Distinguished guests, ladies and gentlemen,
Thank you for inviting me here today at the ISDA Derivatives Trading Forum. This year, we celebrate the 40th anniversary of ISDA.
Four decades are a long time. Back in 1985 there were no mobile phones, the internet was unknown to most, and while there was something like computers at the time, they looked pretty different from those we work with today. As you may guess from my hair colour, I can actually vaguely remember life without these technical tools; I even experienced the grand introduction of the wonderful fax machine at that time. Today however, it will be difficult to rely on fax machine as the primary communication tool. Likewise, ISDA has ushered in so many changes in the last 40 years. The organisation has established itself as the indispensable financial infrastructure builder for the financial services.
Founded in 1985 as the “International Swap Dealers Association”, ISDA has been at the forefront of shaping safe, efficient, and resilient derivatives markets worldwide. From pioneering master agreements many firms rely on, to driving common definitions and documentation, and developing open-source solutions for regulatory compliance, ISDA has played a pivotal role in making the global derivatives markets safer and more efficient. These innovations have strengthened market resilience, reduced friction across borders, and enabled institutions to transfer risk with confidence.
Congratulations to ISDA and its members on these transformative achievements, and also thank you for the tremendous contributions to the stability and efficiency of our markets.
As we gather here in Hong Kong, celebrating 40 years of ISDA, I am reminded of how far the global derivatives market has come since ISDA's inception in 1985. Back then, the over-the-counter derivatives market was in its infancy. Today, it stands at near USD 700 trillion globally, a testament to the industry's growth and the critical role it plays in risk management, capital allocation, and financial stability. Hong Kong has been part of this journey, evolving from a regional player to a top-tier global hub, currently one of the largest over-the-counter (OTC) derivatives markets, especially in RMB foreign exchange and interest rate products.
Today, I want to talk about two key areas that underscore Hong Kong’s role as a global derivatives hub: first, our dynamic regulatory framework, which balances innovation with stability; and second, the deepening integration between Hong Kong and the Chinese Mainland’s financial markets, unlocking new opportunities for cross-border derivatives activity. These developments not only reflect our commitment to international best practices but also position Hong Kong as a gateway for sustainable growth in Asia’s derivatives landscape, driving the next phase of market evolution.
Let me start with the evolving regulatory framework in Hong Kong. As markets grow more interconnected and complex, regulation must adapt to mitigate risks while enabling innovation. The HKMA and the Securities and Futures Commission (SFC) have been working closely to ensure our regime aligns with global standards while addressing local nuances.
Over the past few years, we have witnessed significant advancements in particular for the OTC derivatives regulatory regime.
The benchmark rates reform for the Hong Kong OTC derivatives clearing requirement was successfully rolled out last year. This critical initiative transitioned contracts from legacy interbank offered rates (IBORs) to more reliable alternative reference rates (ARRs), enhancing the robustness and transparency of the derivatives markets.
In September this year, Hong Kong implemented the “Rewrite” to enhance the OTC derivatives reporting regime with the updated international reporting standards. The “Rewrite” is part of the global effort to standardise the reporting of OTC derivatives, improving data harmonisation and allowing regulators to identify emerging risks more effectively, as well as fostering cross-border consistency essential for global market participants.
And throughout the global process of “Rewrite” adoption, ISDA once again played a key role. Beyond connecting market participants and regulators across the derivatives market, ISDA expanded its Digital Regulatory Reporting (DRR) solution to support core regulatory regimes across nine jurisdictions, including Hong Kong. The DRR solution ensures a consistent, machine-readable interpretation of rules that dramatically reduces compliance costs and operational risks for firms.
But regulation is not just about rules. In this era of technology, it is also about how to create an environment where financial institutions could leverage the power of technology responsibly, where we can strike a right balance between risk management and innovation.
Just last week, we took an important step forward with the launch of EnsembleTX – the pilot phase of Project Ensemble. What it means is that we are no longer “just talking” about transactions involving tokenised deposits and digital assets as concepts; we are “enabling” them in real transactions, in real markets, under real supervision. EnsembleTX shows that innovation does not have to race ahead of regulation, nor regulation hold back innovation. Instead, they can move forward together, hand in hand, building trust as they build technology.
We are starting with facilitating the interbank settlement of tokenised deposit transactions through the HKD RTGS system, but the vision is bigger. Over time, the pilot will evolve to support settlement in tokenised central bank money, operating around the clock. That is not just an upgrade in technology — it is a reimagination of how money itself can move. And it is happening in a framework where regulators and innovators are working side by side.
Project Ensemble is not our only initiative in responsible innovation. Earlier this year, we launched the Supervisory Incubator for Distributed Ledger Technology. Think of it as a safe space where banks can test new ideas with direct supervisory feedback. Already, seven banks have joined, trialling tokenised deposits and other DLT-based solutions. The message is clear: when innovation is guided, not unchecked, it can move from concept to production-ready reality.
Now, turning to the latest developments in integrating the financial markets of Hong Kong and the Chinese Mainland, a subject that always arouses interest and an area in which our role can never be overstated. China is the world’s second largest economy and is expected to make up about 20% of the world economy. Meanwhile, the “going out” of Chinese firms and Chinese investors’ demand for overseas investment will bring new opportunities. As a super connector, Hong Kong not only originates and intermediates more than half of China’s inward and outward direct investment, our sophisticated and market-friendly financial ecosystem also enables global investors to capture opportunities offered by the Mainland’s economic and financial development.
Our synergy with the Chinese Mainland amplifies our derivatives ecosystem. Taking RMB internationalisation as an example, Hong Kong is the premier offshore hub, handling 80% of global offshore RMB payments and close to 1 trillion yuan in deposits as of August 2025. Promoting Hong Kong’s offshore RMB product and instrument development has been one of our work focuses in recent years.
Leveraging on the premier offshore hub status and key to the integration are the connectivity schemes that have transformed cross-border flows. We are expanding the range of liquidity management tools to address international investors’ needs. OTC Clearing Hong Kong Limited has started accepting eligible onshore bonds as margin collateral for all derivative transactions, including Swap Connect transactions. In addition, the offshore and cross-boundary repo businesses were both launched earlier this year to facilitate international investors to use onshore bonds as collateral for repo transactions in the offshore and onshore markets. We will also continue to enrich the range of risk management tools, including Swap Connect.
The Swap Connect has been a game-changer and particularly relevant for participants of this forum. Launched in May 2023, the Swap Connect has grown markedly. Monthly trading volumes have soared from RMB 50 billion in May 2023 to RMB 380 billion in May 2025, about seven times higher, with daily clearing volumes now averaging RMB 25 billion—far surpassing initial expectations.
Since launch, Swap Connect has kept improving to make investing simpler and more flexible. In the past two years, the scheme has expanded its product scope, improved the ancillary services, provided greater flexibility for investors to execute hedging and portfolio management strategies, and most recently raised the daily quota to 45 billion yuan. More upgrades are coming, including an expansion of the dealer list.
The connection of the financial markets in Hong Kong and the Chinese Mainland is not without challenges, but the ongoing dialogue with the industry with the facilitation of ISDA at forums such as this one is key.
Let me conclude with this.
As we celebrate ISDA’s 40th anniversary, we recognise the concerted efforts and exciting progress in achieving standardisation and well-functioning of the derivatives markets. We are also reminded that resilience is built not only on rules, but on vision for the future. Initiatives like the Project Ensemble and Supervisor Incubator show that innovation and regulation are not opposites --- they are partners. Together, they can carry our markets further than either could alone. Hong Kong will continue to be that proving ground, where bold ideas meet sound oversight, and where the future of finance is written responsibly.
Ladies and gentlemen. The journey ahead is one of immense opportunities and responsibility, and we look forward to engaging proactively with ISDA and industry stakeholders in maintaining an innovative, efficient and resilient financial ecosystem. As a global derivatives marketplace, Hong Kong will continue to play a key role in this journey.
Thank you, and I wish the Forum a great success.
