TR Standard A Ruflin

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



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


Standardization and Aggregation as a challenge


Art. 103

Art. 94(Equivalence / Cooperation

Agreement with 3rd country)

Single Sided Dual SidedTo be defined

Art. 80(Equivalence / Cooperation

Agreement with 3rd country)


Agenda


Trade Repository



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


Trade Repository & Standardization


Objective Measure

Avoidance of double submission

Clear rules

Pairing

Comparable and aggregationGlobal Standards with respect to Identifiers


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)


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)


Agenda


Trade Repository



The overall Objective


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.


Overview Company Identifications



Legal Entity Identifier


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


TR Standards / Identification1


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


The challenge is still ahead of us…


TR Standard A Ruflin

Economy & Finance

Transcript of TR Standard A Ruflin