24 August 2011

IOSCO-CPSS releases report on requirements for OTC derivatives data reporting and aggregation

IOSCO and CPSS have set out guidelines for standardising the reporting of derivatives trades as part of a continued drive to increase transparency and prevent the build-up of systemic risk between dealers of over-the-counter products.

The Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of IOSCO have today released for comment a report on the OTC derivatives data that should be collected, stored and disseminated by trade repositories (TRs). The committees support the view that TRs, by collecting such data centrally, would provide the authorities and the public with better and timely information. This would make markets more transparent, help to prevent market abuse, and promote financial stability.

The report addresses Recommendation 19 in the October 2010 report of the Financial Stability Board (FSB), 'Implementing OTC derivatives market reforms', which called on the CPSS and IOSCO to consult with the authorities and the OTC Derivatives Regulators Forum in developing:

(i) minimum data reporting requirements and standardised formats, and

(ii) the methodology and mechanism for data aggregation on a global basis. A final report is due by the end of 2011.

The proposed requirements and data formats will apply to both market participants reporting to TRs, and to TRs reporting to the public and to regulators. The report also finds that certain information currently not supported by TRs would be helpful in assessing systemic risk and financial stability, and discusses options for bridging these gaps. Issues relating to data access for the authorities and reporting entities are discussed, including methods and tools that could provide the authorities with better access to data. Public dissemination of data, it is noted, promotes the understanding of OTC derivatives markets by all stakeholders, underpins investor protection, and facilitates the exercise of market discipline.

The report also covers the mechanisms and tools that the authorities will need to aggregate OTC derivatives data. It advocates a system of standard legal entity identifiers (LEIs) as an essential tool for aggregation of such data. It further recommends that TRs actively participate in the LEIs' development and use the system once it becomes available. As the implementation of a universal LEI will require international cooperation, it is noted that further international consultation would be beneficial. Finally, the report recommends that CPSS-IOSCO or the FSB make a public statement calling for timely industry-led development, in consultation with the authorities, of a standard classification system for OTC derivatives products.

Comments on the report are invited from all interested parties and should be sent by 23 September, 2011. After the consultation period, the CPSS and IOSCO will review all comments received and publish a final report by the end of 2011.

Press release

© IOSCO