Wednesday, January 20, 2010

TriOptima makes OTC rates data available

Original posted in the Financial Times by Michael MacKenzie:

Momentum to create greater transparency in the vast over-the-counter interest rate swap market gathered pace on Wednesday as TriOptima said its trade reporting repository had gone live, providing regulators with information in 15 major countries.

TriOptima, the trade processing group, said 14 financial institutions had submitted data for their non-cleared OTC interest rate derivatives trade portfolios and that these included trades with G-15 institutions, so-called buy-side organisations and other financial and non-financial institutions.

TriOptima said that while the information was available to regulators at the moment it would make it available publicly over time.

TriOptima was chosen by the International Swaps and Derivatives Association last September to set up the interest rate derivatives trade reporting repository.

The repository is designed to provide regulators with a series of monthly reports which summarise market volumes for OTC interest rate derivatives. These include derivatives that are not currently cleared, and comprise interest rate caps and floors, forward rate agreements, options, swaps, swaptions, and cross currency swaps.

The monthly reports will disclose outstanding trade volumes and gross notional volumes across different currencies and maturities.

This is seen helping regulators identify potential risks among key participants in the derivatives market and is one of a number of risk management measures that have become a priority in the wake of the financial crisis.

Jon Eilbeck, chair of the ISDA rates steering committee and chief operating officer for global rates at Deutsche Bank said: “It demonstrates the industry’s ongoing commitment to enhancing the OTC derivatives infrastructure, reducing systemic risk and improving transparency in the OTC derivatives marketplace.”

However, whether there should be just one repository for interest rate swaps covering all currencies remains a topic for debate among regulators. While some regulators desire a country-by-country approach, such a structure could run the risk of double counting OTC positions and not provide a comprehensive overview.

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