About a-team Marketing Services
The knowledge platform for the financial technology industry
The 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: In data we trust – How to ensure high quality data to power AI

Artificial intelligence is increasingly powering financial institutions’ processes and workflows, encompassing all parts of the enterprise from front-office to the back-office. As organisations seek to gain a competitive edge, they are trialling the technology in variety of ways to streamline and empower multiple use cases. Some are further than others along the path to achieving...

BLOG

Data’s Role in AI Transition and Value Creation: Data Management Summit London Preview

The rapid adoption of artificial intelligence by financial institutions has required a heavy data management uplift as organisations have upgraded their systems to incorporate the new technology. It has also provided greater opportunity to squeeze even more value from data by enabling its efficient deployment across enterprises. Just how companies manage data for AI to...

EVENT

AI in Capital Markets Summit London

The AI in Capital Markets Summit will explore current and emerging trends in AI, the potential of Generative AI and LLMs and how AI can be applied for efficiencies and business value across a number of use cases, in the front and back office of financial institutions. The agenda will explore the risks and challenges of adopting AI and the foundational technologies and data management capabilities that underpin successful deployment.

GUIDE

BCBS 239 Data Management Handbook

Our 2015/2016 edition of the BCBS 239 Data Management Handbook has arrived! Printed copies went like hotcakes at our Data Management Summit in New York but you can download your own copy here and get access to detailed information on the  principles and implications of BCBS 239 on Data Management. This Handbook provides an at-a-glance...