DTCC Launches Canadian Trade Repository

Terry Flanagan

Depository Trust & Clearing Corp. has launched its Global Trade Repository in Canada – the seventh jurisdiction in which DTCC is enabling financial firms to meet new regulatory mandates requiring the reporting of OTC derivatives transactions.

Under the Canadian rules, which were finalized in December 2013, reporting of trades involving a dealer or a clearing agency began on October 31, 2014, while other counterparties, such as buy-side firms, have until June 30, 2015 to comply with the reporting requirements.

“We see Canada as a very good example of applying lessons learned based on the implementations that have occurred in other jurisdictions,” Marisol Collazo, managing director and CEO, DTCC Data Repository (U.S.), told Markets Media. “While there are other trade repositories, we’re the only ones that are offering a full-on asset class coverage.”

GTR is supports reporting in multiple jurisdictions and for all five major derivatives asset classes (credit, interest rate, equity, FX and commodity). Despite differences in local reporting requirements, DTCC has built a robust and flexible infrastructure to provide trade reporting to multiple regulators and in multiple formats across the globe, the company said in a release.

The Canadian authorities are permitting a phased implementation based on feedback from the industry as well as the trade repositories themselves. “Essentially, what we now have is this phased implementation where the dealers and clearinghouses went on October 31, and then the buy side will go live next June,” Collazo said. “That certainly helps to mitigate a Big Bang approach with all firms going live on the same day.”

The Canadian authorities took into account the fact that there were other significant launches going on, particularly in Europe, so “the sequencing of moving it to October meant that there was a much more higher degree level of success for both us at the Global Trade Repository as well as the industry to comply,” Collazo said.

The Canadians also took note of the fact that entities were already reporting in other jurisdictions. “We’ve always said this market is inherently cross-border,” said Collazo. “The Canadian authorities did look at the data elements that were already being provided to the trade repositories, and took feedback from the industry as well as the trade repositories in terms of mitigating any differences that were really just limited to geography.”

Many of the entities that would be subject to Canadian reporting were already subject to US reporting; if they had large global books and they have a U.S. presence, they certainly were already reporting under the CFTC requirements. “Largely, all of the economic fields and the formats remain intact,” Collazo said. “That was certainly very important for any changes that would have to be made by the TRs or by the clients.”

DTCC continues to evaluate other potential jurisdictions “and if those conditions align, and it’s an area where our clients do have data and there would be reporting then we would be open to looking at those jurisdictions,” she added.

The GTR is a good example of the use of the LEI [Legal Entity Identifier}. Many jurisdictions either accept LEI or require LEI. DTCC has built its own global LEI structure, and provides support to the federated model.

At this stage, all the large jurisdictions that have a major market share in global derivatives have passed their reporting regulations. Regulators are receiving data, and are meeting local objectives in terms of the collection of data.

Still, there’s more work to be done on two fronts: data quality and global data aggregation. “While all major jurisdictions have implemented their rules and now data’s flowing through, there really needs to be a focus on data quality so that it can be relied upon and that it can be accurately assessed and aggregated for oversight purposes,” said Collazo.

Global aggregation is the bigger challenge “inasmuch as you have disparate, fragmented regulations,” Collazo said. “We haven’t seen the kind of collaboration consistently that we would have hoped to have seen in the implementation over these past two years.”

It’s not a technological issue but one of coordination. The G-20 goals that came out of Pittsburgh in 2009 called for the establishment of a trade repository for the purpose of enabling oversight, and one of the important parts of that was systemic risk oversight and financial stability.

“To achieve that, the answer is not starting with a technological response to metadata,” Collazo said. “The issues are, is there a common recognition of what that framework is, how do we address the privacy challenges that have emerged, how are regulators collaborating towards identifying what those elements are, and then how is that information being ultimately translated, or data being translated, so it becomes relevant information?”

Featured image via DPC

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