27 September 2011

EBF response to CPSS-IOSCO report on requirements for OTC derivatives data reporting and aggregation

It is the longstanding view of the EBF that Trade Repositories (TRs) play an important role in enhancing the transparency of information on OTC derivatives data, in promoting financial stability, and in assisting in the detection and prevention of market abuse.

Furthermore, the Federation considers that an agreement on international standards for TRs is urgently needed.

Before discussing the CPSS-IOSCO report in more detail, the Federation set the scene by recalling five important principles for the industry:

• Any initiative on data reporting should take heed of the cost/benefit considerations of reporting new data, including an assessment of the correlation between new data demands and regulators' information needs such that no more than is necessary is reported; of the amount and quality of requested data and of regulators' ability to interrogate adequately the information received.
• Data standardisation processes, despite their many advantages, are also likely to result in substantial compliance costs for the industry. Ongoing dialogue between the industry and the regulatory community over reporting items, frequencies and timing is of the essence. Flexibility on specific instruments and/or national market circumstances may be needed.
• Concretely, in connection to OTC derivatives markets, it should be noted that no “one-size-fits-all” approach should be promoted. The implementation of responses to improve transparency and restore investor confidence in OTC derivatives markets needs to be based on a number of considerations specific to the particular market in terms of whether regulatory or market driven responses will enhance transparency and promote trading efficiencies without imposing undue and prohibitive costs on transactions.
• The scope of any public disclosure of reported data should be guided by a legitimate interest of the public in what may be sensitive information. Regulators need to consider carefully the risks of any public disclosure of reported data.
• Data aggregation on the basis of global identifiers, whilst strongly supported, poses an important number of practical design, implementation and financial challenges. In order to ensure consistency, any initiative in this regard should be developed in a properly calibrated timeframe.

Full response

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