While significant progress has been made during the last eight years towards establishing a global reporting framework for over-the-counter derivatives transactions, substantial work remains in the areas of data consistency, aggregation and access in order to be able to effectively monitor and reduce systemic risk, according to the DTCC.
In the wake of the 2008 global financial crisis, the G20 called for the reporting of OTC derivatives transactions, leading to the establishment of several trade repositories (TRs) around the world.
The DTCC has long pushed for a global reporting framework for the 22 TRs to deliver greater transparency and risk mitigation. In a new white paper the US body says that while there has been progress, there are still major problems.
Says CEO Chris Childs: "Unfortunately, however, a lack of global coordination and a local approach toward initial implementation of trade reporting has resulted in a lack of global standards and multiple repositories in many of the jurisdictions. Without global standards, regulator access and risk analysis are seriously compromised, as there is no consistent or singular view of the data.
"Reporting rules, data fields, terms and formats vary from one jurisdiction to another, fragmenting the reporting environment for firms that are regulated in multiple jurisdictions. Such fragmentation also increases the costs for all involved in reporting and using the data."
The paper also explores the potential of distributed ledger technology and whether it can enable a shift to searchable databases and full regulatory access. But to harness DLT to advance derivatives operations and reporting, standards must be in place to enable consistent data capture, processing and reporting, warns the DTCC.
Read the full paper:Download the document now 3.7 mb (Chrome HTML Document)