Those classes include credit, interest rate, equity and foreign exchange derivatives.
DTCC does have a global swaps repository called Trade Information Warehouse. But a provision of the Dodd-Frank Wall Street Reform Act is leading to the creation of a separate warehouse of data on U.S.-only The provision requires U.S.-based swap repositories to receive indemnification from foreign regulators for any legal liability that might result if the data that is shared becomes public. The indemnification against any potential injury or loss from such public disclosure is to be obtained, before viewing data on executed trades in European regulators rely on memoranda of understanding or multinational forums such as the OTC Derivatives Regulators Forum (ODRF) to establish policy and procedures to safeguard the use of data and sharing.
The Dodd-Frank financial reform measure calls for swap traders to report their transactions in swaps to a centralized repository so that regulators can get a sense of global trading activity. They can view details about a trade and evaluate the concentration of risk to avoid another financial crisis.
DTCC’s stance: without an indemnity agreement, U.S. repositories may be legally precluded from providing critical market data to regulators overseas.
“The Trade Information Warehouse will continue to operate as a global repository while the DTCC Data Repository will only include information on U.S.-traded swaps,” says Steve Letzler, a spokesman for DTCC. “The DTCC Data Repository will not be impacted by the issue of indemnification because there is no need for foreign regulators to have information on U.S. swap contracts.”
Letzler says that DTCC has no intention of shutting down the TIW and expects data on U.S. swap deals to be “made available” to the TIW. He could not elaborate on how that would take place and says that DTCC could end up relocating the TIW to Europe should U.S. and foreign regulators not come to an agreement on indemnification.
The DTCC claims the TIW’s database represents about 98 percent of all credit derivative transactions in the global marketplace representing about 2.3 million separate contracts with a gross total notional value of $29 trillion. The DTCC has also recently given foreign regulators automated access to the global data through a portal. The portal allows each regulator registered with the DTCC access to transaction reports tailored to their requirements; those detailed reports are created for each regulator to show only the credit default swap data relevant to the regulator’s jurisdiction, regulated entities or currency.
The DTCC has been tapped by the International Swaps and Derivatives Association to launch another repository for interest rate swaps. The umbrella organization for the clearance and settlement of U.S. transactions has filed a separate application with the CFTC to operate a commodities repository through Global Trade Repository for Commodities (U.S.) LLC, a strategic alliance between DTCC’s Deriv/SERV subsidiary and Netherland-based EFETnet.
This story originally appeared on Securities Technology Monitor.
Chris Kentouris is senior international editor at Securities Technology Monitor. Chris can be reached at by email.
