The latest consultation by the Derivatives Service Bureau (DSB) has revealed significant industry appetite for further analysis on functionality that may be helpful in delivering improved data quality, standardisation and automation as well as further strengthening the DSB’s cybersecurity processes and governance.
This second consultation by the DSB, which was founded by the Association of National Numbering Agencies (ANNA) to facilitate the allocation and maintenance of International Securities Identification Numbers (ISINs), Classification of Financial Instrument codes (CFIs) and Financial Instrument Short Names (FISNs), for OTC derivatives, closed on the 29 July with nine responses representing 12 institutions, four of which were from trade associations. Industry concurred with 80 per cent of proposals set out in the second consultation paper. Half the proposals are being taken forward for analysis, to allow the industry to better understand the benefits and potential impact.
The industry requested that the DSB undertake further analysis, for example, on leveraging the ISIN-LEI service to provide LEI and other supplemental data to further improve data quality. By placing the LEI mapping table in the product-mapping template the data enables anyone consuming the ISIN record to have easier access to LEI mapping. This, in turn, offers the potential to improve downstream processing. The DSB will be conducting this cost-benefit analysis on a business as usual basis, with no cost impact to users.
Another industry request for more analysis, resulting from the DSB’s 2nd Consultation, was for the DSB to look at the CFI code coverage it provides today and whether and how it needs to be taken forward for implementation as well. Evaluation will also be undertaken by the DSB to ascertain whether and by how much the annual fee determination process can be brought forward in 2020. Following industry feedback, an industry Agreement Forum will also be formed to commence work in relation to multiple or group-wide agreements with the aim for recommendations to be included in the annual industry consultation in 2020.
Emma Kalliomaki (pictured), Managing Director of ANNA and the DSB, says: “Collaboration is a cornerstone of our evolution at the DSB, and the enhancements and the further analysis being undertaken, driven by user feedback, focus on data quality and standardisation which is so important for all users. At its core, the DSB is focused on delivering the ISO obligations and principles to fulfil the industry needs for ISO standards while being as cost-effective, transparent and efficient as possible, to both help firms further their operational efficiency and manage risk for global markets.”
Malavika Solanki, a member of the DSB Management Team, says, “Industry ideas have driven this process, and we are pleased with the partnership-driven approach that is emerging. As we continue to adopt user sourced initiatives, we are increasingly focusing on aiding consistent use of data contained within the OTC ISIN record. We have also observed an evolution from use of OTC ISIN for RTS 23 purposes to improve integration in users’ infrastructures, as the industry realises the benefits of using OTC ISIN records in their own workflow processes.”
In line with the DSB’s critical market infrastructure role, the consultation also highlighted industry appetite for the adoption of international best practice on cyber-security governance. The DSB is, therefore, creating the role of a Chief Information Security Officer (CISO) in the short-term, who will be tasked with strengthening the DSB’s cyber-security processes. The DSB will review this part-time role in 2020 to determine the most effective way to enhance cyber-security governance in the medium term.