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DTCC Policy for Releasing CDS Data to Global Regulators

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The DTCC Trade Information Warehouse for credit derivatives is a user-governed, not-for-profit cooperative that provides a registry of the details of virtually all outstanding credit default swaps traded globally. The Warehouse currently holds data on roughly 2.3 million contracts from trading counterparties located in 52 countries, covering credit obligations of entities located in more than 90 countries around the world. In recognition of the systemic importance of the Warehouse, and hence the need for a global regulatory framework, DTCC recently established a limited purpose trust company (the Warehouse Trust Company) to operate current Warehouse services. The Warehouse Trust Company is a state member bank of the Federal Reserve System subject to direct oversight by the Federal Reserve Bank of New York (FRBNY) and the New York State Banking Department.

It is a bedrock principle of the Warehouse that all interested regulators should have unfettered access to Warehouse information necessary in furtherance of their respective regulatory missions. We understand that the global OTC Derivatives Regulators’ Forum is developing a framework to provide guidance to the Warehouse about how it should evaluate requests for information from regulatory authorities and other governmental entities. In addition, in response to Forum requests forwarded to us by the FRBNY, we are developing special regulator access protocols that will allow direct regulator access to our data under this global framework without the need to go through Warehouse Trust Company personnel, thus greatly enhancing the ability of regulators to obtain immediate access to relevant Warehouse data.

In the past, we have provided both aggregate and trade-level information from the Warehouse to any regulator that has requested it. Extensive aggregate CDS data from the Warehouse’s global repository is also publicly released through DTCC’s website at www.dtcc.com, a practice that started in November 2008, and has been continuously enhanced to provide greater transparency.

However, data confidentiality concerns for protection of proprietary client information has led us to refrain from providing specific counterparty information in response to regulatory requests absent the consent of the specific counterparty.

We recognise that, in the interim as the Forum develops its framework, we will continue to receive information requests from interested regulators around the globe. In light of recent developments, we believe that responding to these requests while continuing to observe the practice of not providing counterparty names absent consent may no longer be appropriate. For instance, we recently saw fit pursuant to regulatory requests to provide the same set of Warehouse trade data to both European and U.S. authorities and included counterparty names in such data regardless of the domicile of the counterparty. (It is worth noting in this regard that the tasks of these authorities in reviewing this data would have been rendered very difficult, at best, were there multiple warehouses for credit derivative data divided by geography. Since much of the trading involves counterparties in multiple jurisdictions, there would have been a clear risk that such data would be either double or triple reported — that is, both to the repository for the location of the underlying and the repositories for the domiciles of the counterparties — or else not reported at all, falling through the cracks due to confusion over where to report the trades.)

We also note that the choices some counterparties have made with respect to the regulators for which they will authorise the Warehouse to provide counterparty “named” data appears to have created unnecessary regulatory friction. Therefore, and unless and until the Forum indicates otherwise, regulators and other governmental entities can expect that, upon the formal request of any regulator or governmental entity, counterparty names will be included in both aggregate and trade-level information provided by the Warehouse if the requesting regulator or other governmental entity affirms that it has a material interest in that information in furtherance of its regulatory or governmental responsibilities. The Warehouse Trust Company will work with each requesting regulator or other governmental entity to determine the practical procedures for accommodating each request.

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