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The Evolution of Trade Reporting in Asia

By Corinne Lee | December 13, 2019

The Evolution of Trade Reporting in Asia
Oliver Williams, Head of DTCC Data Repository (Singapore) Pte Ltd., with the Market Infrastructure of the Year Award from Regulation Asia.

Following the global financial crisis, regulators, including many in Asia, have been focused on improving the transparency of their respective over-the-counter (OTC) derivatives markets by implementing reporting regimes. DTCC has been a central part of this journey through the GTR product from the beginning.

Trade Reporting Landscape in Asia

Asia was one of the early adopters of trade reporting with Japan and Hong Kong among the first to implement requirements related to the reporting of over-the-counter (OTC) derivatives trades to a Trade Repository. This was soon followed by regimes in Singapore and Australia. Based on the experiences of other regimes, the regulators in Singapore and Australia chose to implement a phased approach to trade reporting – each phase focused on specific asset class, firm type, and booking locations.

While regulators in Hong Kong, Japan and Australia have gone live with their full reporting mandates, the final phase of Singapore’s staggered reporting will commence in October 2020, covering first-time reporting of equity, commodity and foreign exchange derivatives contracts for non-bank, non-significant Derivative holders as well as for those booked and/or traded in Singapore.

Changing Market Demands

Oliver Williams, Head of DTCC Data Repository Singapore, commented, “In the beginning, firms were just concerned with getting their trades reported. Manual processes such as the use of spreadsheets were the order of the day – across the industry as well as with the regulators. Over time, we are seeing a shift in focus with the industry looking for scalable and robust trade reporting solutions that can address the data normalisation, enrichment and reconciliation challenges of reporting and maintaining compliance in the face of constant change. We also see the focus of regulators starting to shift to the quality of data reported rather than just completeness of reporting.”

He continued, “The world keeps on changing. A large regional Asian bank for in¬stance might not only be caught by local regulation, but also by European regulation when acting on behalf of a European client. This means some firms might not just be looking to replace old reporting capabilities, but also engage providers and solutions that can reduce the pressure that comes with ongoing global changes in regulation,”

Williams indicated that trade repositories will also need to adapt to the changing demands of the industry. While the initial focus was on increasing data transparency, today the emphasis is on increasing functionality within trade repositories, simplifying the trade reporting process and integrating with other services that provide a front to back approach to trade reporting.

Future Trends in Trade Reporting

Commenting on the future of trade reporting, Williams shared, “Globally, we have seen a real divergence between the different jurisdictions to the point where the reported data is largely unharmonized across the globe. The ability to share data is thus relatively low. The data that is reported in Asia is different from that reported in North America, for example. With that said, we are starting to see a gradual shift towards data harmonization and data sharing. Additionally, we are seeing regulators in Asia taking the lead by increasingly collaborating with their counterparts in the region. This is evidenced in the attempts to drive the adoption of a standardized Unique Trade Identifier (UTI). The regulators in Asia have been engaging in active discussions to ensure that the rollout is harmonized across the region. We think this shows great leadership and promise for the utility of Trade Reporting.”

DTCC’s GTR in Asia Pacific

Since setting up operations to provide global trade repository (GTR) services in Asia Pacific, DTCC has been working with the industry and regulators to create capabilities that leverage data to help reduce risk, enhance transparency and drive down costs for market participants in the region.

Industry Recognition

In addition to receiving the “Best New Product for Reporting” award at the Asia Capital Markets Awards in recognition of the launch of DTCC’s GTR Re-Architecture Program in 2018, DTCC’s GTR was recently honoured with the “Market Infrastructure of the Year” award at the 2nd Regulation Asia Awards for Excellence. Acknowledged for helping shape regulatory change for trade reporting, this is the second consecutive year that the GTR has been recognized by the judges of the Regulation Asia Awards. In the 2018 Regulation Asia Awards, DTCC won “Best Solution for Trade Reporting” award.