The Depository Trust & Clearing Corporation (DTCC) has launched a London-based trade repository for the $553.8 trillion global OTC interest rate derivatives market. The repository will include data from 15 of the largest global dealers.
DTCC already operates global trade repositories for OTC credit derivatives and for OTC equity derivatives and is planning initiatives in the foreign exchange and commodities OTC derivatives markets.
The launch of this new interest rates trade repository is a significant step forward in ensuring that key information about the OTC derivatives market is transparently available to regulators globally as they work to ensure that systemic risk is quickly identified and minimized, says Stewart Macbeth, president and CEO of DTCC Deriv/SERV, the DTCC subsidiary responsible for the companys OTC derivatives activities. DTCC is committed to partnering with the OTC derivatives community and supervisory authorities to establish effective global solutions that strengthen the infrastructure for trading OTC derivatives instruments and help protect the safety and stability of the global OTC derivatives market.
DTCC was selected to build the global interest rates trade repository in May following a competitive request for proposal process managed by the International Swaps and Derivatives Associations (ISDA) Rates Steering Committee. Launching such a repository is a central part of the industrys efforts to fulfill its obligations under the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act, the proposed European Market Infrastructure Regulation legislation in Europe and other financial oversight mandates worldwide.
Initially, all trades by global dealers can be submitted into the Global Trade Repository for Interest Rates directly from members. Additionally, rates trades of those firms matched and confirmed in the MarkitSERV MarkitWire service will be submitted on behalf of the firms. Since the vast majority of OTC interest rate derivatives trades are electronically confirmed through MarkitSERV, these trades will flow into the trade repository automatically in near real time, DTCC says. Trade positions not confirmed in MarkitSERV will be submitted directly by firms on a daily basis.
The service currently supports trade submissions for OTC interest rate swaps (basis, fixed-float, cross currency, etc.), forward rate agreements (FRAs), overnight indexed swaps (OISs), debt options, swaptions, inflation swaps and other complex interest rate contract types. While the initial product release focuses primarily on meeting voluntary regulatory reporting commitments of the largest OTC interest rate dealers, in 2012 DTCCs systems will be expanded to support Dodd-Frank trade reporting requirements, as well as to support additional trade reporting by buy-side and other market participants and to support reporting requirements as additional global regulations emerge.
DTCC already operates a global trade repository for OTC credit derivatives, primarily involving credit default swaps, which holds trade data on about $28 trillion of credit derivatives trades. It also operates an OTC equity derivatives repository.
(CG)