It’s been 13 years since the Group-of-20 (G-20) leaders decided on a package of measures to reform derivatives markets. Of the measures agreed, the reporting of over-the-counter derivatives got most traction early on, but – while an improvement on what went before – the reporting framework never really lived up to its full potential. That’s because of deviations in rule sets across jurisdictions, differences in data formats and discrepancies in how individual firms interpreted the various written regulatory texts.
Two key developments could change that. First, regulators across the globe are revising their reporting rules to incorporate internationally agreed data standards, starting with the US Commodity Futures Trading Commission (CFTC), which implemented its first batch of amendments on December 5. Regulators in Australia, Canada, the EU, Hong Kong, Japan, Singapore and the UK are set to follow suit in the coming years, making global rule sets more consistent.
Second, firms can now access an industry consensus interpretation of the CFTC revisions, available as human-readable and machine executable code, which can be used as the basis for their implementation or as a benchmark to check their own understanding of the rules. As the first step of ISDA’s Digital Regulatory Reporting (DRR) initiative, this should cut down on the discrepancies that can emerge when each firm has to independently interpret a written regulatory text. Version 1.0 of the DRR was launched in November, and will be extended over time to cover reporting rule amendments in other jurisdictions.
This issue of IQ explores the changes to regulatory reporting rules and looks at how ISDA’s DRR can increase the efficiency of implementation and improve the accuracy and consistency of what is reported. Thirteen years after the G-20 Pittsburgh summit, regulators could soon be receiving the accurate, comprehensive data they need to better monitor potential sources of risk.
Click on the attached PDF to read IQ in full.
Documents (1) for Towards Transparency – IQ December 2022
Latest
Expanding Legal Agreement Coverage in the CDM
This paper examines the recent extension of the Common Domain Model (CDM)1 to represent two of the most significant, and previously undeveloped, areas of its legal agreement model: umbrella agreements and contract amendments. Umbrella agreements are widely used to document...
ISDA Omnibus Canadian Representation Letter
On September 2, ISDA published the Omnibus Canadian Representation Letter, which combines previously published representation letters drafted to assist firms in compliance with Canadian trade reporting, business conduct, regulatory margin and clearing classification rules. The Omnibus Canadian Letter is designed...
Joint Response on Cross-margining
On August 31, ISDA and FIA submitted a letter to the US Commodity Futures and Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) on the agencies’ joint request for comment on the implementation of portfolio margining and cross-margining...
Accounting for Carbon Credits: Latest Developments
This paper updates and extends the analysis set out in ISDA’s October 2023 paper on accounting for carbon credits. While preserving the original focus on the accounting treatment of voluntary carbon credits (VCCs) and compliance carbon credits (CCCs), it expands...
