Last September, the Hong Kong Monetary Authority (HKMA) and Securities and Futures Commission (SFC) finalised revisions to their trade reporting regime for OTC derivatives, introducing a sweeping set of changes that will align Hong Kong with other major markets including the US, UK, EU, Singapore, Australia and Japan.

With an implementation deadline set for 29 September 2025, market participants have limited time to prepare for the changes, which include the introduction of new Critical Data Elements (CDEs), along with the Unique Transaction Identifier (UTI), the Unique Product Identifier (UPI), and the mandatory use of ISO 20022 XML message standard.

Discussing the impending changes, Priya Kundamal, General Manager and Head of DTCC Data Repository in Singapore, told Regulation Asia that the finalisation of Hong Kong’s reporting regime was a welcome development that will bring greater consistency and harmonisation to a previously fragmented landscape, not only in terms of the data fields firms have to report but also in terms of standardising reporting formats.

Big change

“I think it has to be acknowledged that this is a big change even compared to the last major change to OTC derivatives reporting in Hong Kong in 2017,” Kundamal said. However, the new regime will bring improved systemic risk monitoring as well as benefits from the use of a reporting format that is consistent across multiple jurisdictions, especially for global reporting entities.

“Firms that have previously reported using CSV format will need to become familiar with and develop and test ISO XML reporting to report directly into the Hong Kong Trade Repository (HKTR),” Kundamal said.

To ease the transition for these firms, DTCC, through its trade reporting service, is offering the option to continue using the CSV format, which DTCC would then translate to ISO 20022 XML for reporting into the HKTR.

Another key challenge for firms, as seen in other jurisdictions including Australia and Singapore, is implementing the UPI, Kundamal said. Reporting entities will need to interact with a service provider, the Derivatives Service Bureau (DSB), and determine how to receive and consume UPIs.

“I think some reporting entities may need to examine and account for the complexity of introducing a workflow to support implementation of the UPI requirement,” she said. “Similarly, many firms still need to identify how UTIs will be generated, received and integrated into their workflows.”

The primary purpose of the UTI is to uniquely identify individual transactions. In line with other jurisdictions, the UTI under Hong Kong’s regime will be generated using the waterfall steps set out in the CPMI-IOSCO’s technical guidance, but this is still a challenge in terms of overall workflow and processes which the industry is starting to address.

Start testing

With less than four months to go before the new reporting rules take effect, it is crucial for firms to start testing. “We have seen repeatedly that solid, extended testing before an implementation leads to the highest chance of success,” said Michele Hillery, Managing Director and Head of Repository & Derivatives Services at DTCC.

DTCC provides a simulator which firms can use for format testing, i.e. to check whether messages can be validated. In addition, DTCC opened a UAT environment for Hong Kong in early April, to allow firms six months before go-live to start end-to-end testing to DTCC’s system. The HKTR recently opened its UAT testing environment in early June.

“Going through all the different global rewrites and various rollout phases over the years, we found that firms that test in advance tend to be better prepared, experiencing a smoother go-live,” Kundamal said. “For firms that haven’t started testing yet or may be in need of assistance, DTCC and the trade reporting ecosystem is ready to support you.”

Hillery acknowledged that market participants have faced high levels of regulatory change across the jurisdictions and with it, a high development and testing burden. “Though these rewrites bring us closer to global harmonisation, there are nuances across each reporting jurisdiction, which adds complexity.”

She said DTCC is in a unique position to help market participants prepare for and manage both operational and regulatory changes. “Whether for data validation checks, assistance with testing, or advice on how to move forward, we encourage you to reach out.”

An educational webinar on Hong Kong’s enhanced OTC derivatives reporting regime is available on-demand here.