DTCC Connection

Apr 04, 2013 • DTCC Connection

DTCC Repository Now Accepts 5 OTC Derivatives Asset Classes

By Michael Bellini

DTCC now accepts over-the-counter (OTC) derivatives trade information from registered swaps dealers for all five major asset classes into the DTCC Data Repository (U.S.) LLC (DDR), its U.S. swaps data repository (SDR).

The DDR is the only swap data repository to offer reporting across all major asset classes, a significant milestone in meeting regulatory calls for robust trade reporting and risk mitigation in the global OTC derivatives market. Currently, there are about seven million positions registered in the SDR.

Derivatives Asset ClassesTackling exposure and risk

“Reporting across classes will, for the first time, provide supervisory authorities with the necessary information to monitor derivatives exposure and identify risk concentration in a timely fashion while also achieving greater public transparency in the OTC derivatives marketplace,” said Michael Dunn, DTCC Chairman of the DDR. “The industry will also benefit from a centralized reporting platform for all its derivatives activity, improving operational efficiency and risk management.”

As outlined by the Dodd-Frank Act and the Commodity Futures Trading Commission’s (CFTC) real-time and regulatory reporting rules, swap dealers initially began reporting credit and interest rate derivatives to the DDR on December 31, 2012. As of February 28, 2013, registered swap dealers also began mandatory reporting of their OTC derivatives trades for equity, foreign exchange (FX) and commodity derivatives. All other market participants that are required to report transactions are beginning their mandatory reporting on April 10, 2013.

“After what has been a major effort by the FX industry in partnership with DTCC, the successful launch of the FX Trade Repository is an excellent step forward,” said James Kemp, Managing Director of the global FX division of the Global Financial Markets Association. “As the reporting deadlines in other regions of the world approach, the industry will continue its work to ensure seamless, efficient and effective reporting of FX transactions, which will lead to greater transparency into the global FX marketplace.”

Compliance timelines

The U.S. compliance deadline is the first in a series of reporting requirement timelines facing swap dealers, major swap participants and non-financial counterparties across the world. In Europe, DTCC already has an existing trade repository regulated by U.K. authorities, DTCC Derivatives Repository Ltd (DDRL). DTCC has submitted DDRL for registration with the European Securities and Markets Authority ahead of the mandatory reporting deadline. Reporting in Europe will start for credit and interest rates swaps in September 2013.

In March 2013, the Japanese Financial Services Agency approved an application by DTCC Data Repository (Japan) KK (DDRJ) to become a Japanese OTC derivatives trade repository. The repository went live ahead of Japan’s April 1, 2013, deadline for mandatory reporting. (See article, page 8.)

Australia, Singapore and Hong Kong also have legislation in place and are going through the rulemaking process. DTCC intends to support reporting in these markets either by acting as agent (in Hong Kong) or by registering its trade repository (in Singapore and Australia). 

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