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

ROC Takes Responsibility for Identifiers Designed to Track OTC Derivatives Transactions

Subscribe to our newsletter

Transparency of the OTC derivatives market takes a step forward tomorrow with the Financial Stability Board (FSB) confirming the Regulatory Oversight Committee (ROC) of the Global LEI System as the International Governance Body for the identifiers that will be used to track OTC derivatives transactions. Harmonisation of the identifiers should culminate towards the end of 2022, providing better market transparency for regulators, easing the trade reporting burden for market participants, and putting in place a framework designed to avoid any repetitions of the 2008 global financial crisis.

The FSB initially published a report on UPI governance arrangements in October 2019, and is now handing over the reins.

The three elements designed to improve OTC derivatives market stability are: the Unique Product Identifier (UPI), Unique Transaction Identifier (UTI), and Critical Data Elements (CDE). The UPI and CDE will be implemented in Q3 or Q4 of 2022, while the UTI must be implemented by the end of 2020.

The FSB designated the Derivatives Service Bureau (DSB), already the generator of ISINs for OTC derivatives, as the sole issuer of UPI codes and operator of the UPI reference data library back in April 2019. The UTI includes two components – the code and an agreement about who generates the code – and identifies individual transactions reported to trade repositories. Technical guidance outlines how decisions must be made on which party to a trade generates the identifier. CDEs capture important characteristics of transactions.

By embedding reference to the LEI in the derivatives identifiers and data elements it will be possible to monitor legal entities’ trading activity, exposures and interconnectedness in the global OTC derivatives market.

Pushing forward industry and regulatory demand for data standards to stabilise and smooth the operation of capital markets, both the UPI and UTI are ISO standards. CDEs will be part of the ISO 20022 dictionary and messaging framework.

The ROC was selected as the governance body of the OTC identifiers on the basis of its expertise in building the LEI data infrastructure and experience of issuance through the GLEIF, The FSB points to high level principles that link the LEI and UPI, such as identification of market abuse and systemic risk. On a lower level, there is technical connection between the LEI, UPI, UTI and CDE.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: How to harness the power and potential of ownership data

The importance of ownership data has escalated over the past few years as financial institutions have acknowledged its potential. Key use cases include integrated risk assessment, which uses ownership data to help financial institutions gain a clear understanding of supplier and customer networks, and identify and mitigate risk. Equally significant is the use of ownership...

BLOG

GLEIF and Swift Reduce Cost of Reconciling Counterparty Data with Certified Mapping of MIC to LEI

The Global Legal Entity Identifier Foundation (GLEIF) has expanded its collaboration with Swift by providing certification for the mapping of Swift’s Market Identifier Code (MIC) to the Legal Entity Identifier (LEI). The resulting open source file will enable market participants that use GLEIF and/or Swift data to link and cross-reference key entity identifiers free of...

EVENT

Data Management Summit New York City

Now in its 12th year, the Data Management Summit (DMS) in New York brings together the North American, capital markets enterprise data management community, to explore the evolution of data strategy and how to leverage data to drive compliance and business insight.

GUIDE

Regulatory Data Handbook 2022/2023 – Tenth Edition

Welcome to the tenth edition of A-Team Group’s Regulatory Data Handbook, a publication that has tracked new regulations, amendments, implementation and data management requirements as regulatory change has impacted global capital markets participants over the past 10 years. This edition of the handbook includes new regulations and highlights some of the major regulatory interventions challenging...