FSB publishes UPI governance arrangements

9 October 2019

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Ref no: 31/2019

The Financial Stability Board (FSB) has today published a report on the governance arrangements for the globally harmonised Unique Product Identifier (UPI).

The UPI will uniquely identify the product involved in over-the-counter (OTC) derivatives transactions reported to trade repositories. This will help authorities to aggregate data on OTC derivatives transactions by product. Such aggregation will facilitate the effective use of OTC derivatives trade reporting data to help authorities assess systemic risk and detect market abuse. It will therefore deliver one of the key objectives of the G20 reforms to OTC derivatives markets.

The Legal Entity Identifier Regulatory Oversight Committee (LEI ROC) is best positioned to become the International Governance Body for the UPI and Unique Transaction Identifier (UTI) and critical other elements other than UTI and UPI (CDE), provided that the LEI ROC makes appropriate adjustments to its existing governance to make it fit for purpose for these identifiers. The FSB takes this decision in coordination with the Committee on Payments and Market Infrastructures (CPMI) and International Organization of Securities Commissions (IOSCO), which were tasked to develop governance arrangements for the CDE. In the interim, the FSB will take on the functions that have been allocated to the International Governance Body.

The FSB also recommends that jurisdictions undertake necessary actions to implement the UPI Technical Guidance and that these take effect no later than the third quarter of 2022.

Notes to editors

G20 Leaders agreed at the Pittsburgh Summit in 2009, as part of a package of reforms to the OTC derivatives markets, that all OTC derivatives transactions should be reported to trade repositories. A lack of transparency in these markets was one of the key problems identified by the financial crisis. Trade reporting, by providing authorities with data on trading activity, is a key part of efforts to identify and address financial stability risks from these markets.

The final report of the FSB’s Feasibility study on approaches to aggregate OTC derivatives data published in September 2014 recommended a number of key preparatory steps that should be undertaken to enable effective global aggregation of OTC derivatives trade reporting data. One of these preparatory steps is harmonisation of important data elements reported to trade repositories, including the creation of a UPI and UTI, and the global introduction of a Legal Entity Identifier (LEI).

The FSB announced in May 2019 that it had designated The Derivatives Service Bureau (DSB) Ltd as the service provider for the future UPI system

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Randal K. Quarles, Governor and Vice Chairman for Supervision, US Federal Reserve; its Vice Chair is Klaas Knot, President, De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

Governance arrangements for the UPI

| PDF full text (433 KB)

This report sets out governance arrangements for the globally harmonised Unique Product Identifier (UPI).

G20 Leaders agreed at the Pittsburgh Summit in 2009, as part of a package of reforms to the over-the-counter (OTC) derivatives markets, that all OTC derivatives transactions should be reported to trade repositories. A lack of transparency in these markets was one of the key problems identified by the financial crisis. Trade reporting, by providing authorities with data on trading activity, is a key part of efforts to identify and address financial stability risks from these markets. The UPI will uniquely identify the product involved in OTC derivatives transactions reported to trade repositories. This will help authorities to aggregate data on OTC derivatives transactions by product. Such aggregation will facilitate the effective use of OTC trade reporting data, including helping authorities assess systemic risk and detect market abuse. It will therefore deliver one of the key objectives of the G20 reforms to OTC derivatives markets.

The final report of the FSB’s Feasibility study on approaches to aggregate OTC derivatives data published in September 2014 recommended a number of key preparatory steps that should be undertaken to enable effective global aggregation of OTC derivatives trade reporting data. One of these preparatory steps is harmonisation of important data elements reported to trade respositories, including the creation of a UPI and Unique Transaction Identifier (UTI) and the global introduction of a legal entity identifier (LEI).

The Legal Entity Identifier Regulatory Oversight Committee (LEI ROC) is best positioned to become the International Governance Body  for the UPI and UTI and critical other elements (CDE) other than UTI and UPI. The FSB takes this decision in coordination with the Committee on Payments and Market Infrastructures (CPMI) and International Organization of Securities Commissions (IOSCO), which were tasked to develop governance arrangements for the CDE. In the interim, the FSB will take on the functions that have been allocated to the International Governance Body.

The FSB also recommends that jurisdictions undertake necessary actions to implement the UPI Technical Guidance and that these take effect no later than the third quarter of 2022.

Governance Arrangements for critical OTC derivatives data elements (other than UTI and UPI)

View the Standard: CPMI | IOSCO

The G20 Leaders agreed in 2009 that all over-the-counter (OTC) derivative transactions should be reported to trade repositories (TRs) to further the goals of improving transparency, mitigating systemic risk and preventing market abuse. Aggregation of the data being reported across TRs will help authorities to obtain a comprehensive view of the OTC derivatives market and its activity. Such aggregation is feasible if “the work on standardisation and harmonisation of important data elements [is] completed”.

The CPMI and IOSCO have published technical guidance to harmonise the Unique Transaction Identifier (UTI), the Unique Product Identifier (UPI) and other critical OTC derivatives data elements (CDE) that may be reported to TRs.

The guidance on governance arrangements for CDE other than UPI and UTI promotes oversight and maintenance of the CDE.

Ryozo Himino appointed Chair of the FSB’s Standing Committee on Supervisory and Regulatory Cooperation

2 September 2019

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Ref no: 30/2019

The Financial Stability Board (FSB) has appointed Ryozo Himino, Vice Minister for International Affairs at the Japanese Financial Services Agency, as Chair of the FSB’s Standing Committee on Supervisory and Regulatory Cooperation (SRC), for a two-year term starting on 1 September 2019.

Mr. Himino succeeds Norman Chan, Chief Executive of the Hong Kong Monetary Authority, who has served as SRC Chair since April 2017.

The SRC’s mandate includes addressing key financial stability issues relating to the development of supervisory and regulatory policies; assisting in managing the coordination issues that arise among supervisors and regulators on issues that have cross-sector implications; setting guidelines for and overseeing the establishment and effective functioning of supervisory colleges; and advising on and monitoring best practice in meeting regulatory standards.

Randal K. Quarles, FSB Chair, welcomed Mr Himino’s appointment, noting his long and distinguished career in public service and his deep experience in international supervisory and regulatory policy matters. He also expressed the FSB’s appreciation for Norman Chan’s effective chairmanship of the SRC and his commitment to the FSB since he became a member in October 2009.

Notes to editors

Ryozo Himino has been the Vice Minister for International Affairs of the Japanese Financial Services Agency since 2016. At the Agency, he has supervised banks, insurance companies, broker dealers and audit firms and regulated capital markets during the last two decades. He also served as the Secretary General of the Basel Committee on Banking Supervision from 2003 to 2006.

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Randal K. Quarles, Governor and Vice Chairman for Supervision, US Federal Reserve; its Vice Chair is Klaas Knot, President, De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

Industry workshop on continuity of access to FMIs for firms in resolution

28 August 2019 | PDF full text (213 KB)

This note provides an informal summary of a workshop on implementation of the FSB’s Guidance on Continuity of Access to Financial Market Infrastructures (“FMIs”) for a Firm in Resolution held in Basel in May 2019. The workshop provided an opportunity for industry participants to share views and experiences in implementing the Guidance and to discuss ways to support and enhance this work to facilitate continuity of access to FMIs for a firm in resolution. We thank all those who participated in the workshop.

The FSB has committed to monitoring implementation of the Guidance and to consider what further actions could be undertaken to assist authorities and firms in their implementation efforts.

As part of the 2018 review of its processes and transparency to maximise its effectiveness, the FSB decided to make more frequent use of stakeholder workshops to support its outreach. This workshop is part of the follow-up to that decision.

Public responses to the Evaluation of the effects of financial regulatory reforms on small and medium-sized enterprise (SME) financing

21 August 2019

Summary of document history

Summary of document history

On 7 June 2019, the FSB published an Evaluation of the effects of financial regulatory reforms on small and medium-sized enterprise (SME) financing for public consultation. Interested parties were invited to provide written comments by 7 August 2019. The public comments received are available below.

Responses received

The FSB thanks those who took the time and effort to express their views. The FSB expects to publish the final evaluation report in November 2019, along with a summary on how the FSB has responded to consultation responses.