Towards Transparency – IQ December 2022

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.

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Documents (1) for Towards Transparency – IQ December 2022

Episode 48: ISDA at 40

To mark ISDA’s 40th anniversary, The Swap meets two pioneers of the derivatives market, Tom Jasper and Jeffrey Golden, to discuss the emergence of derivatives and the importance of standards. Please view this page via Chrome to access the recording.

Response on Options and Discretions

On January 24, ISDA and the Association for Financial Markets in Europe (AFME) responded to the European Central Bank’s (ECB) consultation on its approach to options and discretions under EU law. In the response, the associations highlight the efforts of...