Considerations for trade repositories in OTC derivatives markets - consultative report

May 2010

This report, prepared by a working group (WG) jointly established in June 2009 by the Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organization of Securities Commissions (IOSCO), presents a set of considerations for trade repositories (TRs) in over-the-counter (OTC) derivatives markets.

Over the past several years there has been a coordinated effort by public and private sector entities to improve the post-trade infrastructure for the OTC derivatives market. One outcome of this effort has been the establishment of TRs to centralise information on outstanding OTC derivatives transactions and help improve the market's overall transparency. A well designed TR that operates with appropriate risk controls can provide an effective mechanism to collect and disseminate reliable data in a timely and proper manner to relevant authorities and the public, thereby strengthening the scope and quality of information available regarding the OTC derivatives market.

The effort toward the establishment of TRs has gained further significance and momentum, as the recent financial crisis highlighted a severe lack of market transparency in OTC derivatives markets. In light of the growing importance of TRs in enhancing market transparency and supporting clearing and settlement arrangements for OTC derivatives transactions, the CPSS and the Technical Committee of IOSCO concluded that some form of policy guidance would be useful. Consequently, in parallel with its review of the application of the 2004 CPSS-IOSCO Recommendations for Central Counterparties (RCCP) to clearing arrangements for OTC derivatives, the WG developed a set of factors (Considerations for TRs) that should be considered by TRs in designing and operating their services and by relevant authorities in regulating and overseeing TRs, which are presented in this report. These two sets of policy guidance are complementary and, taken together, constitute an important part of the responses of the CPSS and IOCSO to the recommendations of the G20 that called for the strengthening of the robustness of the OTC derivatives market.

The CPSS and the Technical Committee of IOSCO are grateful to the members of the WG and its Co-Chairs, Daniela Russo of the European Central Bank and Jeffrey Mooney of the US Securities and Exchange Commission, for their excellent work in preparing this report.