The update directly addresses mandatory recovery and resolution planning requirements, specifically valuation frameworks and capabilities that authorized institutions must develop and maintain during resolution proceedings under FIRO.
Mandatory inheritance: Recovery and Resolution Plans is a child of Prudential Standards and Governance, so Prudential Standards must be raised as the secondary tag.
Product
This regulatory update concerns resolution framework and valuation methodology for failing institutions, which does not map to any specific retail product type in the taxonomy.
While depositor protection is mentioned, the update is fundamentally about institutional resolution procedures rather than any specific retail deposit or payment product.
Obligation
The HKMA's issuance of Code of Practice chapters establishes mandatory valuation methodologies, principles and standards that authorized institutions must follow during resolution, which constitutes a Controls Implementation obligation to design and deploy practical valuation measures.
The chapters separately require institutions to develop and maintain operational and technical capabilities to support valuation processes, which reflects an ongoing Governance and Oversight duty to ensure adequate preparedness and capability alignment with regulatory expectations.
Activity
This update concerns resolution planning and valuation methodology for failing institutions under Hong Kong's resolution framework, which does not map cleanly to any retail-facing business activity in the FS taxonomy.
The guidance on asset valuation during resolution could tangentially relate to client asset administration controls, but the content is primarily institutional resolution policy rather than a retail customer-facing activity.
Themes
The update establishes the HKMA's framework and expectations for how authorized institutions must conduct valuations during resolution proceedings, which is a core prudential safety-and-soundness requirement for institutional resilience and solvency protection.
The valuation capabilities and operational processes required to support orderly resolution outcomes reflect elements of Operational Resilience, though the primary focus is institutional solvency rather than disruption recovery, warranting human review of this secondary assignment.
Functions
The update requires finance and treasury functions to develop and maintain valuation capabilities and processes to support resolution planning and asset valuation during resolution scenarios.
Risk functions have a secondary obligation to integrate resolution valuation requirements into their enterprise risk framework and resolution planning governance.
2026-07-27 10:09:17·pthandapani@vixio.com
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TITLE: Hong Kong Monetary Authority Issues Code of Practice Chapters on Valuation in Resolution
BODY:
On July 24, 2026, the Hong Kong Monetary Authority (HKMA) issued two Code of Practice chapters regarding valuation in resolution under the Financial Institutions (Resolution) Ordinance (Cap. 628) (FIRO). The chapters—"The HKMA's Approach to Valuation in Resolution" (VIR-1) and "Valuation in Resolution Capabilities" (VIR-2)—establish the HKMA's framework and expectations for how authorized institutions must conduct valuations during resolution proceedings.
Valuation in resolution is a critical component of the HKMA's resolution planning and execution framework. These chapters set out the HKMA's methodology for assessing the value of failing or failed institutions and their assets during resolution, which is essential for determining the feasibility of resolution strategies and protecting depositors and creditors. The guidance applies to all authorized institutions in Hong Kong and forms part of the broader resolution standards and resolution planning requirements established under FIRO.
VIR-1 outlines the HKMA's overarching approach to valuation methodology, principles, and standards that institutions must follow. VIR-2 addresses the operational and technical capabilities that authorized institutions must develop and maintain to support effective valuation processes during resolution scenarios. Together, these chapters ensure that institutions are adequately prepared to execute valuations that meet regulatory standards and support orderly resolution outcomes.
The Code of Practice chapters supersede previous guidance and represent the current regulatory requirements for authorized institutions. All authorized institutions should review the guidance and ensure their valuation capabilities and processes align with the HKMA's expectations outlined in VIR-1 and VIR-2.
REFERENCES:
Hong Kong Monetary Authority. "Code of Practice Chapters Regarding Valuation in Resolution." July 24, 2026. Available at: https://www.hkma.gov.hk/
HKMA Banking Regulatory Document Repository CIR Current Code of Practice chapters regarding valuation in resolution issued under the Financial Institutions (Resolution) Ordinance (Cap. 628) (“FIRO”) Issue Date: 24 Jul 2026 20260713-1-EN.pdf (440.0 KB) Topic: Resolution - Resolution planning Resolution - Resolution standards Group: All Authorized Institutions Directly related Document Cross referenced Document Version History Superseded Document Directly related Document Two Code of Practice chapters regarding valuation in resolution issued under the Financial Institutions (Resolution) Ordinance (Cap. 628) (“FIRO”) COP Current 24 Jul 2026 The HKMA's Approach to Valuation in Resolution (VIR-1) COP Current 24 Jul 2026 Valuation in Resolution Capabilities (VIR-2) Directly related Document Two Code of Practice chapters regarding valuation in resolution issued under the Financial Institutions (Resolution) Ordinance (Cap. 628) (“FIRO”) COP Current 24 Jul 2026 The HKMA's Approach to Valuation in Resolution (VIR-1) COP Current 24 Jul 2026 Valuation in Resolution Capabilities (VIR-2) Cross referenced Document Version History Superseded Document You may also be interested in + - COP Current 22 Jul 2022 Resolution Planning – Liquidity and Funding in Resolution CPR Archive 22 Apr 2016 Consultation draft of resolution planning core information requirements COP Current 05 Nov 2021 Resolution Planning – Operational Continuity in Resolution Clear All Select All Expand All Collapse All AML & CFT AML/CFT Controls Financial Sanctions Tax Matters Related Others Authorization Digital Banking Guide to Authorization Mergers/Takeovers/Restructuring Minimum Criteria for Authorization Money Brokers Three-tier Banking System Others Banking Conduct & Enforcement Account Opening/Maintenance Bank Culture Code of Banking Practice Complaints Consumer Protection Credit Data Sharing Enforcement/Discipline Financial Inclusion Others Business Continuity Planning Business Continuity Planning Capacity Building Enhanced competency framework Others Capital Adequacy Capital Base Capital Buffers CCR Credit Risk (non-securitization exposures) Credit Risk (securitization exposures) Market Risk Operational Risk Pillar 2 SIBs Sovereign Concentration Risk Others Consolidated Supervision Consolidated Supervision Corporate Governance Board Directorship Code of conduct Remuneration Others Credit Risk Management CCR Corporate credit risk management Credit risk transfer/Mitigation Loan classification/Provisioning Property mortgage lending Retail credit risk management Others Disclosure Pillar 3 requirements Others Fintech Commercial data interchange Fintech supervisory sandbox Open API Regtech Smart Banking Suptech Virtual assets Others Green & Sustainable Banking Climate risk management Sustainability reporting standards Others Interest Rate Risk Management Interest Rate Risk Management Internal Controls Compliance function Insourcing/Outsourcing Internal audit function Risk management function Others Large Exposures & Risk Concentrations Connected parties HKMCI-related exposures Limits on credit exposures Others Leverage Ratio Leverage Ratio Liquidity Risk Management Liquidity facilities Sound LRM framework Statutory liquidity requirements Others Mainland Activities Mainland Activities Market Risk Management Algorithmic trading Foreign exchange Others Miscellaneous BCBS Covid-19 challenges Deposit protection FSB SFC/IA/MPFA Others Operational Risk Management Commercial Crime Bureau Fraud risk management Operational and IT incident watch Others OTC Derivatives Clearing Margining/Risk-mitigation Reporting Trading Others Recovery planning Recovery planning Renminbi Renminbi Resolution Resolution execution Resolution framework Resolution planning Resolution standards Strategic & Reputation Risk Management Strategic & Reputation Risk Management Supervisory Approach Supervisory Approach Technology Risk Management Cybersecurity E-banking Fraud risk management Others Treasury market Reform of interest rate benchmarks Others Trust Business Trust Business Wealth Management & MPF Insurance products MPF products Securities/investment products Others Close Search Search Filter Alphabetic Topic Clear All Expand All Collapse All Close Search Search