Industry Associations Submit Letter Supporting Global Trade Reporting and Data Harmonization (with Lofchie Comment)

In a letter to global regulators, eleven industry associations voiced their support for ISDA's key principles for improving global trade reporting and data harmonization. The signatories include SIFMA, ISDA and MFA et.al. (together, the "Associations").

ISDA's principles consist of an outline of recommendations intended to address challenges that have emerged in the cross-border implementation of derivatives reporting requirements. ISDA recommends that:

• regulatory reporting requirements for derivatives transactions be harmonized within and across borders;
• policy-makers embrace and adopt the use of open standards, including legal entity identifiers, unique trade identifiers, unique product identifiers and existing messaging standards in order to improve quality and consistency in meeting reporting requirements;
• if global standards do not exist, then market participants and regulators should collaborate and secure mutual agreement on common solutions to improve consistency and cross-border harmonization;
• laws or regulations that prevent policy-makers from appropriately accessing and sharing data across borders should be amended or repealed; and
• reporting progress should be benchmarked, tracked, measured and shared with market participants and regulators.

In the letter, the Associations noted that "significant progress" has been made to meet the G-20 requirement that all derivatives be reported to trade repositories. However, the Associations also said that a lack of standardization and consistency in reporting requirements within and across jurisdictions has led to concerns about the quality of the data being reported.

The Associations also warned that poor data quality and differences in reporting requirements reduce the value of the data for regulators and limit their ability to fulfill supervisory responsibilities. According to the Associations, adherence to ISDA's data reporting principles will result in greater consistency in the content and format of the data being reported, which in turn will improve regulatory transparency.

The full list of associations that signed the letter includes SIFMA and the Asset Management Group of SIFMA, the Australian Financial Market Association, the Alternative Investment Management Association, the British Bankers Association, the German Investment Funds Association, the European Fund and Asset Management Association, the Futures Industry Association, the Global Foreign Exchange Division of the Global Financial Markets Association, the International Swaps and Derivatives Association, the Managed Funds Association and the Investment Association.

Lofchie Comment: The market benefits of regulators coordinating information requirements are not limited to cross-border regulators or even to swap transactions. The SEC and the CFTC could do a lot to harmonize a slew of reporting requirements. If they did, the result would be fewer burdens on market participants and more useful information to the regulators.

See: Comment Letter.