ISDA Identifier OverviewMay 2012

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Unique Identifiers ISDA Governance

ISDA Data Working Group

• ISDA UPI Steering Committee

• ISDA UPI Tech and Data group

• ISDA USI Workflow WG

ISDA DWG/CFTC Forum

• Weekly meetings for issues/questions with CFTC Parts 43 and 45

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Unique Product Identifier (UPI)

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Unique Product Identifier (UPI) Overview

Definition (from CFTC regulations)

• Unique identification of a particular level of the taxonomy of the product (CFTC 17 CFR Part 43)

• Sufficient distinctiveness and specificity to enable the Commission and other financial regulators to

fulfill their regulatory responsibilities (CFTC 17 CFR Part 45)

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Progress on UPIs

• Under the oversight of the ISDA DWG, UPI/Taxonomy Steering committee and UPI Technical Data

groups were formed

• The industry has produced OTC taxonomies for each of the asset classes- credit, interest rates,

commodities, equities and FX.

• The taxonomies are a hierarchical view of each of the products.

The ISDA OTC taxonomies and Taxonomy Rules of Operations are freely available on the ISDA website:

http://www2.isda.org/otc-taxonomies-and-upi/

• Credit and Rates taxonomies are considered final while the other asset classes will be made final in

the coming months

• In addition to the work on taxonomies the industry developed two potential approaches towards

UPIs:

1. An unintelligible, algorithmically generated identifier.

2. A ‘ticker-like’ identifier for standardized products.

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Industry Recommendations on UPIs

• Recommend the use of asset class accepted product taxonomy for Part 43 real-time reporting in

lieu of fields listed in Part 43.

• As the use of UPI for Part 43 is optional, ISDA has completed taxonomy definitions for all asset

classes that would ensure that required fields are covered for reporting purposes.

• Recommend that UPIs will only be provided for Part 45 reporting, where appropriate.

• Continue to work with the CFTC in order to get detailed guidance for granularity of UPIs. This will

further categorize products for systemic risk management until such time that the taxonomy

provides sufficient minimum classification.

Industry recommendations made via TAC Sub committee on Data Standardization

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UPI Next Steps

• Publication of taxonomies for credit and rates

• FpML implementation of taxonomies (initially credit and rates)

• Feedback from CFTC on taxonomies

• Discussions with the CFTC on UPI granularity

• Use of proxy UPIs by SDRs

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Unique Swap Identifier (USI)

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Unique Swap Identifier (USI) Overview

Definition• The unique swap identifier (USI) is a CFTC specified unique identifier assigned to all eligible swap

transactions which identifies the transaction (the swap and its counterparties) uniquely throughout its duration. Internationally the USI is referred to as a Unique Transaction Identifier (UTI) Global regulatory and industry harmonization needed so participants are not producing USI and UTIs

Specifications• The USI is a 42-character length alphanumeric identifier that will consist of a namespace and a

unique trade id.

Components of USI• Namespace - It is a ten-digit numeric identifier that consists of a three-digit prefix followed by a

seven-digit identifier unique to each three-character prefix relating to the registrar.• Transaction Identifier – An identifier that uniquely identifies the swap transaction within the

registered entity

103 77777 00000000000000000000000987654321

Prefix

NFA ID

Namespace

Registered entity trade ID (with leading zeros)

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Progress on USIs

• The industry, under the governance of the ISDA Data Working Group, created USI workflow working groups to tackle the challenges of developing USIs to meet the regulatory obligations.

• The group has produced drafts of:

USI Overview document to provide the industry with Design & Guiding Principles that can be used in their internal development of USI generation and consumption, and reporting party guidance for each asset class.

Reporting Party Standards- In addition the group is producing a document that details industry standards for defining reporting party market standards where the CFTC left room for industry interpretation.

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USI Guiding Principles

• The Workflow Working Groups, which started meeting in the fall of 2011, established a set of Guiding Principles for the creation and exchange of USI and a set of Design Principles detailing who creates the identifier and how USIs are exchanged for a set of unique business scenarios.

• USI Guiding Principles1. USI is created following first touch2. USI is created at point of execution, cleared position or following netting cycle3. Reporting Party (RP) will be responsible for the generation of USI for non-SEF/non-DCM trades

and non-DCO positions4. USI may be included with Real Time reporting5. USI will not be publicly reported6. RP will be required to notify the non-RP of the USI 7. The reporting party can assign a 3rd party service provider to generate USI on its behalf.8. If the non-reporting party chooses to submit a voluntary report to the SDR it must include the

USI assigned by the RCP in addition to all other required fields for voluntary reporting.9. The reporting party can assign a 3rd party service provider to generate USI on its behalf.10. If the trade is sent to a DCO for Clearing, the Reporting Party will be required to notify the DCO

of the USI for that trade as well as the identity of the SDR to which the trade has been reported

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USI Reporting Party

• The RP is the party to a swap with the responsibility to report a publicly reportable swap transaction as soon as technologically practicable to an SDR in accordance with the Dodd Frank Act . Under this Act one party must bear responsibility to ensure that the trade is reported. The CFTC has created a hierarchy whereby SDs always report when trading with MSPs and End Users, MSPs always report when trading with End Users.

For swaps executed on facility:• For swap transactions executed on a SEF or DCM the SEF or DCM must report to a real-time

disseminator ‘‘as soon as technologically practicable.’’

For swaps executed off facility: (both US entities)• If only one party is an SD or MSP, the SD or MSP shall be the reporting party.• If one party is an SD and the other party is an MSP, the SD shall be the reporting party.• If both parties are SDs, the SDs shall designate which party shall be the reporting party (see section

4- Same Level Determination of the Reporting Party).• If both parties are MSPs, the MSPs shall designate which party shall be the reporting party (see

section 4- Same Level Determination of the Reporting Party).• If neither party is an SD or MSP, the parties shall designate which party (or its agent) shall be the

reporting party.

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USI Reporting Party

For swaps executed off facility: (one US entity only)

• If one of the parties to a swap is U.S. counterparty and the other is a foreign counterparty, the commission allows parties to a publicly reportable swap transaction to mutually agree on the reporting party for such transaction; such agreement would be a term of the swap.

• The Commission generally agrees that if a registered SD or MSP is a party to a publicly reportable swap transaction, it should be the reporting party, to the extent that such transaction is subject to real-time reporting

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USI Next Steps

• Publication of the final CFTC USI specifications

• Industry discussions on USI / netting of cleared trades

• Finalization of industry USI Guiding Principles

• Finalization of industry Reporting Party Rules

• Industry testing and implementation

• Discussions with regulators- global transaction ids

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Legal Entity Identifier (LEI)

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Legal Entity Identifier (LEI) Overview

Definition• Global Legal Entity Identifiers (LEIs) uniquely identify parties to a financial transaction and provide

regulators with an important tool to help measure and monitor systemic risk.

Specifications• The LEI is a unique 20-character alphanumeric and unintelligible code that would be assigned to all

entities that are counterparties to financial transactions.

The initial data model is expected to include the following mandatory attributes:

LEI (i.e., the identifier itself)

Official name of the legal entity

Address of the headquarters of the legal entity

Address of legal formation

Date of the first LEI assignment

Date of last update of the LEI

The date of expiry, if applicable

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LEI Overview

Who will have LEIs?

• Any legal entity that enters into a financial transaction will be eligible for an LEI. For example:

Transacting entities

Issuing entities

Reference entities

Reporting entities

Ultimate parent entities

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Progress on LEIs

The Global Financial Markets Association (GFMA) brought together the regional trade associations AFME, ASIMFA, and SIFMA and made the following recommendations to global regulators, regarding the creation and management of LEIs:

Standards: ISO 17442 is recommended for use as the new, authoritative legal entity identification standard.

Core Issuing and Facilities Manager: DTCC and SWIFT, along with DTCC’s wholly-owned subsidiary AVOX Limited, are recommended as key partners to operate the core LEI utility as the central point for data collection, data maintenance, LEI assignment, and quality assurance.

Federated Registration: ANNA, through its network of local national numbering agencies (NNAs), is recommended as a key partner in the solution for registering, validating and maintaining LEIs for issuers, obligors, and other relevant parties in their home markets. The NNAs are envisioned to serve as the “face” of the LEI utility to those markets while leveraging the functionality of the centralized LEI utility for the assignment, further validation and global distribution of LEIs.

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LEI Next Steps

• The industry is recommending a phased implementation for 2012 including the use of “proxy LEIs” until such time as the industry can fully adopt and support the approach.

• It is expected that the integration and testing will last no less than 9 months.

• The FSB has also formed an Expert Group who will give a formal recommendation on the LEI to the FSB by the end of April, 2012 which the FSB will present to the G20 members during their 2012 June summit.