On July 11, ISDA submitted a response to the European Securities and Markets Authority’s (ESMA) fourth package of Level 2 consultation under the Markets in Financial Instruments Regulation Review (MiFIR), on transparency for derivatives, package orders and input/output data for the derivatives consolidated tape.

In the response, ISDA argues against ESMA’s proposal to use a modified ISIN as the identifier for those over-the-counter (OTC) derivatives in scope for transparency, and reiterated its longstanding view that the unique product identifier is the correct identifier for OTC derivatives.  The response also strongly opposes the assessment of single name credit default swaps (CDS) referencing global systemically important banks (G-SIBs) as liquid, and proposes a modified deferral framework for these contracts.  It shows that the proposed price deferral for index CDS referencing iTraxx Senior Financials and iTraxx Subordinated Financials is insufficient, and proposes new price deferral lengths based on implied trade-out time.

The response generally supports the deferral framework for interest rate derivatives, but notes that any benefit gained from the inclusion of basis swaps, forward rate agreements and forward starting swaps is disproportionate to the effort of including them, due to the very small numbers of these instruments that will be in scope of transparency under MiFIR.