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The MAS has issued the anticipated response to its 2021 consultation paper on proposed amendments to the reporting of OTC derivatives contracts. The paper addresses the industry feedback and lays out the regulator’s finalised approach to the revised requirements for UTI generation, reporting critical data elements, and the adoption of the ISO 20022 XML message format.
To recap, in July 2021 the MAS issued a consultation paper titled, ‘Consultation Paper on Proposed Amendments to the Securities & Futures (Reporting of Derivatives Contracts) Regulations’ (SF(RDC)R). The proposals sought to adopt the technical guidance published by the Committee on Payments and Market Infrastructures and the International Organisation of Securities Commissions (CPMI-IOSCO) on the Unique Transaction Identifier (UTI), Unique Product Identifier (UPI) and critical data elements (other than the UTI and UPI) (CDE) to facilitate the international standardisation and harmonisation of data elements reported across international OTC derivatives reporting regimes.
Last month, the MAS published its responses in the paper titled, ‘Response to Consultation on Proposed Amendments to the SF(RDC)R’, addressing the feedback obtained in the 2021 consultation and laying out the regulator’s finalised requirements.
UTI generation and reporting
Reporting characteristics
- Reporting entities are to report a UTI uniquely assigned to each reportable contract (and not based on a reporting entity’s trade position).
- UTI is to be generated and reported for each contract in a package trade.
- The same UTI is to be reported where the contract is required to be reported more than once (e.g., requirements in another jurisdiction).
- Same UTI is to remain throughout the life cycle of a contract.
Responsibility for UTI generation
- The entity responsible for generating the UTI is to be determined by the waterfall steps set out in CPMI-IOSCO’s UTI Technical Guidance (“CPMI-IOSCO Waterfall”).
- Where the UTI Technical Guidance is not adopted in a jurisdiction other than Singapore and where the UTI generating entity is unable or unwilling to generate the UTI, counterparties are to apply the next applicable step in the CPMI-IOSCO Waterfall.
- A reporting entity and its counterparty may instead choose to agree on who should be the UTI generating entity. This includes choosing a third party who agrees to provide the UTI by the required reporting deadline(s).
Responsibility for UTI generation for contracts reportable only under the SFA (“domestic contracts”)
- For domestic contracts where only one counterparty is subject to reporting obligations under the SFA, the reporting entity is to generate the UTI.
- For domestic contracts where both counterparties are subject to reporting obligations under the SFA, the UTI-generator is to be determined by the waterfall steps laid out by the MAS. In this regard, the responsible party is either the confirmation platform, the entity agreed by the counterparties, the trade repository, or one of the counterparties based on their legal entity identifiers.
Responsibility of reporting entities that are agents of counterparties to a reportable contract
- Where no counterparty to the contract has a reporting obligation in Singapore or in another foreign jurisdiction, UTI generation requirements would refer to the reporting entities acting as an agent to the counterparty. Please refer to paragraph 2.20 of the response to the consultation paper.
- Where the counterparties to the contract are subject to reporting obligations in Singapore or another foreign jurisdiction, the agent is to obtain the UTI from the counterparty it was acting on behalf of, or from the UTI generating entity.
Providing or obtaining UTIs in a timely manner
- Reporting entities are to make reasonable effort to provide or obtain the UTI (as applicable) in a timely manner, including putting in place written policies and procedures.
- Where a reporting entity has not obtained the UTI despite making reasonable efforts, it may report an interim UTI. Where the reporting entity subsequently obtains the UTI, the entity is to report it within two business days.
Changes to reportable data fields in the First Schedule to the SF(RDC)R
Added and removed reportable data fields
- Added fields: “Package identifier”, “Asset class” and “Contract type”.
- Removed fields: “Basket constituent unit of measure”, “Basket constituent number of units”, “Beneficiary 1” and “Beneficiary 1 identity type”.
Reporting of Unique Product Identifier (UPI)
- A reporting entity is to report global UPI provided by the Derivatives Services Bureau Ltd in the UPI data field.
- Reporting of data elements related to instrument type, instrument characteristic, and underlier elements continue to be required.
Reporting of data fields with directional elements
- A reporting entity is to report elements that relate to the direction of the trade from its perspective.
Exemption from the reporting of collateral and margin information
- Fund/real estate investment trust (“REIT”) managers are not exempted from reporting collateral and margin information unless executing on behalf of a fund/REIT they do not manage.
- Where reporting entity executes or causes to execute a reportable contract as an agent of a party to the contract while not itself being a party to the contract and is not reasonably expected to have information on collateral and margin of the contract, is exempt from the reporting of collateral and margin information.
Reporting of Foreign Exchange swaps
- Foreign exchange swaps are to be reported as two separate contracts linked by the data field “FX swap link ID”.
Implementation timeline and approach
Implementation timeline
- The MAS will commence the revised reporting requirements in October 2024.
Treatment of existing reportable contracts
- The MAS will require re-reporting of all contracts outstanding as at the commencement date of the revised reporting requirements, except contracts that have a maturity of less than six months from the commencement date.
- After the commencement date, changes to all contracts are to be reported under the new format within two business days of the variation.
- Reporting of pre-existing contracts (“Transitional Trades”) in transition between current and revised reporting requirements is to be done within two business days after execution, change or termination, and under the new format if reported after the commencement date.
- The MAS will exempt reporting of any information required under the revised reporting requirements that was not previously captured when the contract was executed.
Adoption of ISO 20022 standard
Adoption of ISO 20022 XML message format for OTC derivatives reporting
- This will commence with the other revised reporting requirements in October 2024.
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