IOSCO together with the BIS and OICV have issued technical guidance on the harmonisation of the Unique Transaction Identifier, which is hoped will lead to a global scheme to be used across all financial trade reporting rules globally. The announcement can be found here and the document here.
Trade reporting schemes such as those under the EMIR and Dodd Frank rules require that trades be uniquely identified. The schemes each require an ID to be sent as part of the trade record. The task of ensuring that the IDs are unique is a challenge, especially when a trade falls under more than one jurisdiction. In addition, when reporting is “double sided”, such as under EMIR, each party must send in a record with a matching UTI. For bilateral trades, determining which side should generate the UTI and its dissemination to the other side in time for reporting can be a challenge. Several “UTI generation” algorithms also exist which attempt to permit each party to generate the same UTI without dissemination, by using trade attributes as parameters.
As mentioned in the announcement, the advice is a framework which comments on the following aspects of UTI generation:
- The circumstances in which a UTI should be used
- The impact life cycle events should have on the UTI
- Which entity (or entities) should be responsible for generating UTIs
- When UTIs should be generated
- The UTI’s structure and format
The new version of the EMIR reporting RTS mandates who is responsible for UTI generation in a hierarchy. In addition, it states that when a “Global UTI” scheme is approved, it will be applicable to EMIR. This technical advice is likely to lead to such a scheme coming into use.