In an effort to aid its corporate clients as well as the Obama administration’s plans to bring transparency to the US$592 trillion OTC derivatives market, Reval, a global provider of derivative risk management and hedge accounting solutions, has announced its intent to serve as a trade repository for OTC derivatives used by corporate end users.
According to the US administration’s white paper on Financial Regulatory Reform released on 22 June, all OTC derivatives are to be recorded in a trade repository for regulators to monitor systemic risk, gain transparency and efficiency, control market manipulation and ensure that derivatives are sold properly. “All” OTC derivatives include those used by companies to hedge business exposure to fluctuating interest rates, foreign exchange rates and commodity prices.
“Since its inception a decade ago, Reval has specialised in helping companies value and effectively account for derivative products used to hedge business risk,” says Reval CEO and co-founder Jiro Okochi. “We are already, in fact, a trade repository for corporate end users of OTC derivatives. With our ability to book, manage risk, value and account for derivatives across all asset classes, we have the technology and expertise today to help clients comply with whatever may become law and to help regulators obtain the reports they will require. Whether the idea of a trade repository takes the form of a sole repository or multiple repositories, Reval will certainly have a role to play in assisting its corporate clientele and the government.”
According to Okochi, in order to support the objectives of the proposed reform, a repository “should be able to book a multitude of standardised or customised transactions and be able to report on, among other things, open positions, fair values, total exposure by counterparty, notional volumes, and any new margin or capital requirements.”
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