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.

Moving Regulatory Reporting up a Gear with AI

The aim of derivatives regulatory reporting is to improve transparency so regulators can monitor market activity and identify emerging risks. Although reporting rules and subsequent updates have resulted in improvements, they haven’t achieved fully consistent outcomes, leading to implementation and...

ISDA Publishes FpML Version 5.14

ISDA has published a new version of its Financial products Markup Language (FpML), a widely used open-source standard for the electronic dealing and processing of derivatives transactions. The latest iteration – version 5.14 – incorporates several key modifications and updates...

Accounting for Tokenized Assets as Collateral

The use of tokenized assets as collateral for derivatives and securities financing transactions (SFTs) is emerging as a significant development in global capital markets. Financial institutions are increasingly evaluating tokenized representations of money market funds, government securities and other high-quality...