Regulation: markets’ friend, data management’s foe?

Derivatives markets participants have been – figuratively – under the regulatory cosh for years and particularly since the 2008 global crash, and subsequent regulatory focus on ensuring fair and effective markets. Several regulations directly impact derivatives data management and reporting, including EMIR, SFTR (ESMA’s Securities Financing Transactions Regulation), MiFIR and the Dodd-Frank Wall Street Reform and Consumer Protection Act.

This latter US regulation directly impacts derivatives data management and reporting, requiring swaps markets participants to both report data to repositories AND to make certain data, such as aggregate data on transactions and positions, available publicly. Further, the US CFTC has finalised rules to improve swap data reporting and approved changes that further streamline oversight of swap data reporting by seeking to improve the accuracy of data reported to – and by – data repositories.

At the same time, ISDA has developed ‘regulation future-proofed’ reporting standards for derivatives data at all stages of the transaction lifecycle, from trade execution to settlement. This Common Domain Model (CDM) is also intended to improve consistency in, and the accuracy of, data reported to regulators.