Hidden in Plain Sight? Derivatives Exposures, Regulatory Transparency and Trade Repositories

From Archegos in the US to the energy crisis in the EU to the problems faced by liability-driven investment (LDI) strategies in the UK, recent events have meant derivatives transparency is once again becoming a public policy agenda priority. Some regulators have voiced concerns about whether they can see and monitor risk exposures at counterparties in their jurisdictions and even whether some relevant counterparties are beyond their regulatory reporting perimeter.

These concerns come amid – and despite – prescriptive requirements to report derivatives transactions to regulators via trade repositories in major jurisdictions, which has been accomplished through significant investment in time and money by market participants and the official sector.

ISDA believes much of the information required to see and identify the build-up of derivatives exposures and risks is available in the trade repository data that is reported to regulators. But, as per the title of this report, it may well be hidden in plain sight – not easily understood, not readily functional, not easily shared among regulators and therefore not as useful as it might otherwise be.

To help inform and contribute constructively to policy discussions on derivatives transparency, ISDA is publishing this paper to explore the following questions:

  • What information on derivatives trades and exposures is currently available to policymakers through trade repositories?
  • How can this information be efficiently and effectively used by policymakers to address their risk exposure concerns?
  • How can derivatives trade and risk data be shared by regulators that receive it with other policymakers within and across jurisdictions, in order to provide a more holistic view?

The paper covers derivatives reporting and trade repositories in the US, EU and UK.

Click on the attached PDF to read the full report.

Documents (1) for Hidden in Plain Sight? Derivatives Exposures, Regulatory Transparency and Trade Repositories

ISDA Omnibus Canadian Representation Letter

On September 2, ISDA published the Omnibus Canadian Representation Letter, which combines previously published representation letters drafted to assist firms in compliance with Canadian trade reporting, business conduct, regulatory margin and clearing classification rules. The Omnibus Canadian Letter is designed...

Joint Response on Cross-margining

On August 31, ISDA and FIA submitted a letter to the US Commodity Futures and Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) on the agencies’ joint request for comment on the implementation of portfolio margining and cross-margining...

Response to SEC on FICC Guaranty Fund

On September 1, ISDA and FIA submitted a joint response to the US Securities and Exchange Commission (SEC), supporting the Fixed Income Clearing Corporation’s (FICC) proposal to establish a dedicated guaranty fund at its government securities division (GSD). FICC had...