In a move to facilitate the international standardization and harmonization of data elements in line with the Group of 20’s over-the-counter (OTC) derivatives market reform, the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) (together, the Regulators) jointly published, following a two-month consultation from March to May 2024, a conclusions paper (Conclusions Paper) on enhancements to the OTC derivatives reporting regime to mandate, including:

  1. the use of a Unique Transaction Identifier (UTI), which is a unique and paired code for identifying a derivatives transaction, and helps to identify and resolve potential reporting errors[1];
  2. the use of a Unique Product Identifier (UPI), which is a unique identifier denoting a specific OTC derivatives product[2]; and
  3. the reporting of Critical Data Elements (CDE), which are standard sets of OTC derivatives transaction data elements (other than UTIs and UPIs), formats and allowable values[3].

Background to the Consultation

The Regulators previously issued a joint consultation in April 2019, narrower in focus, inviting responses on proposals to mandate the use of UTIs and reporting to the Hong Kong Trade Repository (HKTR), which was met with mixed and divergent views. This prompted discussions on how UTI should be implemented in Hong Kong and elsewhere. Nevertheless, at the time there was insufficient consensus internationally and among market participants, and the proposals were not implemented.

As international discussions progressed in the last few years, the Regulators noted that other major jurisdictions had launched and concluded related consultations and implemented UTI, UPI and CDE requirements. The Regulators jointly launched the 2024 consultation in March (Consultation Paper) to further develop the reporting framework in Hong Kong. We had previously discussed this in our Global Regulation Tomorrow Plus podcast, available here and on Spotify / Apple.

Key Takeaways from the Conclusion Paper

The Regulators noted in the Conclusions Paper that respondents to the 2024 consultation were supportive of, and recognized the benefits brought by, international standardization of approaches to the OTC derivatives reporting regimes globally.

The key takeaways include:

  1. The Regulators have confirmed that the proposed UTI implementation date of 29 September 2025 will not change. The Regulators have noted that jurisdictions such as Australia, Japan, the EU, the UK and Singapore are implementing mandatory reporting of UTI in 2024 and expect that the industry will have sufficient experience of, and will have developed appropriate procedures to comply with, comparable requirements by the time of Hong Kong’s proposed implementation date. This may help alleviate many of the operational challenges encountered by reporting entities earlier this year. To assist reporting entities with coordinating their global UTI implementation, the HKTR reporting templates have been updated to incorporate UTI-related data fields to provide flexibility for optional early implementation. Reporting entities are encouraged to start reporting UTI as soon as possible.
  • As UPIs are considered a “new set-up” by the designated UPI provider (the Derivatives Service Bureau), the Regulators have concluded that 29 September 2025 is an appropriate time to implement mandatory UPI reporting. This is because the UPI service will have been in place for almost two years by this date, with market participants already reporting relevant UPIs for major jurisdictions, including to the Australian Securities and Investments Commission, the US Commodity Futures Trading Commission, the Japanese Financial Services Agency, the Monetary Authority of Singapore and under UK EMIR and EU EMIR. It is expected that familiarity and knowhow amongst market participants should, by September 2025, be in place.
  • The Regulators have re-assessed the need for certain CDE data fields, deciding not to mandate a number of such fields which provide information that can be derived from others, or may serve a similar purpose. Certain data fields will also be made optional to the extent that doing so will not compromise the efficient monitoring of markets. These changes will bring down the number of mandated data fields into a range that is comparable with the EU, the US, and other APAC jurisdictions. Reporting entities will need to report all new transactions and their lifecycle events based on data fields starting from 29 September 2025.
  • The Regulators have also noted that several correspondents raised the issue of not being able to identify asset classes for digital assets and crypto derivatives. While the Regulators have noted that the utilization of the Digital Token Identifier (DTI) is a remedy for this issue (for example, ESMA has spearheaded the move to require the use of DTI for standardized identification of crypto-assets since October 2023) and will accommodate the use of DTI in Hong Kong reporting requirements, the Regulators will continue to observe developments in other jurisdictions so as to align Hong Kong’s reporting requirements with international practices.

These developments show that the Regulators are taking proactive steps towards aligning with reporting standards across other major jurisdictions. We expect the implementation of the UTI, UPI and CDE regimes to further bolster Hong Kong’s status as an international finance hub.

[1] For further details, see 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.

[2] For further details, see the Technical Guidance on Harmonisation of the Unique Product Identifier issued by the CPMI and IOSCO in September 2017.

[3] For further details, see the Technical Guidance on Harminsation of critical OTC derivatives data elements (other than UTI and UPI) issued by the CPMI and IOSCO in April 2018 and the Harmonisation of critical OTC derivatives data elements (other than UTI and UPI) Revised CDE Technical Guidance version 2 and version 3 issued by the Regulatory Oversight Committee of the Global Legal Entity Identifier Foundation in September 2021 and September 2023 respectively.