The Financial Stability Board (FSB) has confirmed the Regulatory Oversight Committee (ROC) of the Global Legal Entity Identifier System as the International Governance Body (IGB) for the globally harmonised identifiers used to track OTC derivatives transactions.
G20 Leaders agreed at the Pittsburgh Summit in 2009, as part of a package of reforms to strengthen the resilience of the OTC derivatives markets, that all OTC derivatives transactions should be reported to trade repositories. “A lack of transparency in these markets was one of the key problems identified by the global financial crisis,” FSB says. “Trade reporting, by providing authorities with data on trading activity, is key to identify potential vulnerabilities to financial stability in these markets.”
Globally harmonised identifiers and data elements can help authorities obtain a comprehensive global view of the OTC derivatives markets. The Unique Product Identifier (UPI) will identify the products reported to trade repositories consistently across FSB jurisdictions. The Unique Transaction Identifier (UTI) will identify individual transactions reported to trade repositories and allow authorities to follow their modifications during their whole lifecycle. The Critical Data Elements (CDE) will capture other important characteristics of the transactions. Reference to the Legal Entity Identifier (LEI) in the harmonised derivatives identifiers and data elements will allow consistent monitoring of legal entities’ trading activity, exposures and interconnectedness in the global OTC derivatives markets.
FSB says the ROC, which is already the governance body of the Global LEI System, will be responsible for the governance of the UPI, the UTI, and the CDE, which includes the oversight of the UPI service provider designated by the FSB, The Derivatives Service Bureau (DSB). The ROC has been tasked with finalising appropriately rigorous oversight arrangements of DSB.
In October 2019 the FSB, identified the ROC as best positioned to be the IGB for the UTI, UPI and CDE, provided that the ROC made appropriate adjustments to its existing governance to make it fit for the purpose of overseeing the harmonised derivatives identifiers and data elements. After taking note of the planned adjustments to the ROC’s Charter and Procedural Guidelines, the FSB confirms the ROC as IGB and transfers the governance of the harmonised derivatives identifiers and data elements to the ROC as of 1 October 2020.