Hong Kong Set To Align OTC Derivatives Reporting With Global Standards

The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) have released a conclusions paper outlining final steps to enhance the over-the-counter (OTC) derivatives reporting regime in Hong Kong.

This follows a consultation held in March 2024, which proposed mandating the use of a Unique Transaction Identifier (UTI), Unique Product Identifier (UPI), and reporting of Critical Data Elements (CDE), along with the adoption of the ISO 20022 message standard for reporting.

The proposed changes aim to align Hong Kong’s derivatives reporting framework with international standards, improving regulatory oversight and facilitating global market analysis.

Respondents, including financial institutions and industry bodies, generally supported the move toward greater standardisation.

The conclusions paper confirms that the UTI and UPI will become mandatory for reporting OTC derivatives transactions by 29 September 2025.

It also addresses concerns about specific data fields and offers flexibility for reporting legacy trades, allowing re-reporting on a best-effort basis where retrieving historical data proves difficult.

The HKMA and SFC have also provided flexibility for reporting historical data, recognising the challenges in retrieving information for older transactions.

Adjustments have been made to reduce the number of mandatory data fields, particularly those that could be derived from other fields or were deemed less critical for market monitoring, ensuring smoother implementation.

These changes align Hong Kong’s requirements with those of other major jurisdictions like the EU and US.

The paper also confirms the adoption of the ISO 20022 XML message standard, which will take effect alongside the UTI, UPI, and CDE requirements by 29 September 2025.

This “big bang” approach will see all key components implemented simultaneously to streamline the transition.

The full conclusions paper, including detailed feedback and responses, can be accessed on the HKMA and SFC websites.

Featured image credit: Edited from Freepik