DTCC’S Wotton: Problems persist around trade data and national interpretation

By Rebekah Tunstead | 10 June 2019

Issues remain in the interpretation of reported trade data, according to Val Wotton, managing director, head of derivatives product and strategy at DTCC.

“I think from a reporting standpoint the main challenges are around consistency of data and how the data element is being interpreted in each jurisdiction, what does each data field mean, how do you move to a global taxonomy product standardization which would then allow people to be able to consolidate across multiple data sets?” said Wotton at a DTCC roundtable meeting at the FIA’s IDX in London last week.

“Where you have transactions that are reported in the same repository, pairing rates are higher than 85%. The challenge comes down to trade matching across multiple trade repositories, especially because the inbound message format hasn’t been mandated. What will be interesting around SFTR is that the ISO 20022 message is mandated as an inbound requirement for all trade repositories, which we expect will improve matching across trade repositories,” he said.

Completion of harmonized standards by the International Organization of Securities Commissions (Iosco) on data reported to trade repositories remains of concern, according to Mark Wetjen, managing director and head of global public policy at DTCC.

“One of the big issues that remain is just having those standard setting bodies complete their work. While some work still remains, it’s most of the way there, and only then can the national jurisdictions implement these standards at an international level. That is a huge step and one that will naturally take a bit of time,” said Wetjen.

“The Financial Stability Board (FSB) is working on governance structures around how to maintain uniform product identifiers (UPIs) and trade identifiers. IOSCO has put out some technical guidance related to those same data standards, not the governance of them but actually how you put together the elements themselves.”  

The FSB tasked Iosco and the Committee on Payments and Market Infrastructure in 2014 with the development of global guidance on harmonization of data elements reported to trade repositories.

On May 27, the European Securities and Markets Authority (Esma) opened a public consultation on how to report SFTs, and SFTR validation rules.

However, the CEO of the International Securities Lending Association (Isla) said in a statement on June 7, Esma’s implementation timeline for SFTR reporting could potentially change.

“Whilst we at ISLA remain fully committed to the current implementation timelines (first reports for tier one names being submitted to trade repositories in Q2 2020), I am mindful of the considerable work and testing that will be needed to be done across the industry once the technical reporting standards are finalised. Esma’s own comments around the release of the consultation suggest that this will now most likely be in Q4 this year,” said Andrew Dyson.

Regulators’ investment in technology to utilize the vast amount of data reported is particularly important, according to Wotton.

“The interesting point for me is the amount of investment that regulators are putting into their labs or technology accelerators. It is also very interesting to see the growing amount of industry investment in data science in order to explore ways to take unstructured data and make it more structured and leverage it for operations,” said Wotton.

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