Canadian securities regulators mandated changes to derivatives data reporting standards last year and they took effect last month.
Grygo is the chief content officer for FTF & FTF News.
About a year ago, Canadian securities regulators — the Canadian Securities Administrators (CSA) — unveiled changes to derivatives data reporting standards that actually took effect July 25 of this year and have become known as the “Canada Rewrite.” The amendments are intended to streamline and harmonize over-the-counter (OTC) derivatives data reporting with global standards.
“By harmonizing Canadian data reporting requirements with international standards, the CSA is reducing regulatory burden and increasing market efficiency,” said Stan Magidson, CSA chair and CEO of the Alberta Securities Commission, in a prepared statement at the time. The expected improvements to data quality and consistency should lead to the more effective identification of “risks and vulnerabilities in our derivatives markets and strengthen protections for derivatives market participants,” according to Magidson.
The Depository Trust & Clearing Corp. (DTCC) recently released a statement assuring market participants that the trade reporting rules of the Canada Rewrite “have been successfully implemented by DTCC’s Global Trade Repository (GTR) service, through its locally designated/recognized trade repository, DTCC Data Repository (U.S.) LLC (DDR), across all thirteen Canadian provinces and territories.” The DTCC implemented the required reporting changes within GTR on July 19.
“The updated requirements closely align with CFTC reporting standards, marking an important step toward greater regulatory alignment, supporting transparency and improved data quality in the global derivatives marketplace. Notable changes in the Canada Rewrite include various new critical data element fields, UPIs [unique product identifiers] for credits, rates, equities, and FX, and the addition of collateral reporting requirements for dealers,” according to the DTCC.
The new critical data element fields are part of a greater effort to globally standardize derivatives reporting data led by the Regulatory Oversight Committee (ROC), a group including more than 65 financial markets regulators, other public authorities, and 19 observers from more than 50 countries.
The DTCC is not requiring the adoption of CDEs as it has implemented the prescribed Canadian securities regulators-mandated changes to derivatives data reporting standards last year, and they took effect last month. within its GTR service following the Canada Rewrite rules. The hope is that the adoption of CDEs and other key reference data elements, such as UPIs and unique transaction identifiers (UTIs), can help market participants to rein in multi-jurisdictional reporting practices.
The Canada Rewrite amendments include “a harmonized CSA Derivatives Data Technical Manual” intended to offer “clarity and consistency regarding the format and values for reporting harmonized data elements.” The updated data elements conform to international standards developed by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO), officials say.
The amendments encompass:
- Updated requirements for trade repository governance, operations, and management of risk to align with international standards;
- Data validation and verification;
- Greater harmonization within the CSA, such as a harmonized threshold in the commodity derivatives exclusion for non-dealers;
- Extended reporting deadlines for end-users;
- Optional position-level data reporting for certain types of derivatives;
- Changes to reporting for derivatives executed anonymously on trading facilities such as swap execution facilities (SEFs);
- Mandatory renewal of legal entity identifier (LEIs) for all Canadian market participants transacting OTC derivatives.
The DTCC has helped more than 100 firms achieve compliance with the Canada Rewrite requirements via industry working group sessions and operational support during testing.
“As the industry continues to adjust to these Canadian reporting changes, firms are encouraged to engage with DTCC,” according to the DTCC. “For those seeking additional guidance, DTCC Consulting Services is prepared to assist firms as they navigate the post-Canada Rewrite landscape and other global regulatory adjustments to support successful implementations.”
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