September 27, 2018
Secretariats ofThe Committee on Payments and Market Infrastructures
The International Organization of Securities Commissions

Comments on Consultative Report “Governance arrangementsfor critical OTC derivatives data elements (other than UTI and UPI)”
Dear Sirs/Madams:
We, the Japanese Bankers Association, would like to express our gratitude for thisopportunity to comment on “Governance arrangements for critical OTC derivatives dataelements (other than UTI and UPI)” issued on August 16, 2018 by the Committee onPayments and Market Infrastructures (“CPMI”) and Board of the International Organization ofSecurities Commissions (“IOSCO”). We respectfully expect that the following comments willcontribute to your further discussion.
[General Comments]
Harmonising CDEs and implementation timing
An organisation designated as an International Governance Body should be
responsible for appropriately supervising the status of implementing CDE at respective
jurisdictions and harmonise data elements included in CDE as well as implementation
timing as much as possible.
(Rationale)
If harmonised data requirements are not implemented by national regulations, thereporting parties incur extra costs and inefficiencies to file transaction reports using different
formats required by respective jurisdictions. In addition, authorities would not be able toaccurately capture market conditions on a global basis if data that differs across jurisdictions isaccumulated, thereby failing to achieve the original objective of introducing transaction
reporting obligations that is to ensure market transparency. As indicated in the CDE TechnicalGuidance, although we understand that data elements to be included in CDE would varyacross jurisdictions, we request a designated International Governance Body to seek toharmonise data elements as much as possible and monitor the implementation status of eachjurisdiction.

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If timing of introduction of CDE to cross-border transactions varies across jurisdictions,
eventually, entities need to take compliance actions in line with the ones which start earlier.
This may cause confusion to entities in taking compliance actions at each jurisdiction, and it
may lead to market fragmentation. To avoid such problems, an organisation which isdesignated as an International Governance Body should be responsible for appropriately
monitoring the status of implementing CDE and, as much as possible, harmonising timing ofimplementation by laws or regulations at respective jurisdictions. Such an International
Governance Body should play a key role in ensuring that no jurisdiction would extremely
accelerate timing of implementation.
Transaction reporting obligations entail systems development and changes in operationalflows, and entities need to take actions to implement other transaction reporting data elements
such as UTI. Therefore, when considering implementation timing to be finalised in thegovernance arrangements, we request the CMPI and IOSCO to give due consideration toensuring entities sufficient lead time for taking compliance actions. In this regard, given that
CDE to be implemented include wide-ranged data elements, imposing considerable regulatoryburdens on entities, it is advisable to set lead time for several years after the finalisation of thegovernance arrangements.
[Specific Comments]
2. Key criteria for the CDE governance arrangements
Q1: With reference to the key criteria of the CDE maintenance and governanceframework (Section 2):c) Do you think any of the key criteria should be modified? If so, which ones should bemodified, why and how?

(Comment)
With respect to “Lean,” “low cost” should be regarded as most important.
(Rationale)
A mechanism that will incur minimum cost should be established to introduce andmaintain a CDE framework without imposing undue economic burdens on financial
institutions as CDE has limited cost-recovery measures.
3. CDE areas of governance functions
Q2: With reference to the CDE areas of governance functions (Section 3):a) Can you suggest any refinements or additions to the articulated governance functions?

(Comment)
In monitoring the implementation of the CDE Technical Guidance at the global level(Section 3.5), due consideration should also be given to setting sufficient lead time and2harmonising implementation timing across jurisdictions.
(Rationale)
As noted in “General Comments,” if timing of implementing CDE differs acrossjurisdictions, internationally active financial institutions may be forced to carry out systemmodifications several times to meet reporting requirements that differ across jurisdictions.
Furthermore, there is a possibility that some jurisdictions extremely accelerate implementation
timing without setting sufficient lead time although the development of infrastructure may
require considerable time. As a consequence, financial institutions may incur unnecessary costto fulfill the objective of the requirements. In this regard, CDE should be implemented withina harmonised timeframe that allows sufficient lead time across jurisdictions as much as
possible so as to at least prevent some jurisdictions from unduly accelerating implementation
timing. Therefore we believe it is necessary to monitor the timing of implementation on
particular among other things.
4. A proposed allocation of CDE governance functions to different bodies
Q3: With reference to the proposed allocation of CDE governance functions to different
bodies (Section 4):c) In relation to the proposed governance arrangements under point 4.2.1, what process
should the IGB use to consult and gather feedback from the industry, and why?

(Comment)
As in the case with the development of technical guidance, we suggest to gather feedback
through public consultation.
(Rationale)
When discussing CDE Technical Guidance, there were opportunities to have dialogues
between CPMI/IOSCO and market participants through public consultation and workshops.
Similar as the process taken before, the IGB should use public consultation to appropriatelyreflect market practices.
6.2 Allocation of the execution of the CDE maintenance functions to ISO
Q5: With reference to the Allocation of the execution of maintenance functions of CDE toISO (Section 6.2):b) If a decision were taken to adopt the CDE as International Data Standards, should theCPMI and IOSCO seek to specify any conditions or limitations on ISO concerning themaintenance of the CDE Data Standards? If so, which?

(Comment)
No conditions or limitations need to be specified.

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(Rationale)
If the ISO makes considerations with high reliability and sufficient depth by taking theCDE Technical Guidance into account, we believe it is not necessary to add any furtherconditions or limitations.
7. Factors relevant to identification of the International Governance Body for CDE inareas 2, 3, and 4
Q7: With reference to the factors relevant to the identification of the International
Governance Body for CDE in areas 2, 3, and 4 (Section 7):a) Should the International Governance Body be an existing body or is there a need tocreate a new body? Especially if an existing body, how important should experience/trackrecord be as a consideration in the choice of IGB?

(Comment)
The International Governance Body should be an existing body.
(Rationale)
Cost of introducing and maintaining CDE should be low as it only has limited
cost-recovery measures. If an existing body is appointed as the International Governance Body,
initial costs may be limited at a lower level, and it is highly likely that they could make a gooduse of experiences gained through implementing other regulations on CDE governance.
b) If any International Governance Body would need to absorb significant cost in order todevote sufficient resources to serve effectively in that role (possibly, for example, in thecase of a public-public partnership), how should such costs be allocated among
stakeholders?

(Comment)
We consider it is important for the International Governance Body to play an effectiverole in coordination among national authorities and conduct other necessary businesses.
However, as a prerequisite for this, there should be a framework that does not incur substantial
cost burden so that the private sector does not bear any undue cost.
(Rationale)
The implementation of CDE requires amendments to the existing framework so as toenhance the convenience of oversight by the authorities, and these requirements bring limited
benefits to transaction monitoring by private financial institutions. Therefore, CDE should bestructured in a cost-free manner as much as possible. Considering these, the implementationand maintenance of CDE should be carried out in a coordinated manner among national
authorities (public-public partnership), and should not impose undue cost on the private sector.

4e) Taking account of the factors described above and other factors deemed important, which
body (or bodies) should the CPMI and IOSCO consider as candidates to serve as anInternational Governance Body for CDE? Which factors are most influential as the basisfor such recommendation(s)?

(Comment)
We consider it appropriate for the CPMI and IOSCO to be responsible for the roles of theInternational Governance Body.
(Rationale)
From perspectives of both ability and cost, the most efficient approach is to designate theCPMI and IOSCO, to serve the roles of the International Governance Body which coordinates
decision-making among national authorities since they developed the CDE TechnicalGuidance, and its members are comprised of national authorities.

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