In 2009, the Group of Twenty (G20) Summit called for over-the-counter (OTC) derivatives transactions to be reported to trade repositories and made available to 监管机构. 现在, 十多年后, today’s global marketplace is full of fragmented reporting requirements across jurisdictions raising the cost, complexities and operational risk of trade reporting and hindering the ability of 监管机构 to monitor and mitigate systemic risk.
Related: Are you Prepared for the Tidal Wave of 监管 Changes?
One of the key underlying principles for global trade reporting is for 监管机构 to be able to combine data across the globe in order to monitor, manage and mitigate systemic risk. Responding to the challenges created by differing data requirements across jurisdictions, the Committee on Payments and Market Infrastructure and the 国际 Organization of Securities Commission (CPMI-IOSCO) came together and created a working group specifically focused on data harmonization. They developed common data standards including critical data elements (CDE), universal product identifiers (UPIs), universal transaction identifiers (UTIs), and legal entity identifiers (LEIs). Additionally, they suggested the introduction of a common reporting format, potentially ISO 20022.
快进到今天, almost every regulatory regime is updating their reporting requirements and beginning to implement these common data standards. 然而, t在这里 are inconsistences with the implementation of CDE, as well as the introduction of additional jurisdiction specific fields.
To share perspectives about these industry challenges, 存的瓦尔·沃顿, 董事总经理 of Product Development and Strategy, 存储库 and 衍生品服务, hosted a panel discussion alongside industry experts including Chris Childs, 董事总经理, 储存库主管 & 衍生品服务, 存, 泰拉克鲁斯, Global Head of Infrastructure, Data and Non-Cleared Margin, ISDA, Malavika Solanki, Member of the Management Team, Derivatives Service Bureau (DSB), 还有哈里·麦卡利斯特, 信息架构师, 法国巴黎银行(BNP Paribas).
Incoming 监管 Change
在11月, the Securities Exchange Commission (SEC)’s security-based swaps reporting regime (SBSR) goes into effect, requiring all newly executed swaps to be reported to an approved security-based swap data repository (SBSDR), 2022年2月, SBSDRs begin public dissemination of trade reports. In outlining the new requirements, Kruse added that the third part of SBSR is probably the most challenging, requiring trade data for historical based swaps—both live and not live—to be reported, 2022年4月生效.
The implementation of SBSR is closely followed by a series of rewrites to existing global derivatives reporting rules. The first of a three-stage Commodity Futures Trading Commission (CFTC) rewrite begins in 2022 for swap data reporting compliance. Go-live dates for the European Securities and Markets Authority (ESMA)’s European Market Infrastructure Regulation (EMIR) Refit along with the Australian Securities and Investments Commission (ASIC) and the Monetary Authority of Singapore (MAS) rewrites are upcoming in 2023, with rewrites to reporting rules from the Hong Kong Monetary Authority (HKMA), Japan’s Financial 服务 Agency (JFSA) and Financial Conduct Authority (FCA)-EMIR to follow.
UPI Generation and Adoption
UPI的, which Solanki describes as part of the hierarchy that comprises the Classification of Financial Instruments (CFI) codes and 国际 Securities Identification Numbers (ISIN) in terms of the information it contains, is designed to facilitate effective aggregation of OTC derivatives transactions and is currently scheduled to be implemented in the second half of 2022. The DSB is working with industry representation groups, 监管机构, 标准组织, and other participants to decide the product definition of a UPI, based on an international standard expected to be published later this year by ISO. This standard will set the baseline and minimum data elements that the product committee will then establish to then be adopted by the industry.
The DSB also has an industry group forum analyzing workflows around a UPI's technical requirements and has also held several rounds of consultation to shape what the initial service will look like. Solanki added that firms that report to a trade repository would need to know how they will get a UPI to meet regulatory requirements. “If you’re reporting somew在这里, you need to think about how you’re going to incorporate these data elements.”
“UPI的 will require firms to overhaul their current approach to product identification,克鲁斯说。, adding that adoption will involve significant work around preparing and transitioning from current product IDs. The different timelines for adoption of the UPI, 基于司法管辖区, will add complexity and cost. As other regimes adopt the UPI, it will become more useful as a general-purpose identifier. 不受日期限制, “the UPI completes the last piece of the regulatory reporting jigsaw” states McAllister.
ISO 20022之旅
As the data fields required for global derivatives reporting are harmonized, the adoption of the ISO 20022 message standard is expected to streamline reporting processes for firms with multi-jurisdictional obligations shared McAllister. Scheduled to go live at the end of 2022 ISO 20022 will replace Financial products Markup Language (FpML) which has long been the primary messaging standard for trade reporting.
As the industry prepares this change in message standards, Childs remarked that many clients are asking if their current tech stacks and processes are fit for purpose—and if they need to be amended, 扩展, 或者完全重写. As firms have had varied responses to trade reporting up to this point, they will need to analyze how they can get ready and adapt to the many changes needed for implementation.
Related: Navigating the Trade Reporting Landscape
Preparation Requires Coordination
With the regulatory change coming from multiple directions, McAllister commented that coordination between teams – from technology, 法规遵循, to the front office – is key for global firms to manage the slew of regime updates that are due to go live in the coming years.
Firms should analyze how these changes will impact their own reporting obligations and engage resources to translate the requirements to their own trade reporting processes. Wotton added that data analysis needs to be visible and transparent within reporting firms and industry working groups need to be leveraged to allow for prioritization.
Firms that report in multiple jurisdictions will have to update their reporting infrastructures to adapt to the swathe of revised rules, requiring careful coordination of systems and processes. Childs notes that as firms are thinking about the future of their trade reporting, they are likely wondering if they should be building or buying solutions, 或者两者兼而有之. 存的报告中心® service can help these firms navigate these new changes.
Achieving the Best Outcome for the Industry
Childs pointed out that the basis of the regulatory rewrites stems from reaction to guidance from CPMI-IOSCO, emanating from a 2014 feasibility study from the Financial Stability Board. The study stated that harmonization was required to enable greater data aggregation and this round of rewrites and refits is a huge step forward to achieving these harmonization goals.
Recent analysis suggests that of the 110 CDE that were in the IOSCO guidelines, 51 will be universally and consistently adopted by all 监管机构. 孩子的共享, “We do believe that if amalgamation is required in the future, the 51 elements that are universally adopted have most of the data that is required for systemic risk analysis and that is a huge step forward.”
Childs commented that 存, 像ISDA, continues to engage with 监管机构 to pave the path towards harmonized data standards in global derivatives reporting. “T在这里 will be much work for the industry over the next few years. Harmonizing these rules to see how amalgamation could work, 作为数据共享, governance and technology all come into play to be able to take data sets across jurisdictions, “目标是什么?”他总结道.
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