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1. Opening Remarks
The Chair welcomed those who had joined the meeting of the Post-Trade Task Force (the “Task Force”) and thanked the participants and their respective institutions for their engagement since the previous meeting. The Chair noted that there has been good progress by each working group (“WG”) since the previous meeting.
Sigal Zarmi (“SZ”) explained that this was her last Task Force meeting and introduced Merev Pepere (“MP”), who will be taking over from SZ on the Task Force. The Chair welcomed MP and thanked SZ for her contributions.
2. Working Group Updates
The Chair of each WG gave an update on progress.
Siobhan Clarke (“SC”) gave an update in respect of the Client Onboarding WG. SC noted that there has been good progress since the previous meeting on both the KYC Passporting paper, a draft of which was available at the meeting, and the Institutional KYC onboarding requirements analysis. SC further noted that the main feedback received so far has been that to make meaningful progress in this area it is believed that obtaining some form of endorsement or other support from relevant regulators will be necessary. Andrew Douglas (“AD”) agreed, noting by analogy that there was limited uptake of legal entity identifiers (“LEIs”) when LEIs were merely a voluntary standard, but when ESMA mandated the use of LEIs under EMIR there was a significant increase in their use.
Benjamin Bowry (“BB”) stated that he would like to discuss early drafts of both the passporting paper and the data dictionary with colleagues at the Bank of England. BB asked the WG to consider recommendations it can make that industry will be able to take forward in the absence of a regulatory mandate.
The Task Force discussed what other options might exist to incentivise uptake, such as publishing a ranking system, but agreed that lack of either an economic incentive or a regulatory mandate would inhibit uptake.
SZ noted that the WG had been focusing on identifying the “pain points” for uncleared margin and collateral. SZ added that consistent processes and leveraging technology were likely critical responses to the current low uptake of industry solutions. SZ also stated that the ability to enforce relevant standards remained a serious challenge.
Clair Grayston observed that simply articulating best practice and raising awareness would likely not itself drive adoption, rather there is a need to be more transformational. In a Future Themes paper the WG is working on, a draft of which was available at the meeting, industry wide data standards, digitisation across lifecycle, more use of central utilities & data repositories, and opportunities for DLT solutions & tokenisation are being highlighted. Philip Glackin noted that vendors of utilities are keen to know what the future looks like in this space. Gareth Jones further noted that regulatory engagement will be important because there is real systemic risk when it comes to the scale of daily payments relating to margin calls.
Non-Economic Trade Data
Ify Ekize (“IE”) explained that the Non-Economic Trade Data WG had split into two to discuss use cases around the challenge of who traded with whom (LEIs) and that of Standing Settlement Instructions (“SSIs”) in depth.
IE noted that, in relation to SSIs, standardisation and change of behaviour are key themes. One possible recommendation was that an industry group be created that would define what relevant standards would be, though again it was felt that a regulatory mandate would likely be more impactful.
The Chair asked if the WG supported asking ISDA or another industry body to assist with ongoing standard-setting and maintenance. Sanjay Dhir (“SD”) asked for members to email him directly if they would like to be involved in conversations with any of these industry bodies.
3. Next Steps and Closing Remarks
The Chair explained that each WG now has a defined problem area, has set out why solving their problem would make a difference, why their problem has not been solved in the past, and have provided some suggestions of how to potentially solve their problem.
SD asked if WGs and the Task Force need one or two more meetings before they can finalise their various outputs. SD noted that the objective will then be to draw out common themes, such as the need for regulatory support, standardisation, and the use of new technology.
SD noted that the Task Force could, subject to member’s diaries, meet again towards the end of July to have a similar discussion with near final proposals which by then should be largely written up in draft. Members agreed with this suggestion. The Chair noted that Andrew Hauser could be invited to join the discussion at a future meeting.
The Chair mentioned the possibility of inviting FMIs and Fintechs to attend a meeting with the Task Force at a future date to discuss the commercial viability of each WG’s proposals.
The Chair asked if there was any other business. Michael Kent noted that he would follow- up with some members to ensure formalities relating to their involvement with the Task Force had been completed.
David Hudson (Chair), JP Morgan
Chris Bush, Bank of America
Gerson Riddy, Barclays
Jeremy Lewis, Credit Suisse
Andrew Douglas, DTCC
Gareth Jones, Euroclear
Risa Lederhandler, Goldman Sachs
Sanjay Dhir, JP Morgan
Marcus Robinson, LCH
Siobhan Clarke, M&G Investments
Sigal Zarmi, Morgan Stanley
Merav Pepere, Morgan Stanley
Michael Irwin, XTX Markets
Robert Lamb, Blackrock
Akbar Sheriff, State Street
Benjamin Bowry, Bank of England
William Rawstorne, Bank of England
Ify Ezike, Blackrock
Philip Glackin, JP Morgan
Michael Kent, Linklaters
Elliot Jack, Linklaters
Aamanveer Binning, M&G Investments
Clair Grayston, Morgan Stanley
Anabel Thomson, Re:link