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DTCC-SWIFT win CFTC approval to provide swap ID system
WASHINGTON, July 24 |
WASHINGTON, July 24 (Reuters) - The Depository Trust & Clearing Corporation and SWIFT won approval on Tuesday to provide an interim service that will help regulators identify and track the biggest players in the $650 trillion swaps market.
The Commodity Futures Trading Commission said in a release that the DTCC and SWIFT, which formed a joint venture, would help provide "legal entity identifiers." These unique IDs will be used by big swap dealers, such as Goldman Sachs and Morgan Stanley, and other large traders.
The Dodd-Frank Wall Street reform law of 2010 laid out a new regulatory regime for the over-the-counter derivatives market. One of its key pillars requires all swaps trading data to be reported to central repositories so that regulators can get a better window into the opaque marketplace.
Part of the new swap data reporting requirements will entail using a new program to help track trades and get a better sense for the exposures that major financial institutions may have through their derivatives trades.
Tuesday's regulatory approval lets DTCC-SWIFT provide the legal entity identifiers on an interim basis until the CFTC eventually transitions to using a global system that will help to aggregate derivatives data.
The CFTC said DTCC-SWIFT is the only venture that is able to satisfy all of the agency's swap data reporting rules and be ready in advance of initial compliance dates.
The designation will be in place for a limited term of two years.
The DTCC, which operates as a utility, is vying to become the dominant provider of swap data that will be used by regulators to police the market. The DTCC is still awaiting regulatory approvals on its applications to operate swap data repositories.
Exchange operator IntercontinentalExchange, one of the DTCC's competitors in the derivatives data arena, is so far the only company to receive provisional registration approval from the CFTC to operate a swap data repository, known as ICE Trade Vault.
SWIFT, or the Society for Worldwide Interbank Financial Telecommunication, is a member-owned cooperative that provides communications platforms and other services to financial institutions.
In addition to teaming up with the DTCC to provide legal entity identifiers, the two are working together to develop a data repository for foreign-exchange derivative trades.
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