HKMA Regulatory Changes Are Afoot, Automated Regulatory Technology Will Be Critical For Success

By: Abraham Teo, Head of Product Management, AxiomSL APAC

The Hong Kong Monetary Authority (HKMA), in its drive to revamp the domestic banking regulatory landscape, is set to fall in line with the current global trend of taking a more proactive stance on requiring granular data more frequently from financial institutions. Anticipated HKMA regulatory changes set a stage similar to the one faced by a participant in a fencing bout: Hong Kong financial institutions need to be technically prepared – light on their feet and nimble – to flexibly adjust to the potential changes and also comply with revisions that have already been announced, which are the following:

  • The renewal of Large Exposure Reporting – form MA (BS) 28 is required, replacing form MA(BS) 1D
  • An update to the capital adequacy regime
  • The recent introduction of net stable funding ratio (NSFR) reporting – form MA(BS) 26
    HKMA commitments related to the implementation of the final Basel III reform package


Regarding the final Basel III reform package, due to the disruptions caused by the COVID-19 pandemic, HKMA is following the revised timeline set by the Group of Central Bank Governors and Heads of Supervision to defer implementation of the aforementioned changes by one year – to January 1, 2023.

En Garde: Technology Promotes Change Management

hkma regulatory changesHKMA has traditionally implemented regulatory changes on a step-by-step basis, however, with the support of advanced technology, it is preparing to initiate more dynamic changes – and in a shorter timeframe. In general, the trend in regulation technology is to move away from manual, siloed processes to automation, and from form-based reporting to templates. New technology is enabling HKMA to actively pursue a digitalization program that cuts across multiple functions, enabling them to become more adept in collecting and analyzing large amounts of granular data. And more is expected – recently, HKMA hired an external consultant to conduct surveys and interviews with banks and technology firms on regtech development in the territory.

Technological innovation means that the regulator will likely require greater amounts of data, more frequently and on a more granular level, and may eventually do away with templates and require large data submissions from financial institutions instead. Like all proficient fencers learn early on – be “pret” or prepared before the match.

Pret: Implications For Financial Institutions

Although no deadline for some of the new HKMA regulatory changes has been set, enough information has been provided for financial institutions to stay ahead of the game by finely honing their techniques in preparation for the inevitable.

Key issues for firms to consider include:

  • Data quality, completeness, and accuracy will be a critical component in future reporting
  • Greater drilldown into data will be required – Excel spreadsheets will no longer be sufficient
  • More data volume and greater granularity will be needed – requiring automation
  • Audit defense will be key – instead of asking if the number in the box is correct, it will be necessary to consider if the underlying data being provided is correct
  • Data lineage will not be optional – defending lineage to a regulator two years after a submission is extremely difficult without robust data lineage capability
  • Granular, auditable data gleaned from transparent, efficient reporting can be used internally by financial institutions for business analysis and risk and regulatory management – enabling operational efficiencies and business insights

Allez: Alert And Ready For What May Come Next

As HKMA increases its technical capacity, it will expect Hong Kong financial institutions to do the same. In fact, an HKMA official signaled to the financial sector in a recent speech that the regulator would be requiring more granular data. Hong Kong financial institutions must be technologically prepared and ready to tackle the Hong Kong regulatory changes as they occur. AxiomSL can empower firms to be as technically prepared and quick as an expert fencer before proceeding with the regulatory data management requirements of HKMA.

Institutions lacking a transparent and technology-driven approach to data lineage are less able to identify and rectify data inaccuracies and are more vulnerable when defending submissions. Taking a tactical approach to data lineage and relying on manual processes produces a static view of lineage that is prone to errors. These practices are unsustainable, create operational inefficiencies, and do not satisfy regulators’ expectations for dynamic data lineage.

AxiomSL’s LineageView is a powerful application native to the ControllerView® data integrity and control platform. It collects critical metadata information and analytics, and documents all the changes that take place across the data flow. Powerful visualizations enable users to inspect complex lineages with ease. LineageView enables financial institutions to:

  • Track complete data journeys
  • Graph and explore lineage
  • Drill down to reporting line items
  • Export lineage metadata
  • Trace a single transaction from source to report
  • Connect to enterprise lineages


With AxiomSL’s proven technology, organizations can satisfy new HKMA regulatory changes and deliver the data integrity and auditability that regulators demand in the correct format. Organizations are enabled to strengthen their resilience in times of crisis, and ultimately, enhance their decision making to drive business growth when they adapt their risk and regulatory reporting to be technology-driven, transparent and efficient.

To learn about an impeccable technique and staying on the point of the blade, contact us today.

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