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by Judy Inosanto

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  • Deriv/SERV LLC

  • Issues & Initiatives: The Case for a Single Trade Repository for Each Asset Class of OTC Derivatives Contracts

  • This is the title of an article written by Donald F. Donahue, DTCC chairman and CEO, for the Financial Times. It was published in the May 4 print issue (and in the May 3 online edition under the headline "Forum takes OTC regulation global").

    Below is an excerpt. To read the entire article, Click Here.

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    European and US authorities are moving forward with adopting oversight reforms to ensure financial markets have greater protection from systemic risk and provide tighter supervision of the global over-the-counter derivatives markets. As legislators and regulators grapple with these proposed policies, several important questions must be addressed.

    Most crucially, how can necessary improvements be implemented in a way consistent with the global nature of these markets? Can global infrastructures for these instruments be preserved? Can a global set of transparency requirements governing these markets be agreed upon, across multiple regulators and jurisdictions?

    The OTC Derivatives Regulators’ Forum – which comprises global market regulators, supervisors and central banks – has been working quietly to come up with a solution.

    The Depository Trust & Clearing Corporation (DTCC) has worked with these regulators and market participants to develop and operate a central trade repository for the global credit default swap (CDS) market.

    Our CDS repository holds contracts of more than 17,000 counterparties and reference entities in more than 90 countries, representing 95 per cent of all CDS contracts....

    The value of a trade repository is that it has all the relevant trading data, including more detailed information that supports a thorough understanding of the net open interest relating to reference entities. It does this on a market-wide basis that allows it to provide the markets and regulators with a single view of risk from a central vantage point.

    Global policymakers must be assured that the markets have access to a solution that addresses systemic risk concerns.

    Given the global nature of the derivatives market, that solution must involve global infrastructures – particularly trade repositories – that can respond to market and supervisory demands with a global view. @