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Banking Groups Push ISDA® Global Swap Data Reporting Plan
Practical Law Legal Update 4-616-4917 (Approx. 3 pages)
Banking Groups Push ISDA® Global Swap Data Reporting Plan
by Practical Law Finance
| Published on 16 Jun 2015 • USA (National/Federal) |
A global group of banking and derivatives industry associations published a letter supporting a set of principles developed by ISDA that are designed to improve consistency in regulatory reporting standards for derivatives.
On June 11, 2015, A global group of banking and derivatives industry associations published a letter supporting a set of principles developed by ISDA® that are designed to improve consistency in regulatory reporting standards for derivatives.
Although there has been significant progress in meeting a G-20 requirement for all derivatives to be reported to trade repositories to increase regulatory transparency, a lack of standardization and consistency in reporting requirements within and across jurisdictions has led to concerns about the quality of the data being reported. Poor data quality reduces the value of the data for regulators and limits their ability to fulfill supervisory responsibilities. Differences in reporting requirements also increase compliance costs for firms with reporting obligations in multiple jurisdictions.
The ISDA principles were developed to address challenges that have emerged in the cross-border implementation of derivatives reporting rules by calling for:
- Harmonization of regulatory reporting requirements for derivatives transactions within and across borders. To achieve this goal, the ISDA principles emphasize that regulators around the world should identify and agree on the trade data they need to fulfill their supervisory responsibilities, and then issue consistent reporting requirements across jurisdictions.
- Policymakers to embrace, adopt and expand the use of open standards, such as legal entity identifiers (LEIs), unique trade identifiers (UTIs), unique product identifiers (UPIs) and existing messaging standards (eg, FpML, ISO, FIX) to drive improved quality and consistency in meeting reporting requirements. The governance of such standards should be transparent and allow for input and review by market participants, infrastructure providers and regulators.
- Collaboration and strong agreement among market participants and regulators on common solutions to improve consistency and cross-border harmonization in situations where global standards do not yet exist.
- The amendment or repeal of laws and regulations that prevent policymakers from appropriately accessing and sharing data across borders. Additionally, regulators must continue to work together to develop a framework that enables appropriate secure and safe sharing of derivatives trade data across geographic boundaries.
- The benchmarking of reporting progress to track, measure and share the quality, completeness and consistency of data provided to repositories with market participants and regulators.
The associations believe the ISDA principles will help to achieve:
- Further regulatory transparency.
- Greater consistency in the content and format of data being reported.
- Greater specificity and harmonization in reporting across multiple regimes.
- A benefit to global trade reporting requirements beyond derivatives.
The following are the eleven associations that signed the letter supporting the ISDA principles:
- Australian Financial Market Association (AFMA).
- Alternative Investment Management Association (AIMA).
- British Bankers’ Association (BBA).
- German Investment Funds Association (BVI).
- European Fund and Asset Management Association (EFAMA).
- Futures Industry Association (FIA Global).
- Global Foreign Exchange Division (GFXD) of the Global Financial Markets Association (GFMA).
- ISDA.
- Managed Funds Association (MFA).
- Securities Industry and Financial Markets Association (SIFMA) and its Asset Management Group (SIFMA AMG).
- The Investment Association.
On June 18, 2015, the Depository Trust & Clearing Corporation (DTCC) also issued recommendations on global data harmonization to the Committee on Payments and Market Infrastructure (CPMI) and IOSCO harmonization working group. The recommendations propose a path toward global data harmonization that reportedly aligns with ISDA's data reporting principles. It has identified credit derivatives as the first asset class for which reporting should be harmonized. The approach involves harmonizing around 30 data fields across global trade repository providers.
"ISDA" is a registered trademark of the International Swaps and Derivatives Association, Inc. (ISDA). ISDA is not a sponsor of Practical Law and had no part in the development of this resource.