February 28, 2014

Comment on Feasibility study on approaches to aggregate OTC derivatives trade repository data
published by the Financial Stability BoardJapanese Bankers Association

We, the Japanese Bankers Association, would like to express our gratitude for this opportunity tocomment on Feasibility study on approaches to aggregate OTC derivatives trade repository data
published by the Financial Stability Board (the “FSB”). We respectfully expect that the following
comments will contribute to your further discussion on this issue.

1.

Consultation Paper P.15 3.2 d)

As an example of a case where double counting of derivatives trade data may occur, the Consultation
Paper illustrates an instance of varying reporting requirements being established across nationalauthorities. In addition to such an example, double reporting may involve a following practical issue
for a reporting institution to report to relevant national authorities.
Trade execution data for derivatives managed on a global basis (including globally-managed
CSA collateral data) is in general managed based on “netting sets” that are globally netted.
Consequently, the reporting of pre-netting trade information by location may not necessarily
represent the actual picture of credit risk, and moreover such reporting may lead to a risk ofdouble-counting.

This issue can be resolved by taking an action, for example, collectively reporting globally-managed
trade data from the parent company and head office responsible for global management (reporting ata location level is not required). It is therefore requested to consider avoiding the above
double-counting issue by harmonising the reporting requirements across national authorities.

2.

Consultation Paper P.35 5.5.2

The Consultation Paper propose the following approaches, stating “Standardisation can arise at twodifferent points […] Upstream of each TR by elaborating common standards for reporting to TRs in
the first place and Downstream from TRs by using a translation mechanism to aggregate and sharedata originally provided in different formats”. The latter approach is viewed as complementary to theupstream aggregation. Considering the idea underlying the Consultation Paper as noted in Preface
p.ii “the aggregation options are being considered on the basis that they would complement, ratherthan replace, the existing operations of TRs and authorities’ existing direct access to TR data”, it is1

requested to adopt the latter approach that does not require an additional action by private financial
institutions.
Further, the Consultation Report identifies the following data elements for data standardisation
purposes: (i) Counterparty identifier (LEI: Legal Entity Identifier), (ii) Product identifier/productidentification taxonomy (UPI: Unique Product Identifier) and (iii) Transaction/trade identifier (UTI:
Unique Transaction/Trade Identifier), and further states that the standardisation of (ii) UPI and (iii)
UTI across markets and geographies has lagged behind the development of counterparty identifiers(i.e. the LEI), and are not yet available on a global basis.
To achieve harmonisation of data standardisation for complicated trade data such as derivatives, it isessential to develop a data dictionary and taxonomy, and establish a data maintenance/governancesystem in order to enable medium- to long-term use of data on a global basis. Therefore, measuresand approaches proposed in the Consultation Report should be promoted based on a medium-to longterm plan agreed with private financial institutions so as to avoid any additional cost being incurredon private financial institutions for taking any short-term and ad-hoc actions.

3.

Consultation Paper P.40 Chapter 6 (Question 3 raised in the Press Release of the Consultation
Report)

The Consultation Report proposes a list of criteria to assess the different options for data aggregationfrom the following four aspects: (i) uses, (ii) legal, (iii) data and (iv) technology. These criteria,
however, do not cover costs that may incur on private financial institutions and the period required
for them to comply with the reporting and aggregation requirements. Given that the reporting
requirements of OTC derivatives trade data are already implemented in major national authorities,
the above criteria “cost” and “period required” should be added.

4.

Consultation Paper P.42 Chapter 7 (Question 4 raised in the Press Release of the Consultation
Report)Instead of uniformly developing data aggregation options on a global basis, an alternative approachshould be considered; for example, allowing each national authority to define aggregation options on
a reporting financial institution-basis or reporting product-basis, or combination of these, taking intoaccount the volume of derivatives traded by reporting financial institutions, their business type/sizes
and other factors.

5.

Question 5 raised in the Press Release of the Consultation Report

The disclosure of the trade data to the markets should be limited to the transaction volume subject toaggregation. Any information that may allow users of information to infer the name of the reporting
financial institution, the name of a counterparty, exposures held by the reporting financial institution,2

and its operation policy should not be disclosed. If aggregated data is to be disclosed, pre-hearing
should be conducted with participants of a transaction or other stakeholders in a sufficient manner so
as to avoid causing any adverse impact on the pricing mechanism of markets, etc.

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