THE VOICE OF THE SWIFT COMMUNITY
Discussions regarding standards are a recurring topic of debate at Sibos. However, this year’s standards and trade repositories panel was particularly timely given the role that trade repositories play in improving transparency and mitigating systemic risk in the global OTC derivatives marketplace.
The G20 commitment to build and implement trade repositories in the OTC derivatives market is being implemented with the support of ISDA and AFME, who have run a competitive RFQ process to identify preferred suppliers for Credit, Equity, Interest Rates, FX and Commodity trade repositories.
However, to ensure that global regulators can fully benefit from access to transaction data in a timely and accurate manner, reporting standards are more important than ever.
A panel discussion with Karel Engelen of ISDA and Joe Halberstad and Malene McMahon of SWIFT focused on the role of standards, the ability to leverage existing standards and anticipated future developments.
During the panel, I shared DTCC’s experience in the credit derivatives markets, which created the precursor to the ‘trade repository’ concept and was the by-product of our electronic credit derivatives trade confirmation system. Our experience in running the CDS repository taught us that derivatives’ trading is a global business and that standardisation aids transparency.
We also discussed the unprecedented opportunity to create transparency in the global OTC derivatives markets. In order to do so, it is important to keep a comprehensive set of data on a global basis. The more data that is contained in the trade repositories, the more data sets regulators will be able to access. To achieve these aims, data input needs to be flexible to maximise usage, and data output needs to be harmonised to provide aggregate, common data for the ‘end users’ i.e. the regulators.
The G20 has provided an important framework for improving the transparency of the global OTC derivatives market. The driver for reducing complexity in the global trade repository community will, however, be market forces rather than regulation. To reconcile data between multiple trade repositories, global standards and common identifiers are critical.