Trade Repository Reporting

Trade Repository Reporting
by Thomas Schwiertz

Repository Reporting and Blockchain

Trade Repository Reporting is probably one of the most interesting use cases of XVA Blockchain, as the benefits from applying blockchain technology to use cases in regulatory reporting are directly related to the general characteristics of the blockchain and immediately apparent:

  • Risk reduction from decentral structure and transparency. In contrast to centralized IT systems our distributed ledger technology will reduce operational risk completely. There is no risk of terror attacks and there is no risk of internal fraud. Therefore contingency plans, secondary emergency locations and four-eyes-principles will vanish.
  • Massive efficiency improvements as a result. The superior security of blockchain technology reduces costs for Repository Reporting services tremendously and enables us to offer a very competitive offering to the existing market players.
  • Extremely efficient processing for reconciliation of data. Especially regarding the mandatory “double sided reporting” introduced by regulations like SFTR or EMIR STS.
  • Delegated Regulatory Reporting to DTCC for all reporting obligations e.g. CSDR and data enrichment services on- and off-blockchain.

What is next?

As we slowly emerge from our socially distanced bubbles and contemplate the view beyond our own back garden towards the wider world again. More specifically, towards the regulatory reporting landscape. So why is that piquing interest in particular? When it comes to the regulators’ priorities, that is. After CFTC Dodd-Frank reporting went live in 2013, all has been relatively quiet on the US regulatory reporting front, with Europe’s EMIR, MiFID II, and much more recently the inflight SFTR taking all the limelight. The regulators will be revising the principles-based swap data reporting rules first rolled out in 2013 which had the unfortunate outcome of different Swap Data Repositories (SDRs) supporting different fields and formats. The industry will need to be fully prepped for the final version of the rewrite rules expected in the final quarter of 2020 and braced for the subsequent 12-month implementation period. So, we expect to see banks, reporting firms, technology vendors, and SDRs will be substantially updating, revising and reconfiguring their reporting solutions and controls frameworks in the interim. What’s next? While there is some talk of that the industry is urging regulators to consider longer implementation time periods to accommodate the impact of COVID-19, it by no means feels like the regulatory world has hit the pause button. The priority for firms now will be to figure out the best working practices to meet the respective deadlines in this new world.

SFTR (Securities Financing Transactions Regulation) Delegated Reporting

XVA Blockchain is strongly focused on the new regulatory approaches like double-sided reporting in SFTR or EMIR STS and additional data demands emerging from the needs for bilateral margining, collateral management, and the mandatory introduction of initial margins in OTC markets.

Whenever existing reference and market data is sufficient within your existing IT systems: our reconciliation layer on blockchain can be applied. In the regulatory reporting space we are proud to be the partner of DTCC.