The International Swaps and Derivatives Association (ISDA) announced that it’s extending its Digital Regulatory Reporting (DRR) initiative to several additional jurisdictions, enabling firms to implement changes to regulatory reporting requirements cost-effectively and accurately, reducing the risk of regulatory penalties for misreported data.
The ISDA DRR is being extended to cover rule amendments being implemented under the UK European Market Infrastructure Regulation and by the Australian Securities and Investments Commission and the Monetary Authority of Singapore. Those rule changes are due to be implemented in the UK on September 30, 2024, and October 21, 2024 in Australia and Singapore.
Regulators around the world are revising their reporting rules to incorporate globally agreed data standards to improve the cross-border consistency of what is reported and the format in which it is submitted. While more aligned, disparities will continue to exist in the various rule sets, meaning firms cannot take the work completed for one jurisdiction and apply it to another. Each set of requirements will need to be individually interpreted and applied, but there’s no guarantee each firm will interpret the requirements in the same way, leading to inconsistencies and the potential for regulatory fines for those firms that get it wrong.
ISDA’s DRR addresses this by establishing a golden-source interpretation of each rule set, reviewed and agreed by an industry committee. The Common Domain Model – an open-source data standard for financial products, trades and lifecycle events – is then used to convert this mutualized interpretation into free, machine-readable code. Firms can either use the ISDA DRR as the basis for implementation or to validate an independent interpretation of the rules.
The first iteration of the ISDA DRR was launched in November 2022, ahead of the initial set of reporting rule changes introduced by the US Commodity Futures Trading Commission (CFTC) on December 5, 2022. The DRR has since been extended to cover amended rules in Japan that came into effect on April 1, 2024, and the EU, which will be implemented on April 29, 2024. The DRR will be further extended to cover rule changes in Canada and Hong Kong, both due in 2025. The ISDA DRR code for those jurisdictions will be available well in advance of implementation. The DRR for the CFTC rules will also be updated to include further anticipated updates, currently under consultation at the commission.
“The ISDA DRR significantly reduces the time and cost needed to implement changes in reporting requirements. Rather than interpreting and implementing each set of rules themselves, and then repeating that work as the rules change in future, firms can implement code that has been validated and tested by industry participants and will be updated as rules are amended, enabling resources to be reassigned to other projects,” said Scott O’Malia, ISDA’s chief exec, in a statement.
“The DRR code for the UK, Australia, Singapore, Canada and Hong Kong will be available well ahead of the rules coming into effect, meaning firms will have plenty of time to implement and test the DRR before using it to report to regulators. Having supported the first phase of the CFTC rule amendments, we’re also committed to updating the DRR to include any additional changes when finalized.”