FSB survey of reporting entities on legal barriers to OTC derivatives trade reporting
The FSB is seeking responses from financial institutions and other reporting entities on issues they may face with legal barriers to the reporting of full transaction information about over-the-counter (OTC) derivatives. The requested responses will provide input to the FSB’s ongoing work to evaluate the extent to which its member jurisdictions have met their commitments to remove such legal barriers. The FSB will report on the findings from its evaluation to the November-December G20 Summit in Buenos Aires.
Such barriers may arise from client confidentiality, data protection, blocking statutes, or other official requirements, either in FSB member jurisdictions or other jurisdictions where counterparties may be located. Such barriers may require trade reports to be “masked” or de-identified, which significantly impairs the value of the information to regulators. The following information is available for financial institutions or other reporting entities responding to the survey:
Survey – an Excel template that will be used to collect survey responses. All responses must be completed in this format.
Guidance on completing the survey – a note providing instructions on how to complete the survey.
Survey responses should be submitted by Wednesday 25 April 2018 to [email protected]org. Responses will be treated confidentially in line with the guidance on completing the survey, which is available at the link above.
In 2009 the G20 agreed a comprehensive reform agenda for OTC derivatives markets. The agreed reforms included trade reporting of OTC derivatives; central clearing and, where appropriate, exchange or electronic platform trading of standardised OTC derivatives; and higher capital and minimum margin requirements for non-centrally cleared derivatives.
Trading reporting provides authorities with information to identify and monitor systemic risk and for a range of other purposes, including oversight of markets, trading venues, financial market infrastructures and market participants; analysing product and market structure developments; developing policies around central clearing; and conducting event studies.
FSB members have raised concerns that restrictions on reporting complete OTC derivatives transaction information to trade repositories can limit its usefulness to authorities in carrying out their regulatory mandates, including monitoring and analysing systemic risk and market activity. Barriers to authorities’ access to data held in trade repositories also limit the ability of authorities to make full use of the data.
The FSB published a thematic peer review of OTC derivative trade reporting in November 2015, which identified a number of legal barriers to reporting of transactions. FSB members agreed as a follow up that, by June 2018, all jurisdictions should remove barriers to reporting of full transaction information and have a legal framework in place to permit authorities’ access to data in accordance with their mandates and in accordance with the domestic regulatory regime. The FSB has since published progress reports in 2016 and 2017 setting out the steps FSB member jurisdictions have taken, and are planning to take, to address these barriers.
The FSB will report to the G20 Summit in November-December 2018 on implementation of the OTC derivatives reforms and in particular on the extent to which member jurisdictions have met their commitments to remove legal barriers for trade reporting.