ISDA Response to IFSCA on Derivatives Reporting and Clearing

On August 5, ISDA responded to the International Financial Services Centres Authority’s (IFSCA) consultation on reporting and clearing of over-the-counter (OTC) derivatives contracts booked in International Financial Services Centres (IFSC). In the response, ISDA provided the following recommendations:

  • Not mandating central clearing of equity and credit derivatives and allowing bilateral clearing of credit and equity derivatives. ISDA underscores the importance for IFSC-based central counterparties (CCPs) to obtain the necessary recognition/exemption from home regulators of key foreign bank branches.
  • Phased implementation of margin requirements in line with the Basel Committee on Banking Supervision (BCBS) and International Organization of Securities Commissions (IOSCO) margin requirements for non-centrally cleared derivatives based on market readiness.
  • Permitting broader issuer eligibility, including funds, insurance companies and pension funds registered with the IFSCA, to deepen market participation and liquidity.
  • Removing one-to-one hedging requirements for OTC derivatives, especially those referencing foreign or IFSC-listed securities, to align with global practice and support flexible risk management.
  • Clarifying trade reporting obligations so only IFSC-registered entities (and not offshore counterparties) are required to report to an IFSC trade repository.
  • Encouraging alignment with global data standards (eg, the Committee on Payments and Market Infrastructures (CPMI) and IOSCO unique trade identifier, unique product identifier and critical data elements), with the IFSCA to consult on the detailed reporting format and requirements.

ISDA also offered to engage with the IFSCA bilaterally on central clearing mandates, trade reporting and margin framework implementation.

FRTB Impact on Correlation Trading

The capitalization of the correlation trading portfolio (CTP) under the Fundamental Review of the Trading Book will have an adverse economic impact for users of these instruments. In particular, there is a lack of clarity and consistency in the application...

A Path to Greater CFTC-SEC Alignment

Earlier this week, the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) held a roundtable on regulatory harmonization – an initiative we wholeheartedly support. The US regulatory framework has evolved over time to facilitate financial markets...