consultation or proposal, is "Stage 1". "Improved" is a mark in the table that shows an improvement since the end of September 2021, separate from the definitions of the stages.
Learn more: Overview of Derivatives Regulation in Asia-Pacific
Question 2
As of October 2026, under the Hong Kong clearing rules (L.N. 28 of 2016 as made), from which date does the clearing obligation arise for the transactions of a person subject to it?
Answer and explanation
Answer: D
The obligation arises for transactions entered into on or after the prescribed day that corresponds to the first calculation period in which the person reached the threshold. The table in the rules sets the prescribed day for each calculation period, and the four prescribed days in the rules as made run from July 1, 2017 to January 1, 2019.
The rules commenced on September 1, 2016, but the date on which the obligation arises for a transaction is the prescribed day for each calculation period, and the earliest is July 1, 2017. There is a gap between the end of a calculation period and the prescribed day, so the obligation does not start from the day after the period ends either, or from the day the Securities and Futures Commission (SFC) designated a central counterparty.
Learn more: OTC Derivatives Regulation in Hong Kong
Question 3
How does Singapore's Securities and Futures Act 2001 lay out the regulation of reporting, clearing, and trading of derivatives contracts, according to the table of contents of the version published as of October 3, 2026?
Answer and explanation
Answer: C
Singapore places reporting in Part 6A, clearing in Part 6B, and trading in Part 6C, each as a separate Part. Each Part has a section on the power of the Monetary Authority of Singapore (MAS) to make regulations.
Placing reporting and clearing together in one Part differs from this table of contents. The rule-making power is also set out in sections inside each Part, not outside the Act or in a common Part.
Learn more: Singapore
Question 4
As of October 2026, which of the following is correct about what China's Futures and Derivatives Law sets out at the level of the law for derivatives transactions that use a master agreement?
Answer and explanation
Answer: A
Article 35 provides that when an agreed event occurs, the transactions can be terminated in accordance with the agreement and the profits and losses of all transactions under the agreement can be settled on a net basis. It also provides that this netting is not suspended, invalidated, or revoked even if one party enters bankruptcy proceedings in accordance with the law. This is a close-out netting rule.
The option that says the transactions cannot be terminated and are settled separately is the opposite of Article 35. Clearing by a central counterparty has a provision with a similar purpose, but netting for transactions that use a master agreement is not limited to central clearing. Article 32 provides that the master agreement, the supplemental agreements, and the parties' terms for individual transactions together form one agreement, so the option that treats the three sets of terms as separate agreements conflicts with it.
Learn more: China
Question 5
As of October 2026, to whom does Article 166-2 of Korea's Financial Investment Services and Capital Markets Act (the guidelines for dealing in OTC derivatives) apply?
Answer and explanation
Answer: B
Article 166-2 sets out guidelines for investment traders, which trade on their own account, and investment brokers, which broker, intermediate, or act as an agent for trading on the account of others, among financial investment business entities. Examples are limiting OTC derivatives with ordinary investors to risk-hedging transactions and monthly reporting.
Financial investment business entities include those engaged in investment trading, investment brokerage, collective investment, investment advisory, discretionary investment, and trust business, but the addressees of Article 166-2 are only two of these. Investment advisers and discretionary investment business entities are not addressees.
Learn more: South Korea
Question 6
As of October 2026, which of the following is a correct description of "substituted compliance" under the Australian prudential standard CPS 226?
Answer and explanation
Answer: C
The margin requirements of CPS 226 do not apply to transactions that comply in their entirety with a foreign margin regime that the Australian Prudential Regulation Authority (APRA) lists in Attachment D and that meet the conditions in paragraph 66. This is substituted compliance.
A transaction that complies with only part of a foreign regime does not comply in its entirety and is not substituted compliance. The conditions in paragraph 66 must also be met. For the regimes in subparagraphs (a) to (j) of paragraph 1 of Attachment D, substituted compliance cannot be used for transactions between members of the same margining group. The risk mitigation requirements are separate from the margin requirements covered by substituted compliance.
Learn more: Australia