Following the 2008 financial crisis, regulators from across the globe have been focused on improving the transparency of their respective over-the-counter (OTC) derivatives markets by implementing reporting regimes.
However, due to the varying needs of global OTC derivatives markets, regulators have taken different approaches to rolling out these reporting requirements.
Ollie Williams, head of The Depository Trust & Clearing Corporation’s (DTCC) Data Repository services for Asia said to FOW that Asia has been rolling out its reporting requirements in a “staggered approach”, and that in regions such as Singapore this has meant that Trade Repositories, Service Providers and the Industry as a whole remain in implementation mode.
“In regions such as Australia and Singapore reporting has been rolled out in a staggered way, with regulators looking to ensure that they implement the rules in a sustainable way.
“This means that in regions such as Singapore, reporting requirements still haven’t been rolled out to everyone and participants are at different stages of preparation for the upcoming reporting requirements,” Williams said.
The Monetary Authority of Singapore’s reporting regime for OTC derivatives will be expanded in October this year and capture a wider scope of firms.
“On the one hand you have globally active firms who certainly are not new to reporting and might be prepared for the next phase of requirement.
“In the middle we have large regional banks who would be fairly comfortable with reporting, but might be caught by the new compliance dates.
“And then you have firms who are yet to report for the first time,” he said.
Williams explained that this is a challenge for the industry because the needs of the firms will vary greatly from each other.
For instance, participants who have been reporting for a number of years might be more focussed on processes after the reporting itself, such as reconciliation and enhanced assurance.
On the other hand, some firms might be new to reporting and will be grappling with more fundamental requirements relating to identifying what needs to be reported and how the data is extracted.
Williams highlighted that service providers such as the DTCC who have been operating in the industry for a number of years can help provide participants with access to information and best practice dependant on what stage they are in their reporting preparations.
“With improvements we have made over the years to make the reporting simple, it will allow participants the relief to focus on setting up the system and reconciliation,” he said.
Evolving beyond reporting
Williams highlighted that while DTCC has been operating in Singapore it has witnessed growth in the ecosystem of solutions surrounding trade reporting requirements.
“The world keeps on changing. A large regional Asian bank for instance might not only be caught by local regulation, but also by European regulation when acting on behalf of a European client.
“This means some firms might not just be looking to replace old reporting capabilities, but also systems to take the pressure of the continual change in regulation,” he said.
He highlighted that recent developments seen with Securities Financing Transactions Regulation(SFTR), such as a specific data standard being required for the submission to the trade repository present unique challenges to industry and could potentially become more common globally.
In response to increased interest from Industry in technical solutions to requirements like this one, DTCC has introduced a data transformation service that can convert data in any format to the relevant SFTR standard, with the firm looking to roll this out to more of its GTR services.
Looking forward Williams said he sees APAC regulators as generally being fast followers with their regulation and showing signs of looking to harmonise with other global regulators, but in some cases looking to act in a coordinated, regional way at the same time or ahead of the global community
“We see early signs of this regional cooperation with standardised Unique Transaction Identifier requirements that APAC regulators are looking very closely at and are likely to roll out imminently.
“As regulators see the finalisation of their requirements roll out, the next step will be how these regimes harmonise globally,” Williams added.