FX trade workflows and regulatory change
New regulations mandating clearing of FX OTC products and trade
reporting of all non-Spot trades will not only introduce the need
to connect to central counterparties (CCPs), Swap Execution
Facilities (SEFs) and Trade Repositories to the FX back office, it
will also impact all aspects of the clearing workflow for FX
derivatives. Nick Dyne and Keith Tippell, co-heads of MarkitSERVs
FX business debunk a few myths around just how much market
participants will be impacted by the new regulatory landscape.
As a small buy side firm, the new regulations will not affect us
greatly as our banks and brokers will send the necessary trades
to CCPs and SEFs and report these trades for us. It will not
greatly affect how we process trades today.
KT: All buy side firms should, as best
practice, store USIs (Unique Swap Identifiers) for all reported
FX trades since it will be the specific identifier used by the
regulators to investigate any trades. US entities may have
additional reporting obligations over and above this requirement.
While the impact of change may not seem particularly onerous to a
small buy side firm, appropriate connectivity will still need to
be established to accommodate workflow changes.
MarkitSERV is trade source, participant and destination agnostic;
our partnership with SWIFT, for example, enables us to process
users' NDF trades through to clearing and to deliver cleared
state messages - with USIs as appropriate - back to users.
Moreover, many small buy side firms are already connected to the
MarkitSERV FX platform. As such, the conduit is already in place
to facilitate future reporting and clearing processing and
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