It’s been 13 years since the Group-of-20 (G-20) leaders decided on a package of measures to reform derivatives markets. Of the measures agreed, the reporting of over-the-counter derivatives got most traction early on, but – while an improvement on what went before – the reporting framework never really lived up to its full potential. That’s because of deviations in rule sets across jurisdictions, differences in data formats and discrepancies in how individual firms interpreted the various written regulatory texts.
Two key developments could change that. First, regulators across the globe are revising their reporting rules to incorporate internationally agreed data standards, starting with the US Commodity Futures Trading Commission (CFTC), which implemented its first batch of amendments on December 5. Regulators in Australia, Canada, the EU, Hong Kong, Japan, Singapore and the UK are set to follow suit in the coming years, making global rule sets more consistent.
Second, firms can now access an industry consensus interpretation of the CFTC revisions, available as human-readable and machine executable code, which can be used as the basis for their implementation or as a benchmark to check their own understanding of the rules. As the first step of ISDA’s Digital Regulatory Reporting (DRR) initiative, this should cut down on the discrepancies that can emerge when each firm has to independently interpret a written regulatory text. Version 1.0 of the DRR was launched in November, and will be extended over time to cover reporting rule amendments in other jurisdictions.
This issue of IQ explores the changes to regulatory reporting rules and looks at how ISDA’s DRR can increase the efficiency of implementation and improve the accuracy and consistency of what is reported. Thirteen years after the G-20 Pittsburgh summit, regulators could soon be receiving the accurate, comprehensive data they need to better monitor potential sources of risk.
Click on the attached PDF to read IQ in full.
Documents (1) for Towards Transparency – IQ December 2022
Latest
Updated OTC Derivatives Compliance Calendar
ISDA has updated its global calendar of compliance deadlines and regulatory dates for the over-the-counter (OTC) derivatives space.
ISDA Publishes Saudi Arabia Netting Opinions
ISDA has published new legal opinions that recognize the enforceability of close-out netting under regulations published by the Saudi Central Bank (SAMA) earlier this year. SAMA’s netting regulations were published in February, meaning all Group-of-20 jurisdictions now recognize the enforceability...
Get Ready for the ISDA Notices Hub
No one wants to have to terminate a derivatives trading relationship – that usually means a counterparty has failed to make a payment or has become insolvent. At an already stressful time, the last thing anyone needs is to experience...
ISDA Publishes Paper on SFDR Review
On June 23, ISDA and the Association for Financial Markets in Europe (AFME) published a position paper on the review of the Sustainable Finance Disclosure Regulation (SFDR). The paper acknowledges that the SFDR needs to be revised in line with...