Regulierung und Auswirkungen auf die Finanzstandards anhand des Beispiels Derivate Transaktionsregister Zurich, 7 November 2014
Jun 23, 2015
Regulierung und Auswirkungen auf die
Finanzstandards anhand des Beispiels
Derivate Transaktionsregister
Zurich, 7 November 2014
Standards Forum | 7 November 2014 | Seite 1
Agenda
Switzerland in the global context
Trade Repository
Standardization & Taxonomy
Standards Forum | 7 November 2014 | Seite 2
Switzerland in the global context
Reporting Obligation (Art. 103)
3rd country Trade Repositories (Art. 80)
Reporting obligation 3rd
country law (Art. 94)
FinfraG
(legislative
message)
Only one counterparty has a reporting obligation (American concept). A cascading rule defines the responsible party (CCP, FC, NFC).
“Automatic“ acceptance of 3rd country Trade Repositories in the case of equivalence.
Possibility to report under “equivalent” 3rd country regulation.
Chapter 3: Reporting to a transaction repository
Art. 103 Obligation1 Die wesentlichen Eigenschaften aller Derivatgeschäfte müssen einem von der
FINMA bewilligten oder anerkannten Transaktionsregister gemeldet werden.
Reporting obligation according to FinfraG – Various Options
Standards Forum | 7 November 2014 | Seite 3
Standardization and Aggregation as a challenge
Switzerland in the global context
Art. 103
Art. 94(Equivalence / Cooperation
Agreement with 3rd country)
Single Sided Dual SidedTo be defined
Art. 80(Equivalence / Cooperation
Agreement with 3rd country)
Standards Forum | 7 November 2014 | Seite 4
Agenda
Switzerland in the global context
Trade Repository
Standardization & Taxonomy
Standards Forum | 7 November 2014 | Seite 5
Overview on most important requirements
SIX Trade Repository
Requirements as discussed with banks Fulfillment of requirements
Functional requirements
• Solution must meet the regulatory requirements. The functionality shall be comparable to global and European Trade
Repositories.
• Swiss Trade Repository to be FINMA (FinfraG) compliant/
registered.
• Yes, as the platform will be licensed from one of the internationally proven Trade Repositories
Data protection / segregation requirements with respect to
• CID (Client Identifying Data)
• Data compartmentalized
storage and reporting
Technical Segregation:
• Full data protection and segregation (in particular client data)
preventing unauthorized data access. Confidential data to be stored in Switzerland. Compartmentalized data storing to allow 3rd
country authority to partially access data.
Organizational Segregation
• Preference for a SIX-controlled and SIX-branded Trade
Repository
Governance Segregation
• Contractual relationship to be established solely between SIX and
customer/bank with respect to the Swiss Trade Repository service
• Yes, platform will run on a fully segregated, Swiss-hosted platform under the full control and brand of SIX
SIX will offer Derivatives Trade Reporting services and support
Swiss clients to meet their FinfraG reporting obligations
Standards Forum | 7 November 2014 | Seite 6
Trade Repository & Standardization
SIX Trade Repository
Objective Measure
Avoidance of double submission
Clear rules
Pairing
Comparable and aggregationGlobal Standards with respect to Identifiers
Standards Forum | 7 November 2014 | Seite 7
Client Output
Data extracts (incl. machine readable automation, human readable messages) and operational exporting (on a scheduled basis)
• File Formats: FpML*, XML, Fixed width, CSV
• Extract mechanism: sFTP, FTP
Client Input
• Range of standard templates
• Published field specifications (field population depending on asset class)
• File Formats: FpML*, XML, Fixed width, CSV, Excel
• Load mechanism: File upload (SIX website), sFTP, (MQ), (SWIFT), (FIX)
SIX Trade Repository
Trade Repository Functional Solution
Counterparty Data
Transaction Data
Identification Data
(LEI, UTI, UPI)
Participants
Regulators (e.g. FINMA)
Public (e.g. SIX website)
Enterprise Systems (e.g.
SAP)
Trade
Repository
� Validation
� Acknow-
ledgment
� Exception
Management
Data Management
• Submission report (status, error message), Submission statistics
• Customized reporting (accessing underlying system data)
Standards Forum | 7 November 2014 | Seite 8
Agenda
Switzerland in the global context
Trade Repository
Standardization & Taxonomy
Standards Forum | 7 November 2014 | Seite 9
The overall Objective
Standardization & Taxonomy
According to the FSB1…
The development of global standards for derivatives data and
their aggregation is a foundational requirement under any data
aggregation model. […]
The following data elements have been identified in the Data
Report as key to the aggregation process.
• Counterparty identifier
• Product identifier/product identification taxonomy
• Transaction/trade identifier
1 FSB's "Consultation Paper: Feasibility study on approaches to aggregate OTC derivatives data," of February 4 2014.
Standards Forum | 7 November 2014 | Seite 10
Overview Company Identifications
Standardization & Taxonomy
Standards Forum | 7 November 2014 | Seite 11
Legal Entity Identifier
Standardization & Taxonomy
Legal Entity Identifier
30 Local Operating Units…Bundesanzeiger (CEI), Centraini depozitar cennych papiru, a.s. (LEICZ), DTCC/SWIFT CICI (GMEI), Dutch Chamber of Commerce (LEINL), Institut National de la Statistique et des Etudes Economiques (INSEE), Irish Stock Exchange (LEIIE), Krajowy Depozyt Papierow Wartosciowych S.A. (KEI), London Stock Exchange (IEI), National Board for Patents and Registration (LEIFI), National Settlement Depository (LEIRU), Registro Mercanti del Reino de Espana (LEIES), Takasbank(LEITR), Unione Italiana per le Camere di Commercio, Industria, Argtigianato e Agricoltura (LEIIT), WM Datenservice (GEI)
20 character code, allocated in accordance with ISO 17442:2012
Prefix Reserved digits Random code Check digits
2138 00 A1B23D4E5F6 77
Pre-LOU prefix Two reserved characters 12 character alphanumeric code
Calculated check digit
Local Operating Units
LEI structure
The Legal Entity Identifier (LEI) initiative is designed to create a global reference data system
that uniquely identifies every legal entity or structure, in any jurisdiction, that is party to a
financial transaction.
LEI ���� GLEI (virtual data base)
LOU ���� COU (enabled by GLEIF - supporting of a logically centralized database)
Mechanism to tie the same business entities together. LEI can be ported to another LOU,
the identity of the LOU changes even though the LOU code does notIssues &
next steps
Standards Forum | 7 November 2014 | Seite 12
TR Standards / Identification1
Standardization & Taxonomy
Unique Transaction Identifier
Choice of 4!
Each transaction should have a Unique Trade ID• Up to 52 alphanumeric digits
• Key field for reconciliation – must be unique
Four possibilities of formulating the UTI
• Method 1: ‘E01’ + MIC of trading venue + CCP/trading venue code
• Method 2: ‘E02’ + LEI of generating entity + unique code from generating entity
• Method 3: ‘’E03’ + bilateral counterparties’ unique code based on LEIs of CPs
and element of common data
• Method 4: ‘E04’ or ‘000’ + Non-LEI identifier for generating entity and
generating entity’s unique code
• ‘U’ = product identifier [endorsed in Europe – not yet]
• ‘I’ = ISIN/AII + CFI
• ‘E’ = Interim taxonomy, e.g. ‘Interest rate’; ‘Swaps’; (‘IR’ ; ‘SW’)
Unique Product Identifier
Choice of 3!
1 EMIR Q&A October 2014
Standards Forum | 7 November 2014 | Seite 13
The challenge is still ahead of us…
Standardization & Taxonomy