Taiwan’s trade repository setting up reporting agreement with DTCC

Taiwan’s trade repository, GreTai Securities Market in Taipei, is looking to set up a reporting system with the Depository Trust & Clearing Corporation (DTCC) in order to avoid the potential double reporting of OTC derivative trades by banks, according to Bing-Jing Huang, executive vice-president, bond department at the exchange.

In the first quarter of 2011, Taiwan’s financial regulator, the Financial Supervisory Commission, tasked GreTai with setting up a trade repository for the Taiwanese OTC derivatives market as part of a global push to introduce central clearing.

The first stage was launched on April 2, requiring online reporting of interest rate swaps, foreign exchange swaps and non-deliverable forwards. This is expected to cover 70% of the annual turnover of 10trn Taiwan dollars on the OTC derivatives market.

Banks had previously expressed concern that the emergence of trade repositories at an individual country level in Asia could result in an excessive level of reporting requirements. However, according to Huang, Taiwan is looking to avoid this by establishing a reporting agreement with the DTCC’s trade repository arm, the Trade Information Warehouse.

“If a US bank is already reporting to the DTCC, their counterpart or local office in Taiwan will act as a reporting agent and send their data to us so that banks will not need to report twice – however the logistics surrounding this still need to be worked out. International banks are already reporting to the DTCC, so they can act as a reporting agent,” says Huang.

GreTai’s trade repository system is scheduled to be completed by June 2013 and will go online in three stages by product category to allow traders more time to integrate reporting requirements into their systems, says Huang.

Additional transactions that require online reporting in the second stage starting December 2012 include foreign exchange options and forwards. Upon the completion of the second-stage trade repository, the reported transactions will account for 90% of the market by volume. The third stage, to be implemented by the end of June 2013, will encompass all other OTC derivatives trade data required to be reported to the repository.

Institutions that are required to report to the trade repository include domestic banks (including branches of foreign banks in Taiwan), securities firms, bills finance companies and insurance companies. GreTai says institutions will be required to report on a daily basis and the information will be used to assess the risks of individual financial institutions and provide the Financial Supervisory Commission with data for market supervision purposes. GreTai says it will also disclose daily the derivatives market trade information on its website to enhance market transparency.

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