Hong Kong's new derivatives reporting rules present an opportunity for firms to build more resilient systems, writes Lobna Jallouli.

Following the 2008 global financial crisis, regulators implemented significant changes to enhance derivatives market resilience, transparency, and stability to protect against future financial shocks. Since then, the financial services industry has seen a slew of revised derivatives trade reporting rules introduced at a rapid pace, as the regulatory landscape continues to evolve.

The latest jurisdiction to implement transaction reporting amendments in the derivatives space is the Hong Kong Monetary Authority (HKMA), which has mandated significant revisions to transaction reporting regulations set to go live on 29 September 2025.

The changes require the introduction of more harmonised standards to enhance the reporting of derivative transactions by ensuring the integrity, accuracy, and transparency of the reported data.

Data fields including Critical Data Elements (CDE), Unique Product Identifiers (UPIs) and Unique Transaction Identifiers (UTIs) have now been largely harmonised across jurisdictions, following past and forthcoming rewrites, enabling data aggregation, data comparability and reliability, and better insights into potential financial stability threats.

Navigating the HKMA Rewrite

While jurisdictions may opt for either staggered or single-phase rollout, the HKMA Rewrite involves a one-time implementation, mandating the adoption of UTIs, UPIs, CDE, and ISO20022 XML for message exchange.

Implementing these changes will require firms to update system flows, operating models, reconciliation logic, and control frameworks - impacting multiple stages of the trade lifecycle, including onboarding, trade booking, confirmation, margining, and data reconciliation.

Assessing Operational Readiness

Firms should proactively evaluate their readiness by addressing several critical questions.

Firstly, firms should evaluate their existing operational capabilities against the new regulatory requirements while ensuring effective data management and operational resilience. By proactively addressing system vulnerabilities and implementing updates ahead of the go-live date, organisations can significantly improve compliance with the HKMA Rewrite.

Secondly, it is crucial for firms to adopt scalable and cost-efficient trade reporting solutions that address their business, operational, and compliance demands, ensuring efficiency and accuracy through industry best practices without incurring unnecessary expenses.

Thirdly, firms should take this as an opportunity to implement future-proof technologies and methodologies capable of adapting to evolving regulations and market dynamics, ensuring long-term capabilities and resilience.

Lastly, securing skilled personnel and specialised expertise is vital for effective change management and implementation processes.

Shaping a Resilient Reporting Strategy

As firms plan their next steps, they face a pivotal choice: implement quick, short-term fixes to meet the HKMA Rewrite requirements on their own or adopt a comprehensive strategy that addresses current and future regulatory requirements to ensure sustained trade reporting success.

The HKMA Rewrite requirement offers firms a unique opportunity to reassess and strengthen their foundational systems and processes. Given the cross-functional nature of transaction reporting, assembling a team with the right blend of business, operations, and compliance expertise will be a critical component of success. When internal resources are stretched, engaging external subject matter experts can provide critical support.

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By Lobna Jallouli, Director, Head of Regulatory Reporting – DTCC Consulting Services, DTCC