DTCC’s Chris Childs on the Prospect of Trade Reporting 2.0

Chris Childs of DTCC
John Lothian

John Lothian

Executive Chairman and CEO

In a recent interview, John Lothian of John Lothian News spoke with Chris Childs, managing director, repository & derivatives services at DTCC, about the evolution of trade reporting and the prospects of Trade Reporting 2.0. The discussion touched upon the history of trade reporting, the importance of data standardization, and the challenges of sharing data across jurisdictions.

Childs’ historical overview of trade reporting emphasized that it gained prominence after the 2008 financial crisis when the G20 countries recognized the lack of transparency in over-the-counter derivatives. As a response, regulators mandated that all derivative transactions be reported to trade repositories worldwide. This initiative aimed to achieve two primary goals: provide regulators with data for market abuse detection and enhance global systemic risk oversight.

However, Childs noted that the initial phase of trade reporting lacked coordination among regulators, resulting in a lack of standardization in data collection. To address this issue, organizations like KPMG and IOSCO were tasked with recommending greater harmonization of data standards, which led to the use of unique Trade Act identifiers (UPIs) and critical data elements (CDEs).

“CFTC is also introducing the use of the collection of UPI in January next year,” Childs said.

Childs highlighted that the adoption of ISO standards for data submissions has become a common trend among regulators.

“​​ISO standards seem to be the standard all the regulators are going to stipulate for the inbound submissions,” Child said.

This shift towards standardized data collection is a significant component of Trade Reporting 2.0, aiming to facilitate the amalgamation of data sets across jurisdictions and enhance systemic risk oversight.

Childs described Trade Reporting 2.0 requiring regulators to adopt more harmonized data sets and utilizing ISO standards for data collection. The ultimate goal is to enable greater amalgamation of data for proactive systemic risk oversight. However, Childs acknowledged that challenges remain, including questions about governance, data sharing agreements, and the technologies that will facilitate data sharing.

Childs said that most of the data is contained within individual jurisdictions, which makes it difficult to proactively monitor global systemic risk. Achieving global data sharing is essential for comprehensive systemic risk oversight but poses questions about governance structures and legal agreements between data-sharing parties.

“I think there are other questions around governance and about how that sharing of data will actually operate and the technologies that we’ll use,” Childs said.

When asked about his ideal design for Trade Reporting 2.0, Childs emphasized the importance of a global data set while acknowledging that modern technologies, such as cloud-based solutions, can facilitate efficient data sharing. However, he stressed that governance frameworks and legal agreements must be in place to manage data sharing effectively.

Childs also discussed DTCC’s commitment to innovation, mentioning that they are already using emerging technologies like cloud computing to enhance their derivatives and trade reporting services and are exploring the use of blockchain in other areas of the business. While acknowledging the concentration of cloud providers, he expressed confidence in their safety and soundness while emphasizing the need for regulatory oversight.

“We have adopted cloud and have completely modernized our GTR technology to create a user friendly, resilient and efficient platform for the industry,” Childs said.

The interview concluded with a reflection on DTCC’s 50th anniversary, with Childs stating that their commitment remains focused on safeguarding the financial industry’s safety and soundness and adapting to the evolving landscape of financial technology.

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