The Depository Trust and Clearing Corporation (DTCC) has received approval from Japanese regulators to launch the first trade repository in the nation for the reporting of over-the-counter (OTC) derivatives trades.
The utility, which has been authorized by the Financial Services Agency of Japan, will cover credit, equity, foreign exchange (FX) and interest-rate derivatives. Based in Tokyo, it will begin operations ahead of the April 1 deadline set by the regulator for mandatory reporting of trades by market participants, in line with global OTC reform.
Along with other elements such as clearing through central counterparties, trade reporting is seen by regulators as a crucial aspect of reducing system risk in the OTC market. With the data, national authorities can build a picture of the previously-opaque market and identify areas that are potentially of concern.
"The launch of a Japanese trade repository is a significant and welcome development for facilitating effective OTC derivatives trade reporting in this market," says Keiko Fukuda, executive director at Morgan Stanley MUFG Securities. "It is critical that there is in place a strong infrastructure that provides market participants with the ability to submit trades for regulatory supervision in a seamless and cost-efficient manner."
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