The repository brings commodities in line with other over-the-counter derivatives that under Dodd-Frank must be reported to a trade repository as of October 14 if they are subject to the jurisdiction of the US Commodity Futures Trading Commission.
Credit derivatives were the first to see information collated into a global data repository when the DTCC went live with its global warehouse for automated processing and storing of credit default swap data in November 2006. The service now holds information on US$26trn in gross notional value across all credit products.
The equity repository went live in August 2010 (see IFR 1845 “DTCC launches equity repository”), while the service for interest rate derivatives launched last December (see IFR 1913 “DTCC global trade repository debuts”).
The DTCC and EFETnet were picked by the International Swaps and Derivatives Association last June to jointly run the commodities operation. Unlike other OTC derivatives asset classes where activity is dominated by a relatively small group of dealers, commodities have much broader reach with an array of smaller specialist companies trading commodity derivatives across an ever-increasing array of products.
“We have been working for some time with the commodities industry on an implementation plan that both provides improved trade reporting timelines and quality standards and is compliant with existing and upcoming global legislation. The global trade repository for commodities is the result,” said Stewart Macbeth, president and CEO of DTCC’s Deriv/SERV subsidiary.
Testing under Dodd-Frank
In the first instance, submission testing for swap data repository requirements as required later this year under Dodd-Frank will begin on May 14 and will include real time messages, economic terns, confirmation data and valuation messages. Initial coverage consists of contracts for natural gas, power, oil, agriculture, emissions, financial freight and weather.
The second phase will focus on enriching the data to meet Dodd-Frank specific requirements and expand the product coverage in conjunction with market participants to ensure a full range of coverage.The repository will support the full range of commodities swaps, both physical and cash-settled, by mid-October when Dodd-Frank takes effect.
Trade reporting for the repository will be provided to regulators through DTCC’s web-based regulatory portal, which is currently utilised by more than 38 regulators globally, providing access to information on credit default swaps and equity derivatives. Interest rate and FX data will be added to the portal in due course.
“The launch of the Commodity Derivatives trade repository by DTCC and EFETnet is another important step forward in improving regulatory transparency in the OTC derivatives markets,” said Julian Day, head of market infrastructure for ISDA. “Policymakers around the world will have greater insight and access to OTC derivatives trades across the range of interest rate, credit, equity and commodities asset classes.”