The International Organization of Securities Commissions (IOSCO) has published a consultation report on post-trade transparency in the credit default swaps (CDS) market.
The consultation report seeks to analyse the potential impact of mandatory post-trade transparency in the CDS market. This analysis is based upon a review of the relevant works of international standard setting bodies and academic literature, an examination of publicly available transaction-level post-trade data about CDS and a survey of market participants and other market observers regarding their use of certain publicly available post-trade data and its perceived impact on the market.
Part VII of the consultation report sets out IOSCO’s preliminary conclusions and recommendations. IOSCO preliminarily believes that greater post-trade transparency in the CDS market would be valuable to market participants and other market observers. To deliver the anticipated benefits of post-trade transparency IOSCO suggests that jurisdictions may wish to consider the following:
- the maximum permissible delay between time of execution and time of public dissemination of the price and volume of an individual CDS transaction;
- whether special rules are necessary for public dissemination of the price and volume of large or “block” transactions and, if so, rules that determine what constitutes such a transaction;
- measures to ensure confidentiality of the identities of the market participants, which could include “capping” or “bucketing” the true notional size of the transaction, particularly in small or illiquid markets in which trading is concentrated in one or two key market participants;
- whether the potential for loss of confidentiality in small or illiquid markets may be less pronounced for CDS products that are frequently traded in other larger, more liquid markets;
- implementing post-trade transparency in phases, focusing on the most frequently traded standardised products and/or the largest or more frequent market participants in earlier phases and on less frequently traded products and/or the smaller or less frequent market participants in later phases; and
- consulting with authorities in other jurisdictions as appropriate, recognising that each member jurisdiction is best placed to judge the extent of any such consultation and the appropriate time and manner for enhancing post-trade transparency for CDS that trade in its respective market.
The deadline for comments on the consultation report is 15 February 2015.
View IOSCO consults on post-trade transparency in credit default swaps market, 17 November 2014