The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) announced plans to overhaul the reporting framework for over-the-counter (OTC) derivatives. The new rules, designed to meet international standards, will come into effect on September 29, 2025.
The decision follows feedback from a consultation paper released in March 2024. Local stakeholders and investors highlighted the challenges of classifying cryptocurrency OTC derivatives under the traditional five asset classes: interest rates, foreign exchange, credit, commodities, and equities. In response, the HKMA and SFC are introducing mandatory Digital Token Identifiers (DTIs) for reporting crypto derivatives.
According to the regulators, the use of DTIs will ensure that crypto assets are clearly identified and tracked in financial reporting. This move aligns with a broader global trend, with Europe’s ESMA having already implemented DTIs in October 2023. DTIs have become a critical tool for tracking crypto assets in European markets, and Hong Kong’s regulators see this as a model for their own adoption.
The new reporting standards will also introduce Unique Transaction Identifiers (UTI), Unique Product Identifiers (UPI), and Critical Data Elements (CDE) to further standardize data reporting across global OTC derivatives markets. The aim is to ensure that Hong Kong’s regulatory environment keeps pace with international developments, particularly as cross-border financial activity increases.
In a joint statement, the HKMA and SFC noted that these changes will make it easier for Hong Kong-based firms to participate in global financial markets. “By incorporating DTIs into our reporting requirements, we are ensuring the proper identification of crypto-assets in a rapidly evolving digital economy,” they stated.
As per report, Hong Kong will also adopt the ISO 20022 XML message standard for OTC derivatives reporting, to ensure consistency with global reporting practices.
This regulatory shift also opens the door for more collaboration with other financial hubs in the Asia-Pacific region, including Singapore, Australia, and Japan. The HKMA and SFC said they are working with these countries to develop a coordinated implementation plan for UTI, ensuring smooth adoption across the region.
The renewed focus on OTC regulation follows one of Hong Kong’s largest financial frauds, involving the crypto exchange JPEX, which led to around HK$1.6 billion (US$225 million) in losses. Physical OTC shops were found to be significant channels for funneling retail investors’ funds into fraudulent schemes, raising concerns about oversight.
Some in the industry, however, have expressed confusion over placing OTC shops under C&ED, which regulates money changers, especially as the SFC oversees other aspects of cryptocurrency investment
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