FX trade workflows and regulatory change

New regulations mandating clearing of FX OTC products and trade reporting of all non-Spot trades will not only introduce the need to connect to central counterparties (CCPs), Swap Execution Facilities (SEFs) and Trade Repositories to the FX back office, it will also impact all aspects of the clearing workflow for FX derivatives. Nick Dyne and Keith Tippell, co-heads of MarkitSERV’s FX business debunk a few myths around just how much market participants will be impacted by the new regulatory landscape.

First Published: e-Forex Magazine 48 / FX Mythbusters / July, 2012

As a small buy side firm, the new regulations will not affect us greatly as our banks and brokers will send the necessary trades to CCPs and SEFs and report these trades for us.  It will not greatly affect how we process trades today. KT: All buy side firms should, as best practice, store USIs (Unique Swap Identifiers) for all reported FX trades since it will be the specific identifier used by the regulators to investigate any trades.  US entities may have additional reporting obligations over and above this requirement. While the impact of change may not seem particularly onerous to a small buy side firm, appropriate connectivity will still need to be established to accommodate workflow changes.      MarkitSERV is trade source, participant and destination agnostic; our partnership with SWIFT, for example, enables us to process users’ NDF trades through to clearing and to deliver cleared state messages – with USIs as appropriate – back to users. Moreover, many...continued

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