A new report provides technical guidance to authorities on a uniform global Unique Product Identifier (UPI) applying to over-the-counter (OTC) derivatives transactions.
The report, entitled Harmonisation of the Unique Product Identifier, is a joint publication by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO).
The role of the UPI is to uniquely identify each OTC derivative product involved in a transaction that an authority requires, or may in future require, to be reported to a trade repository consistent with the commitment of the G20 Leaders to a more transparent OTC derivatives market. Global uniform UPIs facilitate the consistent global aggregation and analysis of OTC derivatives transaction data reported across trade repositories that authorities can use to meet their legal obligations and prudential requirements.
The report envisions a UPI system in which a unique UPI code would be assigned to each distinct OTC derivative product, with each UPI code mapping to a set of data comprised of reference data elements with specific values that together describe the OTC derivative product. The collection of reference data elements and their values for each OTC derivative product would reside in a corresponding UPI reference data library.
The guidance is global in scale, takes account of relevant international technical standards where available and is jurisdiction-agnostic. It covers the following areas:
the technical principles applicable to the UPI;
the UPI reference data elements required for each OTC derivative asset class;
the identification of underlying assets and benchmarks of OTC derivative products (underliers); and
the UPI code structure.
This guidance does not address the governance arrangements or the implementation of the UPI, which are matters the FSB will soon consult on.
This guidance is complementary to the Technical Guidance on Harmonisation of the UTI published in February 2017. The CPMI and IOSCO intend to also produce guidance on harmonisation of other critical OTC derivatives data elements in the coming months.
Aggregation of the data reported across trade repositories can help provide authorities with a comprehensive view of the OTC derivatives market and activity and help improve transparency, mitigate systemic risk and protect against market abuse. The 2012 CPSS-IOSCO report on OTC derivatives data reporting and aggregation requirements, the 2013 CPSS-IOSCO report on Authorities’ access to trade repository data and the 2014 FSB Feasibility study on approaches to aggregate OTC derivatives data served as the starting point for the harmonisation work on key OTC derivatives data elements for meaningful aggregation on a global basis.