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BVI
BVI strongly supports the initiative taken by the FSB to develop a global aggregation mechanism for (OTC) derivatives which will enable regulators worldwide to identify and mitigate systemic risk in the market. Only data in aggregated and high quality form ensures that competent authorities will obtain a comprehensive and accurate view of the global (OTC) derivative markets in order to meet the financial stability objectives of the G20 calling for a comprehensive use of Trade Repositories (TR).
Pursuant to EMIR, since 12 February 2014 financial counterparties (e.g. OGAW, AIF) have to report (OTC) derivative contracts to TRs. Our members are connected to distinct TRs (e.g. DTCC, Regis-TR) located in different jurisdictions. In preparation of the EMIR reporting obligation our members experienced technical issues and shortcomings as outlined in the Consultation Paper (lack of data standardisation: e.g. trade identifier, product identifier, incomplete data for derivative products and different TR formats and contents). A clear and comprehensive concept of the Unique Trade Identifier (UTI) and of the Unique Product Identifier (UPI) was not available during the implementation phase and essential guidelines on the subject were delivered by ESMA only one day before the reporting state date. The mentioned ESMA concept needs to be implemented in the market and further developed in cooperation with the financial community.
Therefore, BVI shares the FSB view that data standardisation is a necessary tool for effective high quality aggregation under each OTC data aggregation. BVI also supports the assessment of the FSB that the most straightforward method for achieving standardisation is to implement consistent international standards for reporting of data to TRs and/or from TRs to authorities. It has to be ensured that data standards developed for reporting of data to distinct TRs located in different jurisdictions are used in the same way (e.g. format and content) and are not interpreted separately by the Trade Repositories.
Otherwise, it may be possible that incomplete data by different TRs could not be aggregated and could therefore distort the accurate view of the global (OTC) derivative market. BVI strongly supports the usage of internationally accepted (ISO) data standards. The implementation of the LEI at global level is a good starting point in order to establish further important data standards for the purpose of the (OTC) derivative reporting obligation.
Any global aggregated data requirements agreed between the TRs and the regulators should not increase the data obligation currently laid down in the EMIR regulation for reporting of data from the financial counterparty (e.g. UCITS, AIF) to the TRs. Moreover, aggregated data models should not create amendments on current data content and formats which are used between the financial counterparties and the TR. Otherwise, TRs could charge the additional data fields to the end users which would go beyond the requirements as foreseen in the EMIR regulation.
EACT
The EACT repeated its plea that the opportunity of the FSB work should be used to bring more consistency in derivatives reporting at international level. The EACT pointed out that there is a risk that the aggregation of derivatives reporting data will be seen principally as a technical challenge instead of a challenge relating to the international inconsistency of the new regulatory requirements in respect of the reporting of OTC derivatives.
The EACT would suggest that FSB Feasibility Study should take this opportunity to propose harmonisation of the reporting requirements in a way that would reduce the volume of data that shall be required to be aggregated in futureas follows:
The EACT considers that, in addition to the legal data privacy concerns mentioned in the consultation paper, there are also commercial data privacy concerns where, for example, a derivative hedge may effectively disclose the existence of an underlying commercial exposure (such as a forthcoming acquisition).
Original FSB-consultation, 4.2.14