This article was originally published in Regulation Asia on June 16, 2025.
HKMA’s new derivatives reporting rules require firms to prioritise testing and stakeholder engagement, writes DTCC’s Priya Kundamal.
As global derivatives reporting reform continues, the Hong Kong Monetary Authority (HKMA) has joined financial regulators in Asia and in other regions to implement changes to its trade reporting rules, effective 29 September 2025.
Building on the foundation of past regulatory reporting implementations, many regulators around the world are implementing regulatory rewrites and refits to improve the integrity, accuracy, and completeness of derivatives transaction reporting, thereby enabling greater transparency into markets. Specifically, many are looking to implement new message specifications and harmonised data fields.
Related: Supporting Trade and Transaction Reporting Obligations
The industry is not new to changes in trade reporting rules and multiple jurisdictions have implemented refits and rewrites over the past eighteen months, beginning with the US Commodity Futures Trading Commission (CFTC) Phase 1 starting 5 December 2022. However, each jurisdictional rewrite may differ due to local nuances.
Like the revisions to trade reporting rules implemented by the Australian Securities and Investments Commission (ASIC) and the Monetary Authority of Singapore (MAS), the upcoming HKMA Rule Rewrite will adopt a “big bang” approach instead of a multi-phased launch. To accommodate this, HKMA has provided in-scope firms with a 12-month preparation period to make the transition. Key mandatory requirements include the use of Unique Transaction Identifiers (UTIs), Unique Product Identifiers (UPIs), and the adoption of Critical Data Elements and ISO 20022 XML for message exchange.
As HKMA reporting transitions to the use of standard data elements under the revised rules, firms must prioritize preparations to mitigate potential challenges with implementing these new reporting changes. Effective preparation requires proactive outreach to stakeholders and experts, internal support, resource allocation, and thorough testing of the new reporting standards.
ISO 20022 XML format
Currently, reporting firms can fulfill their trade reporting obligations through HKMA’s Hong Kong Trade Repository (HKTR) by using the CSV or FPML format. Under the revised rules, trade submissions to the HKTR will transition to ISO 20022 XML. This new requirement seeks to align with global standards by adopting a common reporting format to simplify the reporting process for firms reporting to multiple jurisdictions, thus reducing administrative complexity.
Each firm will need to assess how to implement the change; either use in-house technical resources to handle the migration to the new ISO 20022 XML format or leverage external service providers to convert their CSV files to XML submissions. This option benefits entitles who prefer working in CSV files and enables them to handle error correction in a CSV format before resubmission.
For firms with high reporting volumes that require customised connectivity solutions, leveraging external providers that offer various industry-standard connectivity options, such as Message Queue-based (MQ) messaging interfaces and Secure File Transfer Protocol (SFTP), can be beneficial. These options provide automated submission channels to facilitate the reporting process.
Given that HKTR prescribes a limit on the total number of records per submission, which may necessitate splitting submissions into multiple files, reporting entities can also benefit from leveraging external providers. These providers, such as DTCC, may be able to manage up to 100,000 records in a single submission as well as the splitting and stitching of responses – enabling reporting entities to focus on strategic priorities.
Sharing of UTI and UPI
As the UTIs and UPIs are part of the current wave of global derivatives regulatory updates aimed at standardising data formats and definitions, their usage helps promote greater data harmonisation and quality to enable regulators to identify emerging risks more effectively.
Based on past experiences, it will be useful to generate reports to facilitate the pairing and sharing of UTIs and UPIs with counterparties on an intraday basis. These reports would contain trade activity submissions that help identify and resolve discrepancies or mismatches in trade data submitted by parties to a trade, thereby ensuring timely and accurate regulatory reporting.
Early testing
One of the critical preparation tasks to ensure readiness is to ensure ample time for testing, starting as early as six months prior to the rule implementation date. Firms should leverage industry simulator testing tools and available User Acceptance Testing (UAT) environments to verify and validate their submissions. This ensures that reported trades comply with the revised rules and will be processed correctly in the production environment, ready for go-live on 29 September 2025.
Despite exposure to previous rewrites, firms should not underestimate the scale of any rule rewrite. For example, time is needed to assemble a project team to review the regulatory obligations, as well as system and process enhancements needed to comply with the rules. It is also important to understand not only the revised rules for each jurisdiction, but also any local nuances.
Additionally, firms should ensure any changes will be supported by effective governance and skilled resources. Advanced readiness checks and testing will allow sufficient time to resolve any errors during the preparation phase. Attending industry working groups is yet another way to stay informed of developments, acquire crucial knowledge, and share best practices – to better navigate common issues.
Setting up for success
Ultimately, complying with the HKMA Rule Rewrite and other regulatory reporting requirements is an ongoing journey rather than a destination. Now is an excellent time to enhance and modernise existing trade reporting infrastructure to ensure that systems are scalable and adaptable for future regulatory needs.
If in-house specialised talents are not available, reporting firms can seek external guidance and expertise to navigate the complexities across regimes. Firms can tap into external providers to help lay the groundwork and effectively tackle requirements, including data mapping, testing, go-live support, and post-submissions analysis to identify opportunities for improvement. This will ensure that firms are best positioned for compliance with the forthcoming rules as well as future reporting requirements.