ISDA publishes paper recommending adoption of entity-based reporting

Rick Steves

In the context of the 31st Annual General Meeting in Tokyo,  and in partnership with 12 other trade associations, the International Swaps and Derivatives Association, Inc. (ISDA) has published a paper today recommending an entity-based approach to derivatives trade reporting in a bid to cut costs and complexity for end users. The paper argues that […]

reporting

In the context of the 31st Annual General Meeting in Tokyo,  and in partnership with 12 other trade associations, the International Swaps and Derivatives Association, Inc. (ISDA) has published a paper today recommending an entity-based approach to derivatives trade reporting in a bid to cut costs and complexity for end users.

The paper argues that “global adoption of an entity-based reporting framework – where sole responsibility for reporting is assigned to one counterparty via an automated hierarchy process – would help promote greater consistency in reporting standards and would lead to improvements in data quality”. Also, such approach should reduce operational complexity associated with current reporting requirements, cut costs, and eliminate the reporting burden on end users.

To further make its point, ISDA illustrated with the European example, where the aggregate expenditure for end users that have implemented the dual reporting framework is estimated to be in excess of €100 million.

isda logo

Mandatory trade reporting regimes, key element of the derivatives market reforms agreed by the G-20 in 2009, are in place in most financial centers but harmonization is much needed as lack of consistency in the reporting rules between jurisdictions and variations in data reporting formats have limited the ability of regulators to aggregate exposures and spot possible systemic risks.

The twelve associations that contributed to the paper are: the Alternative Investment Management Association, the Association of Corporate Treasurers, the Australian Financial Markets Association, the US Chamber of Commerce’s Center for Capital Markets Competitiveness, the Coalition for Derivatives End-Users, the Global FX Division of the Global Financial Markets Association, ICI Global, the Investment Association, Managed Funds Association, the US National Association of Manufacturers, the Securities Industry and Financial Markets Association’s Asset Management Group, and Pensions Europe.

The paper can be read here.

ISDA and the Symbology Project

ISDA had already launched a project in September 2015 in efforts to improve data standardization across jurisdictions with help from Symbology Governance Committee, a consortium consisting of buy and sell-side market participants, vendors, platforms and trading associations, including Barclays, Bloomberg, UBS, Citigroup, Goldman Sachs, Deutsche Bank, ICAP-Traiana, and Thomson Reuters, among 18 participants.

The iniciative, Symbology Project, was designed to respond to new regulatory changes seen since the financial crisis of 2007-2008, from the Dodd Frank Act to MiFiD II, established to increase transparency over OTC derivative markets and to reduce systemic risk. Lack of global data harmonization has been an issue ever since, becoming a burden to both regulators and regulated institutions, causing higher costs and complexity as well as less effectiveness. Symbology Project aims to develop an open-source standard derivatives product identification system to be applied across all derivatives facilities.

Read this next

Retail FX

Malaysia regulator exposes OctaFX clone, shady FB profiles

Malaysia’s financial regulator today warned online investors about the risks of following investment tips made on social-media platforms.

Digital Assets

Crypto trading volume spikes at Swiss bourse amid FTX collapse

The shockwaves from the historic collapse of Sam Bankman-Fried’s crypto empire are still being felt across the industry, but some trading venues are actually doing better because of it.

Executive Moves

CMC Markets adds Camilla Boldracchi to institutional sales

UK’s biggest spread better, CMC Markets has promoted Camilla Boldracchi to take on an expanded role within its institutional sales desk.

Institutional FX

FXSpotStream reports $1.48 trillion in monthly volume for November

FXSpotStream’s trading venue, the aggregator service of LiquidityMatch LLC, reported its operational metrics for November 2022, which moved higher on a yearly basis but reflected weak performance across executed trade volumes when weighed against the figures of the prior month.

Retail FX

Interactive Brokers’ client activity drops 30% YoY

Interactive Brokers LLC (NASDAQ:IBKR) saw 1.95 million daily average revenue trades, or DARTS, in November 2022 compared to 1.96 million transactions in the prior month.

Digital Assets

The rise of Crypto ETPs in traditional exchanges as crypto winter deepens

Institutional investors are increasingly looking at traditional regulated exchanges as their first route into digital assets amid market turmoil caused by the crypto winter and the collapse of several big names within the space, including FTX. Acuiti and Eurex surveyed 191 buy and sell-side firms on their views of the digital assets markets in order […]

Digital Assets

TP ICAP’s crypto arm receives FCA’s go-ahead

UK interdealer broker TP ICAP has received a regulatory go-ahead to launch its cryptocurrency services in the UK. The bid shows that the recent collapse of FTX exchange has done little to damp the interest of big names in running their own crypto business.

Industry News

Coin Signals founder to pay $2,847,743 after prison sentence over crypto Ponzi scam

The U. S. District Court for the Southern District of New York has ordered Jeremy Spence, founder of Coin Signals, to pay $2,847,743 in restitution to victims of a fraudulent virtual currency scheme.

Digital Assets

CME Group goes DeFi: Reference rates and real-time indices of Aave, Curve, Synthetix

“These rates are designed to provide traders, institutions and other users transparency and price discovery across a much broader range of tokens, allowing them to confidently and more accurately value cryptocurrency sector specific portfolios and manage price risk around various blockchain-based projects.”

<