Swift and the Depository Trust and Clearing Corporation (DTCC) are pursuing a number of opportunities within the data infrastructure sphere, one of which is the establishment of a new global FX trade data repository. The idea has found favour with a number of industry associations and Alicia Szybillo, senior manager of Sapient Global Markets, reckons it is exactly the right team to take on the task.
“DTCC and Swift are absolutely the right pairing to deliver a trade repository solution for the FX markets,” says Szybillo. And she is not alone in her opinion: the Global FX Division, which represents around 90% of the FX market across the globe and 22 individual market participants, pledged its support for the initiative when it was announced by the partners back in June.
As for the reasoning behind Szybillo’s support, she cites the “pervasiveness of Swift’s message formats and connectivity infrastructure” as a key reason, combined with DTCC’s “proven expertise” in delivering global trade warehouses. “This makes their offering the ideal solution to provide regulators a vantage point of risk, and market participants a single point of operational control,” she contends.
This “proven expertise” on the part of the DTCC is no doubt a reference to its position as the operator of both a global credit derivatives repository, since November 2006, and, more recently, an equity derivatives repository. Given that Szybillo spent over three years at DTCC working as an analyst and functional architect for its Commodity Derivative Trade Information Warehouse (TIW), before she joined Sapient in June last year, she should be familiar with its capabilities to this end.
The idea behind the new FX repository, according to James Kemp, managing director of the Global FX Division, is that the regulators will have “access to the maximum amount of data and that market participants of all sizes are not overburdened with multiple reporting formats.”
FX settlement infrastructure provider CLS Group ruled itself out of the running to operate a data repository earlier this year, when it stated that it was not interested in moving into the data repository business during the Association for Financial Markets (AFME) led RFP process, which began in April and ended at the start of May. CLS indicated the “size, scope and scale of building a trade repository are beyond our core business and expertise” back in May. As well as Swift and the DTCC, five other providers were in the running to act as the operators of the repository.
Following their final selection in July, the task has now fallen to Swift and the DTCC, who are both currently working with the Global FX Division, which includes involvement from AFME, Sifma and the Asia Securities Industry and Financial Markets Association (ASIFMA), to determine next steps in terms of structure and regulatory requirements for the repository. The focus is on establishing the groundwork for core functionality and technology requirements that meet the needs of the industry and regulators.