On January 9, ISDA, the Alternative Investment Management Association (AIMA) and the European Banking Federation (EBF) submitted a joint response to the European Commission (EC) consultation on the best way to identify over-the-counter (OTC) derivatives for transparency requirements under the Markets in Financial Instruments Regulation (MIFIR).

The associations highlight their preference for the identification of OTC derivatives using the unique product identifier (UPI) (ISO 4914) in MIFIR regulatory technical standard (RTS) 2, augmented by a number of other fields to ensure optimal granularity. RTS 2 sets out the technical detail of transparency requirements under MIFIR. The associations state that the most efficient way for users of transparency and consolidated tape data to understand the tenor of instruments covered by these requirements would be for market participants to report the effective date (among the additional fields needed), which along with the time stamp of the trade, would allow approved publication arrangements to calculate the tenor for these users. The associations also suggest that the EC should conduct a cost-benefit analysis regarding the use of the UPI as the basis for MIFIR transaction reporting requirements.

MIFIR currently requires international securities identification numbering as implemented in the EU for OTC derivatives as the basis for transparency and transaction reporting requirements, but this approach has been sub-optimal in some asset classes, particularly interest rate derivatives.