The Financial Stability Board (FSB) has designated the Derivatives Service Bureau (DSB) as the sole service provider for the future Unique Product Identifier (UPI) system. The DSB will also be the operator of the UPI reference data library and will start to issue UPIs once their code and reference data are set as international data standards by the International Organisation for Standardisation (ISO).
A UPI will be assigned to an OTC derivatives product and used to identify the product in transaction reporting data. It will also allow regulators to aggregate data on OTC derivatives transactions by using the UPI or any UPI reference data element, and help them assess systemic risk and detect market abuse. This will be the first time regulators will be able to monitor and aggregate OTC derivatives data consistently across jurisdictions and the globe, as UPI data is less granular than ISIN data.
Emma Kalliomaki, managing director at the Association of National Numbering Agencies (ANNA) and the DSB, says that when the DSB developed templates for OTC derivatives ISINs required for MiFID II regulatory reporting, it also ensured that it would be possible in future to collect minimum UPI data from full ISIN data. This means the creation of an ISIN will autogenerate a UPI.
The DSB was selected as the UPI service provider following a July 2018 call from the FSB to prospective service providers to submit self-assessments. The assessment was then made by the FSB’s Working Group on Unique Transaction Identifier (UTI) and UPI Governance (GUUG), with advice from the Committee on Payments and Market Infrastructures (CPMI) and the International Organisation of Securities Commissions (IOSCO).
The FSB noted in its work programme for 2019 that finalising governance arrangements for the UPI, and identification of one or more UPI service providers by mid-2019, would prepare for further FSB consideration in 2020 of the potential development of a global aggregation mechanism for trade reporting.