FSB 7th Progress Report on OTC Reform Implementation


The FSB have published their latest report on progress around the world on implementing the G20 reforms for Trade Reporting, Central Clearing, Capital Rules and Electronic Trading. Key points I've picked out include:

  • "Twenty five TRs are either currently or plan to be operational." - my mind is boggled, given an article I wrote on the size of the data set being about one 300Gb hard drive, how many times does this data need to be reported? (See One Repository to Rule Them All). 
  • Unsurprisingly: "Alongside progress in implementation of reporting requirements, authorities continue, however, to report challenges regarding the usability of and access to data held by trade repositories. Authorities have stressed the importance of greater standardisation in transaction reporting; this has been noted in the ongoing FSB feasibility study on aggregation of data across trade repositories."
  • Few CCPs are currently permitted to operate in more than one or two jurisdictions, which poses challenges to the wider global uptake of central clearing, in particular for participants engaged in cross-border transactions. (Bill: This is clearly a problem given that the OTC markets are themselves global and cross-border in nature)
  • Several concerns that continue to be identified by many authorities in effectively implementing reforms relate to ensuring that there is a satisfactory resolution of cross-border regulatory issues. Several authorities have noted that there remain issues of overlap, duplication, inconsistencies, conflicts or gaps in regulatory requirements applying in cross- border contexts. Bill: cross-border regulation is proving harder for the OTC global market than regulators anticipated.

Not too many surprises overall, the enthusiasm for Trade Reporting as shown on the chart below illustrates how eager regulators are to get their hands on the data. Electronic Trading and Bilateral Margin rules lag behind significantly. The full report is attached below, or via the FSB website. Keep reading down the report as there as some really useful charts on clearing, and also the proportion of cross-border OTC business, and the complexity of cross-border trading and clearing. Not so many surprises, but good work to show it visually.