The commonly used identifier amongst the European regulators, the International Securities Identification Number (ISIN) has traditionally played a crucial role across various regimes. Nevertheless, a notable change is underway with the introduction of the Unique Product Identifier (UPI) which will now be used for OTC derivative transaction reporting for EU and UK EMIR Refit (as well as some other global regimes like CFTC, ASIC, MAS). The shift has raised the possibility that post-trade transparency (RTS 2) may adopt the UPI+ concept (or UPI Plus relevant fields).
The FCA is actively considering mandating the use of UPI+ for reporting OTC derivatives under the revised transparency requirements. ESMA holds a different stance, resisting the replacement of ISINs with UPI+ for OTC derivatives. ESMA’s primary concern revolves around the associated costs tied to the transition between identifiers.
Why the change?
Given the detailed nature of each OTC derivative instrument, a single product may be assigned different ISINs based on variations in its Maturity Date. This poses a challenge for individuals relying on derivative information to follow the price trends of a product. Maintaining a consistent product identifier throughout the year would address this issue, ensuring uniformity in transparency information regarding the product’s price development. Hence, with the introduction of the UPI and its availability on ANNA-DSB’s UPI database, the regulators have expressed the possibility of developing a concept of UPI+ (or UPI Plus relevant fields) to accurately capture information on OTC derivative instruments.
Will this impact transaction reporting?
The proposal is to modify the fields in RTS 2 reporting by incorporating the UPI along with supplementary fields in the reporting table. The UPI+ is proposed to enhance the consistency of MiFIR transparency information, impacting specifically MiFIR post-trade transparency reporting.
At this stage, discussions regarding changes to MiFIR transaction reporting have not taken place.
