Regulatory rewrites take center stage in APAC region

Q3 in the global financial markets and services sector is typically characterized by unique dynamics, including geopolitical risk, earnings volatility, central bank policy actions and the September effect, just to name a few. But this year, in addition to the macro phenomenon we have something different—regulatory rewrites take center stage, and this trend should continue into 2025.

In the APAC region, regulatory compliance efforts are in full swing. ASIC and MAS clients are in their final stages before the October 21 compliance go-live, while HKMA clients are preparing for their proposed rewrite on September 29, next year. Korea clients similarly will join the rewrite bandwagon next year. Following the successful completion of Phase 1 in April and the upcoming Phase 2 from September 27, 2024, JFSA clients will turn their focus to the implementation of the Unique Product Identifier (UPI), scheduled for April 2025. In this dynamic environment, one thing remains constant: the necessity for continual adaptation to regulatory changes.

Australia and Singapore

With less than a few weeks (at the time of writing) before the compliance go-live date, the industry has rallied together, urging clients to increase testing efforts, and for some, to start testing as they might already be late. For some, regulatory notices have also been issued to better understand their testing plans for the latter. Industry associations and trade repositories have likewise organized working groups in which Cappitech has participated, to discuss more in-depth technical nuances and identify solutions to move the needle. While the pressure of the fast approaching deadline is inevitable, the silver lining is that firms have also identified risks within their wider operating workflow and leveraged this opportunity to close out these gaps. Do not ignore the importance of documentation and data lineage, as they are necessary to support any tech automation for present and future use.

On August 22, ASIC finalized changes to its upcoming rewrite, including simplifying and aligning the exclusion of ETDs in the ASIC rules and administrative updates to the clearing rules. MAS also provided additional clarifications via its FAQ on September 5, including re-reporting and interim-UTI usage requirements. Such moves provide clarity to the reporting community as the

October deadline approaches. We expect greater enforcement and compliance from regulators over time.

Hong Kong

Developments have ramped up since our last Hong Kong update. Firms should start to plan for next year's rewrite, regardless of whether they represent a local firm with a single regime or a regional firm with multiple jurisdictions. If you belong to the former, this might be the first time you are engaged in rewrite plans so do place more emphasis on your preparations, while if you belong to the latter, do absorb as many lessons learned from your other colleagues who have implemented global rewrites. In either case, there is significant leg work to do. Cappitech is also actively organizing client meetings and participating in industry events so do not hesitate to reach out to us.

Japan

JFSA reporting clients will go live on Phase 2 after September 27, with expected additional reporting attributes surrounding the tightening of validations, including business rule changes, optional fields to be made mandatory, etc. Also, UPI requirements will be implemented from April 7 next year, so Japan clients can expect more standardization across other regimes.

Korea

Clients in scope for KR reporting will go through similar rewrite changes proposed in 2025. KRX TR on August 22 released a communication to provide further information regarding UTI workflow as well as FAQ to help clients determine their UTI waterfall logic. Earlier in the quarter, Cappitech also had the opportunity to join in our wider Market Intelligence roadshow to raise awareness on OTC Derivatives rewrite. While we believe it will not be the last regime to go through such large-scale changes, we encourage the Korean reporting parties to play a more active role in preparing for the upcoming change.

Overall, firms operating in APAC will need to stay agile and proactive in their approach to regulatory compliance, leveraging technology, and industry collaboration to navigate this evolving landscape. Q3 2024 saw a continued trend toward greater regulatory convergence, enhanced data quality, greater (sometimes intense) communication between stakeholders and increased use of technology in regulatory reporting across the APAC region.

S&P Global provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.