HKMA and SFC Finalize Proposals to Enhance Hong Kong's OTC Derivatives Reporting Regime

The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) have jointly concluded their consultation on enhancements to the over-the-counter (OTC) derivatives reporting regime in Hong Kong, according to HKMA.

Consultation and Feedback

In March 2024, the HKMA and SFC initiated a further consultation to align with international standards, focusing on the mandatory use of Unique Transaction Identifier (UTI) and Unique Product Identifier (UPI), as well as the reporting of Critical Data Elements (CDE). These steps are part of the Group of Twenty’s commitment to reform OTC derivatives markets and aim to facilitate regulatory analysis of OTC derivatives transactions.

Respondents to the consultation generally supported the proposals, recognizing the benefits of international standardization and harmonization of data elements reported across various OTC derivatives reporting regimes worldwide. Based on the feedback, the HKMA and SFC have fine-tuned certain aspects of the proposals to ensure smooth implementation.

Implementation Timeline

The conclusions paper, published on September 26, 2024, details the finalized list of data elements subject to mandatory reporting. The implementation of these proposals is set for September 2025. This timeline allows market participants ample time to adapt to the new requirements.

International Context and Standards

Unique Transaction Identifier (UTI) is a unique identifier for each reported OTC derivatives transaction, structured according to the Technical Guidance on Harmonisation of the Unique Transaction Identifier issued by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) in February 2017. Similarly, the Unique Product Identifier (UPI) identifies specific OTC derivatives products as per the Technical Guidance on Harmonisation of the Unique Product Identifier issued in September 2017 by the same bodies.

Critical Data Elements (CDE) encompass a standardized set of OTC derivatives transaction data elements, formats, and allowable values. These standards were published by CPMI and IOSCO in April 2018 and later by the Regulatory Oversight Committee of the Global Legal Entity Identifier Foundation in September 2021 and 2023.

For more details, the conclusions paper and respondents’ feedback can be accessed on the official websites of the HKMA and the SFC.