The BBA is now integrated into UK Finance. Please go to www.ukfinance.org.uk for new content and updates from UK Finance.
Material published by BBA prior to 1st July 2017 is still available on this website.
From 1 July 2017, the finance and banking industry operating in the UK will be represented by a new trade association, UK Finance. It will represent around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation will take on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.x
Written by Sam Mannion, Policy Advisor, Capital Markets
The FSB recently met in Amsterdam to discuss developments in creating a Unique Transaction Identifier (UTI) code that will assign all OTC derivative transactions made by financial and non-financial counterparties a unique ID.
Discussion focused on achieving a genuinely harmonised framework for UTIs and Unique Product Identifiers (UPI), which would prevent double-counting and the under-counting of trades and transactions.
The FSB believes that a non-prescriptive approach would be the best way to achieve this in the long-term, with incentives for national competent authorities to adhere to broad guidance, as opposed to a list of strict rules which would have to be adhered to.
Despite this “hands-off” approach, the FSB was clear that any UTI code would need to be generated from the user’s Legal Entity Identifier (LEI). This sparked a wide-ranging discussion on how market users could be incentivised to sign up for LEIs, the take-up of which has been described by some as disappointing.
Although it is true that LEI usage remains an issue, the BBA has advocated for close links with the LEI in the past and was pleased to see the FSB accept this argument.
Perhaps unsurprisingly, one of the biggest concerns from attendees was the potential cost of UTI. While industry broadly supports the goal of data harmonisation and aggregation, and has cooperated with the development of codes to achieve this, if the burden of utilising UTI, UPI, LEI, Unique Swap Identifiers and other codes proves excessive it will act as a disincentive for firms to continue business as usual.
The FSB affirmed their intention to develop a UTI that was as close to the development model of LEI as possible. They also gave guarantees on the importance of preserving reporting data quality.
Industry remains committed to ensuring the highest possible standards of data quality and cooperating with regulators to reduce systemic risk through monitoring and supervision.
The technical guidance put forward by the FSB so far has remained in line with these, although there remain a number of outstanding questions we will continue to engage on this issue going forward, including whether there is value in having a wider governance framework sitting above the EU competent authorities.