Trade Reporting

  • 1271

    OPTIMIZING THE INVESTMENT PROCESS: leveraging IBOR for alpha generation

    The Investment Book of Record (IBOR) has traditionally focused on operations and accounting support to strengthen data utilization, optimize trade support analytics, increase regulatory reporting preparedness and tighten risk mitigation. But is this approach the most comprehensive and effective? In this article, Joshua Satten and David Depew examine the information that should form an IBOR to plug alpha leaks and improve the investment process at a time when profit margins are shrinking and regulatory reporting requirements are expanding. Investment is the key term that defines an IBOR. All data controlled and consumed is used with the intent of supporting the [...]
  • 1227

    SIMM: tackling the initial margin obligation in OTC derivatives

    Regulatory reforms following the financial crisis have tested banks’ ability to adapt and fundamentally changed business models. The Standard Initial Margin Model (SIMM) is another addition that could reshape many derivatives trading and risk management practices. In this article, Sapient Global Markets’ Thomas Schiebe and Sendi Cigura in partnership with Patrice Touraine and Matthieu Maurice of Global Market Solutions look at what it means for banks and how they must tackle a new wave of data and technology challenges. Following the introduction of mandatory clearing for standardized derivatives, regulators created measures to deal with non-centrally cleared and non-standardized derivatives. This [...]
  • 894

    MiFID II & MiFIR: reporting requirements and associated operational challenges

    While the key objectives of Markets in Financial Instruments Directive (MiFID) I were to bring greater standardization and improvements in collateralization and risk management, MiFID II seeks to enhance transparency and supervision to ensure methodical markets and harmonize reporting requirements across member states. In this article, Mahima Gupta and Shashin Mishra summarize the obligations MiFID II imposes upon investment firms and explore the associated impact and operational challenges, some of which can be effectively outsourced to a vendor system. Download the PDF MiFID I came into effect in 2007 to facilitate cross-border financial services within Europe, ensuring a competitive landscape [...]
  • 680

    BCBS-IOSCO: increasing the margin period of risk

    As the CCP market continues to expand, with clearing houses offering an increasing number of clearable securities and netting efficiencies, there is an increased focus on the fate of over-the-counter (OTC) derivatives that are as yet unclearable. These bilateral trades will be subject to the BCBS-IOSCO Initial Margin (IM) requirements, scheduled to phase-in from September 2016. This will result in higher IM costs, primarily as a result of the increased Margin Period of Risk (MPOR). The baseline MPOR for a netting set (i.e., a portfolio with a counterparty under a legal netting agreement) is 10 days, but under certain conditions [...]
  • 437

    The Rising Cost of Trade Reporting: can firms afford to stay compliant?

    Now that most G20 member states have mandated trade reporting of derivatives, market participants have an opportunity to evaluate the agility and sustainability of their current approach. In this article, Randall Orbon, Arun Karur and Cian Ó Braonáin discuss the state of trade reporting and show how growing costs, complexity and regulatory scrutiny are fueling a compelling business case for third-party managed solutions. To address the trade reporting requirements outlined in Dodd-Frank and EMIR, many organizations made significant investments in internal systems. Now additional regulations and further enhancements—including MiFID II/MiFIR and requirements in other regions—are poised to effect more change. [...]
  • 202

    THE HIGH PRICE OF NON-STANDARD COMMUNICATION: firms reduce costs, errors and risk for OTC cleared derivatives reporting and communications by adopting new clearing connectivity standard

    Now that some of the dust has settled following the implementation of several regulatory initiatives, such as Dodd-Frank, MiFID II/MiFIR, and European Market Infrastructure Regulation (EMIR), many financial institutions are grappling with how to deal with the impact these initiatives have had on their derivatives business. In this article, Phil Matricardi and Adam Kott discuss why firms are adopting the new ISDA Clearing Connectivity Standard (CCS), introduced two years ago, for derivatives reporting and communication and why an industry utility for data transformation is a necessary next step. OVERVIEW New regulatory requirements, combined with the increasing volume of cleared derivative [...]
  • 335

    MIFID II: harmonization mandates new business models in the OTC space

    Regulatory initiatives, such as the Dodd-Frank Act and EMIR, have had a seismic impact on derivatives markets. The Financial Stability Board’s seventh progress report on the implementation of OTC derivatives market reforms has highlighted crossborder consistency issues arising from different jurisdictions. The combined effect of these regulations through the mandated electronic trading and central clearing of standardized derivatives contracts has been the “balkanization of the capital markets,” causing pockets of liquidity and varying prices for the same contracts across jurisdictions. With the implementation of MiFID II/MiFIR on the horizon in Europe, the industry is anticipating a more level playing field [...]
  • 319

    CROSS-ASSET UNIVERSAL PRODUCT IDENTIFIER: is this the solution the industry is looking for?

    Covering the entire spectrum of asset classes and financial services, from loans and credit cards to derivatives and bond positions, a Universal Product Identifier (UPI) will enable a holistic approach to identifying all trades and positions, including capital calculations, reporting, clearing mandates and booking rules. While such an idea sounds great in theory, historical attempts at achieving global agreement have fallen short, even within a subsector of the industry. Peter Meechan, Jim Bennett and Pauline Tykochinsky examine the feasibility of universal product codes, ponder whether the industry is ready to come together to create them, and discuss what a potential [...]
  • 310

    THE NOVATION CHALLENGE: how to ensure a successful outcome

    Organizations within the financial markets are undergoing a period of incomparable change. The financial crisis has prompted a reevaluation of how risk is managed within firms, and as a result, many have been either forced to, or have elected to, fundamentally transform their business models. This has prompted an unprecedented amount of change in legal entity structures, often leading to large-scale migrations of trade portfolios. As firms migrate positions between legal entities, the need in the market for novation expertise is growing as never before to avoid reputational damage with counterparties, spiraling costs and increased operational risk. In this article, [...]
  • 660

    REPORTING FOR EMIR: firms that assume they are covered because of Dodd-Frank implementations may need to reconsider

    Through most of 2012, derivative dealers across the globe have been frantically making efforts to become compliant with the Commodity Futures Trade Commission (CFTC) implementation of the Dodd-Frank Act’s Title VII reporting regulations. On February 28, 2013, most of the approximately 70 registered Swap Dealers1 stumbled across the finish line for the last asset classes to be reported (Equities, Commodities, and FX). While undoubtedly a major milestone, the CFTC implementation of Dodd-Frank was one of the first of the G20 reporting commitments to go live with many more to follow, and there is enough difference in its European Union (EU) [...]