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

In the response, the associations highlight their preference for unique product identifiers (UPIs) (ISO4914) in MIFIR regulatory technical standard (RTS) 2, augmented by several other fields to ensure optimal granularity. RTS 2 sets out the technical detail of transparency requirements in MIFIR. The associations further stated 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). Along with the time stamp of the trade, this would allow approved publication arrangements to calculate the tenor for these users. Furthermore, the associations suggest the EC conduct a cost/benefit analysis on the use of UPI as the basis for MIFIR transaction reporting requirements.

Currently, MIFIR requires ISINs as the basis for transparency and transaction reporting requirements, but this approach has been sub-optimal in some asset classes – notably, interest rate derivatives.