DTCC Connection

Mar 22, 2013 • DTCC Connection

GTR Team Assists the Buyside with Swap Data Reporting Compliance

by Theresa Pagliocca

With regulations covering reporting for over-the-counter (OTC) derivatives in effect and full implementation scheduled for later this year, DTCC is actively reaching out to market participants to raise awareness of the new Dodd-Frank requirements and how the DTCC Derivatives Repository (US) LLC (DDR) service can help them comply.

DTCC recently reached out to the buyside, hosting a half-day forum to assist current and potential buyside clients better understand the new reporting requirements. The forum, entitled “U.S. Dodd-Frank: Swap Data Repository Reporting and the Buyside,” was held January 31 in New York and was attended by approximately 70 market participants.

Readiness for reporting

The forum gave attendees an instructional overview of DTCC’s global trade repository services and discussed how the Dodd-Frank regulations impact business conduct between dealers and the buyside. It focused on helping attendees get ready for Dodd-Frank reporting as well as reporting in other jurisdictions for those firms with multinational operations.

Michael Dunn, Chairman of DDR and former Commodity Futures Trading Commission (CFTC) Commissioner, delivered the keynote address and applauded efforts by DTCC and the industry in preparing to meet regulatory reporting compliance dates.

Dunn highlighted DTCC’s focus on issues that impact both market participants and regulators around the globe and explained how DTCC is working closely with key regulatory bodies to establish procedures to protect and strengthen the industry. “It is vital for us to continue engaging with regulators to assist the industry in meeting Dodd-Frank’s intent for comprehensive and consistent regulatory oversight and public transparency,” Dunn stated.

Need to know

The first panel discussion, “Everything You Need to Know about What Is Being Reported to Regulators,” was moderated by Marisol Collazo, DTCC Deriv/SERV Managing Director and Global Head of Business Operations, and Stephen Sandberg, Consultant, Product Management.

The panel gave attendees a step-by-step review of data reported to a swap data repository (SDR), end-user obligations and the required verification procedure. The discussion highlighted several key points regarding DDR services.

  • It supports dual-sided submission, by which either counterparty may report a trade at any stage.
  • Clients may report to one or more jurisdictions by subscribing to DTCC’s trade repositories, and regulators only view data they are entitled to under their jurisdiction.
  • DTCC will operate four trade repositories: DDR for U.S. Dodd-Frank reporting; DTCC Derivatives Repository Ltd (DDRL) currently regulated by the U.K. Financial Services Authority and will be submitted for registration with the European Securities and Markets Authority; DTCC Data Repository Japan K.K, to support Japan reporting; and DTCC Data Repository Singapore PTE to support Singapore. These entities will also be offered for registration in any other jurisdiction recognizing foreign trade repositories. The discussion also reinforced important factors to consider when getting ready for reporting. Attendees were reminded that under DTCC’s fee schedule, end-users do not pay for use of the services and there is no charge for submissions, maintenance or reporting. Before reporting, users will need to register for a CFTC Interim Compliant Identifier (CICI), determine which jurisdictions they will report to and sign any applicable user agreements. In addition, firms need to determine the best method of connectivity to report information to DDR or any of DTCC’s other trade repositories.

 

GTR Team Assists the Buyside with Swap Data Reporting ComplianceStephen Sandberg, DTCC Consultant, Product Management, and Marisol Collazo, DTCC Deriv/SERV Managing Director and Global Head of Business Operations

Who reports

A recurring question that arose throughout the forum was when an end-user is required to report a trade.

The team explained that end-users must report any transaction when a trade is between a U.S. end-user and a foreign entity not registered as a swap dealer or major swap participant. In addition, when an end-user is a U.S. corporation of a foreign entity and the transaction is with non-U.S. counterparties, the end-user is required to report that transaction. When a trade is between two end-users, the parties themselves must agree on who will report the trade.

Real-time reporting

Forum attendees received a tutorial of the DDR Real-Time Dashboard and an overview of information that is publicly available on DTCC’s website, under the DDR Real Time Dissemination link on the homepage.

Under CFTC rules, SDRs in the U.S. are required to provide real-time dissemination of trade data for OTC derivatives reported by counterparties for all credit, interest rates, equities, other commodities and foreign exchange (FX) derivatives trades. The deadline for reporting credit and interest rates was December 31 and reporting for equity, FX and other commodities began February 28.

ISDA protocol

In the closing panel moderated by Gregg Rapaport, DTCC Managing Director, Strategy and Business Development, adherence to the International Swaps and Derivatives Association (ISDA) protocol and preparations for the May 1 compliance deadline were stressed.

In August 2012, ISDA began launching a series of procedures to facilitate implementation of Dodd-Frank rulemakings. The protocol is designed to allow swap market participants to simultaneously amend multiple ISDA Master Agreements to comply with Dodd-Frank regulatory requirements. They consist of a series of amendments to existing documentation and standardized questionnaires that counterparties complete to satisfy new regulations.

In December 2012, the CFTC provided interim final rules for swap dealers and major swap participants. These rules extended the compliance date for various provisions covered by the ISDA protocol from January 1 until May 1. All market participants were encouraged to adhere to the ISDA protocol and provide questionnaires to counterparties in advance of the deadline.

dtccdotcom