The Bank of International Settlements (BIS), parent of the Basel Committee, has published new guidance on global governance arrangements to harmonise the usage and reporting of critical OTC derivatives data elements (CDE).
The new guidelines follow the decision taken by the G20 back in 2009 requiring all OTC derivatives transactions to be reported to trade repositories (TRs) in order to improve transparency, mitigate systemic risk and prevent market abuse. However, in order to aggregate that data to give regulators a comprehensive overview of the trading landscape, the disparate data elements must be standardised and harmonised.
In October 2019 the Committee on Payments and Market infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO), under the BIS banner, published a new report identifying key criteria, functions and bodies for the governance arrangements for CDE, excluding the Unique Transaction Identifier (UTI) and the Unique Product Identifier (UPI).
The new governance covers three broad areas: maintenance, oversight, and implementation.
In coordination with the Financial Stability Board (FSB), in its capacity as the international body in charge of defining governance arrangements for the UTI and UPI, the report concludes that the Legal Entity Identifier Regulatory Oversight Committee is best positioned to take on the role of the international governance body for critical data elements by mid-2020, subject to some necessary adjustments to its own governance. In the interim, the FSB will perform this role.
CPMI and IOSCO also recommend that jurisdictions take steps to implement the governance arrangements across jurisdictions within three years from the publication of the report.
In 2014 the FSB conducted a Feasibility Study on approaches to aggregate OTC derivatives data, and asked global guidance based on the results. This report is the final part of CPMI and IOSCO’s response to that mandate, and complements the previously published Technical guidance on harmonisation of the UTI, the Technical guidance on harmonisation of the UPI and the Technical guidance on harmonisation of critical OTC derivatives data elements (other than UTI and UPI).