BNP Paribas has implemented a new initiative created by the International Swaps and Derivatives Association (ISDA) to enable digital regulatory reporting under the US Commodity Futures Trading Commission’s (CFTC) amended swap data reporting rules.
This is the first time that ISDA’s Digital Regulatory Reporting (DRR) initiative has been deployed with the successful submission of data to the Depository Trust & Clearing Corporation’s (DTCC) swap data repository (SDR).
ISDAʻs DRR initiative is intended to create efficiency as firms adapt their reporting systems to comply with changes to reporting rules. It also seeks to improve the accuracy and consistency of what is reported. The DRR avoids the inconsistencies that can occur when each firm interprets a written set of rules by providing a collective, mutualized interpretation of the relevant CFTC rule amendments developed by an industry working group.
The Common Domain Model (CDM) is then used to transform that interpretation into open-source, human-readable, and machine-executable code that firms can either use as the basis for implementation or check if their interpretation of the rules is consistent with the peer-reviewed industry version. The BNP Paribas test demonstrates the DRR can be successfully used for the CFTC swap data reporting requirements.
“We’re pleased to be the first to use the DRR in a production-level environment with real data, enabling us to automatically generate a report for submission to the DTCC’s CFTC SDR testing simulator. Working with our technical partners and having completed the necessary internal adaptations, including converting our internal trade and counterparty data to CDM format, we’re now in a position to implement the DRR for the CFTC rewrite on December 5 and subsequent changes to reporting rules expected in Europe and Asia-Pacific,” Harry McAllister, information architect at BNP Paribas, said.
The CFTC will be the first regulator to amend its swap data reporting framework to incorporate harmonized critical data elements.
“Since my days as a CFTC commissioner, I have worked to improve regulatory reporting. The DRR is a win-win for the industry and regulators – it will not only increase efficiency and reduce costs for firms but will result in better quality and more accurate data for regulators, helping them to monitor potential sources of risk,” Scott O’Malia, ISDA’s chief executive, said.
The ISDA working group is also working on digitizing revised reporting requirements under the European Market Infrastructure Regulation (EMIR), expected to come into force in 2024.