US regulator the Commodity Futures Trading Commission (CFTC) has provisionally approved IntercontinentalExchange (ICE) Trade Vault as the first swap data repository under the Dodd-Frank Act.
ICE Trade Vault, which is owned by derivatives exchange ICE, will initially focus on commodity and energy markets; the firm has not yet committed to the other asset classes for which it has received approval.
Created by the Dodd-Frank Act, swap data repositories are a category of CFTC registered entities designed to collect and maintain swap transaction data and information. The intention of the regulation is to reduce systemic risk in derivatives markets by promoting transparency.
ICE Trade Vault has obtain registration to operate a swap data repository for the interest rate, credit, FX and other commodity asset classes. The approval is provisional until the CFTC completes final rules for swaps data repositories regulations, due before the end of this year.
“We are pleased with the CFTC’s provisional approval of the swap data repository following a thorough application and review process,” said Bruce Tupper, president of ICE Trade Vault. “Global market participants will benefit from our functionality and compliance tools, which will help them manage new reporting requirements through a well designed, cost efficient solution.”
ICE Trade Vault released its beta version in spring and expects to go live with its production version later this year so customers can begin submitting data before final reporting rules take effect. The swap data repository service will use the ICE eConfirm service as a trade data capture tool, making it easier for users to satisfy mandatory swap reporting rules.
US post-trade services operator the Depository Trust & Clearing Corporation (DTCC) has its own ambitions to establish a global network of trade repositories. The DTCC is already registered as a trade repository under current law, but is still in the registration process for the Dodd-Frank-specific trade repository status. The DTCC, which claims to maintain data on more than 98% of all CDS transactions, has cautioned that if there are too many separate repositories, fragmentation may make it difficult for investors and regulators to form a clear picture of market risk.
“An increase in the number of local repositories would fragment the data,” Andrew Douglas, head of European government relations at the DTCC, told theTRADEnews.com in April. “That would run against the G20 aim of increasing market transparency.”