Asset Control and Nomura Research Institute also have FinTech news.
CFTC Hopes Global LEI System to Be More Operational in a Year
The legal entity identifier (LEI) utility operated by the DTCC and SWIFT can continue for another year in the hope that the global LEI system will become fully operational in that time, according to the CFTC, which just issued an order extending the designation.
The LEI utility helps firms meet the CFTC’s swap data recordkeeping and reporting rules. CFTC officials add that this extension will allow “more time for the global LEI system to become fully operational.”
Initially, the CFTC designated DTCC-SWIFT’s utility on July 23, 2012 for a two-year term. “When the order was issued, the CFTC was already participating in an international process to establish a global LEI system. The designation was extended for one year on July 22, 2014 and again on July 17, 2015,” CFTC officials say.
Like the CFTC’s initial order, the current amended and restate order will permit registered entities and swap counterparties under CFTC’s jurisdiction to comply with the CFTC’s swap data recordkeeping and reporting rules by using LEIs issued by DTCC-SWIFT and other pre-local operating units (pre-LOU) that have been endorsed by the LEI Regulatory Oversight Committee (LEI ROC) of the global LEI system, CFTC officials say. In addition, LEIs issued by any LOU accredited by the Global LEI Foundation (GLEIF) will be acceptable for usage.
The DTCC-SWIFT utility, first known as the CICI utility, is now called the Global Markets Entity Identifier (GMEI) utility or GMEI Utility, officials say. “A full list of the pre-LOUs that have been endorsed by the ROC as globally acceptable, including the website via which each of these pre-LOUs may be accessed, is available at LEI ROC. The list of accredited LOUs can be found on the GLEIF website,” CFTC officials say.
The CFTC order announced July 18 will be published in the Federal Register in the near future, officials add.
Asset Control Takes On Risk Data Management
Financial data management solutions provider Asset Control has enhanced its AC Risk Data Manager, “to help financial institutions address next-level regulatory data management requirements” via a market data calculation back-end, vendor officials say.
Risk management requirements via regulators such as the Fundamental Review of the Trading Book (FRTB) are “reinventing the way risk is measured, with significant consequences for the required market data and its quality, for both the internal model approach (IMA) and the sensitivity based approach (SBA),” according to Asset Control officials.
Asset Control’s AC Risk Data Manager “will allow institutions to address the key market data requirements of FRTB through data model extensions and business rules,” Asset Control officials say. “AC Risk Data Manager’s time series management is equally applicable to stress testing regulation and Independent Price Verification requirements.”
Asset Control has cited some of the specific FRTB market data management requirements as:
- Screening and completing time-series histories;
- Checking consistency between front- and middle-office data;
- Managing stress scenarios by appropriately shocking risk factors;
- Configuring and monitoring proxy rules;
- Casting a wider net when sourcing market data by integrating with trading systems and trade repository data to meet the requirements of uncovering real prices and the modeling of risk factors;
- And assigning risk categories and liquidity horizons as per the Basel classification.
NRI Upgrades T-STAR/GX to Meet Basel Committee Rule
The Tokyo-based Nomura Research Institute, Ltd. (NRI), a provider of consulting services and system solutions, has upgraded its T-STAR/GX solution for asset managers’ securities operation management to accommodate the standardized approach for measuring counterparty credit risk exposures (SA-CCR) under Basel III, which takes effect in January 2017.
The new function will be available in April 2017 and be used by multiple financial institutions in Japan including major asset managers, NRI officials say.
“The Basel Committee’s final standard on the SA-CCR includes a comprehensive, non-modelled approach for measuring counterparty credit risk associated with OTC [over-the-counter] derivatives, exchange-traded derivatives, and long settlement transactions,” NRI officials say. “With SA-CCR, risk calculations are more complicated and demanding for banks than with the current approach.”
The upgraded T-STAR/GX “will automatically execute calculations for SA-CCR, significantly reducing burdens on banks who usually would need to process these calculations manually, increasing operational efficiency as a result,” NRI officials add.
The T-STAR/GX will address “additional proposals from Basel III” including the new “look-through approach” (LTA) by calculating credit risk-weighted assets and preparing “reports even for funds such as foreign investment funds and fund-of-fund funds, to which the LTA is usually hard to apply,” NRI officials say. “T-STAR/GX can also be used in combination with IDS-BIS, NRI’s integrated data service offering, to assist with Basel III compliance reporting.”
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