About a-team Marketing Services
The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

CPSS and Iosco Set Out Recommendations for Trade Data Repositories in New CP

Subscribe to our newsletter

A joint working group of the Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organisation of Securities Commissions (Iosco) has published a consultation paper this week setting out recommendations for the operation of trade repositories in the OTC derivatives markets. Data sharing and new data infrastructure is a subject that has been much discussed over recent months and the consultation paper indicates that these repositories will have a significant impact on firms’ data supply chains.

The introduction of repositories in this space is all part of the post-crisis regulatory effort to improve the post-trade infrastructure for the OTC derivatives market. However, there is some degree of disagreement remaining about whether a single or multiple repositories are required. European regulators in particular are concerned that a US-based single repository in the form of the Depository Trust & Clearing Corporation’s (DTCC) Trade Information Warehouse might not be the right option and multiple repositories may be needed, especially one based in Europe.

To this end, the consultation paper sets the ground rules for the establishment and operation of such repositories, which are aimed at centralising information on outstanding OTC derivatives transactions and helping to improve the market’s overall transparency. “A well designed trade repository that operates with appropriate risk controls can provide an effective mechanism to collect and disseminate reliable data in a timely and proper manner to relevant authorities and the public, thereby strengthening the scope and quality of information available regarding the OTC derivatives market,” states the paper.

Exactly what constitutes “reliable” data and a “timely” manner is at the heart of the related derivatives data management challenge. The repository will take the data that is generally held by counterparties and often stored in proprietary systems in various formats with different data fields and turn it into standardised and complete data sets. However, this data will not replace that being used by individual counterparties, counterparty data will instead need to be reconciled with the trade repository data, adding another layer of data processing to the data supply chain.

A proportion of the data held by the repository will therefore be seen as a reliable record of the relevant trade information, says the paper: “Some data maintained in a trade repository may be considered the ‘official legal record’ of the transaction and therefore constitute the data that can be used for various downstream processing.” Regulators are convinced that this will thus bring down some of the cost and risk in the market related to data cleansing, but it will involve another layer of data reconciliation.

Market participants have until the 25 June to provide responses to the regulator on the proposals within the consultation paper, including voicing any concerns they may have about the operational reliability or governance of these repositories.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: How to optimise the business value of your data using agile data governance

Data governance is transforming from a risk management and compliance tool with limited and prescriptive controls, to a solution that can help you optimise the business value of your data. In this role, data governance must scale to manage rising volumes of data, more and different data types, and changing user requirements, while continuing to...

BLOG

Sanctions Against Russia Mean Screening is More Vital than Ever

By Collette Allen, Client Services Director, SmartSearch. Firms should take action to review their due diligence and sanctions screening procedures to avoid falling foul of extensive new and emerging sanctions against Russia. The wide-ranging sanctions imposed so far by Western nations include restrictions against individuals, entities and their subsidiaries, and the introduction of legislation to...

EVENT

ESG Regulation, Reporting & Data Management Summit (Redirected)

This summit will explore challenges around assembling and evaluating ESG data for reporting and the impact of regulatory measures and industry collaboration on transparency and standardisation efforts. Expert speakers will address how the evolving market infrastructure is developing and the role of new technologies and alternative data in improving insight and filling data gaps.

GUIDE

MiFID II handbook, third edition – How compliant are you?

Six months after Markets in Financial Instruments Directive II (MiFID II) went live, how compliant is your organisation? If you took a tactical approach to cross the compliance line on January 3, 2018, how are you reviewing and renewing systems to take a more strategic approach and what are the business benefits of doing so?...