Hong Kong regulators intend to align reporting requirements for over-the-counter (OTC) transactions with international standards. In particular, the report will include transactions involving crypto derivatives.
The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) announced plans to bring OTC reporting requirements in line with global standards.
After considering stakeholder responses to a consultation paper published in March, Hong Kong’s financial regulators decided to impose a number of requirements on market participants in relation to derivatives reporting.
In particular, the majority of respondents supported the proposal to implement ISO 20022 for OTC derivatives reporting, which should include the use of three elements, including:
- Unique Trade Identifiers (UTI), which should be generated in accordance with international standards. Temporary identifiers will be used until full implementation.
- Unique Product Identifiers (UPI), which will be required for all underlying derivatives in each transaction in the region. They will comply with the ISO 4914 technical standard.
- Critical Data Elements (CDE), the number of fields of which will be reduced to comply with EU, the U.S., and other jurisdictions’ requirements. However, for effective market surveillance, some fields will remain optional and the regulator will be able to require their private completion if necessary.
Local firms will have 12 months to prepare to implement the technical elements of the specification. The new reporting requirements in Hong Kong will take effect on September 29, 2025.
Regarding the reporting of OTC transactions in digital assets and crypto derivatives, local market participants noted that they cannot be classified under the existing traditional asset classes. Therefore, the HKMA and the SFC decided to use the Digital Token Identifier (DTI) to report transactions in such assets – a similar variable that the European Securities and Markets Authority (ESMA) introduced in reporting in October 2023.
The G20 countries are developing regulations to ensure tax transparency for cryptocurrency transactions. It is planned to implement them by 2027.
