North American Regulations

Q4 of 2023 has been a very busy year for market participants in the U.S. and Canada as many firms are preparing for the January 29th go live of UPI for FX, Rates, Credit and Equity. Although the concept of UPI is fairly straightforward, the actual implementation and enrichment is actually more complicated and burdensome than many in the industry have anticipated. Understanding the product attributes required for enrichment, the actual enrichment itself, upgrading open positions and maintenance of the UPI database are all critical components and have required extensive business analysis and testing to ensure the correct UPIs are being used, and when a UPI is not available, what is the workflow/process to create a new one or source one from the SDR or counterparty.

Even with this implementation focus, the CFTC has been busy working on another proposed rewrite of 43 and 45, with a request for comment on the proposed rules and technical specifications published in the federal register on December 28th. Some key considerations worth highlighting:

• Requirement to report UPI for Commodities
• Geographic masking on commodities UPI for part 43
• New data fields (entity designations, clearing related fields, notional amounts/quantities, etc.)
• Target compliance date, 1 year after final rules (possibly Q2/Q3 2025)

Another major event was the publication of the SEC 10c-1 final rules on October 13, 2023. These rules now formalize the requirements of reporting securities lending transactions in the U.S. Some of the key requirements are outlined here:

• 10c-1 is the new securities lending regulation published by SEC to bring transparency to the securities lending market in the U.S.
• Lenders, Lending Agents or Brokers will need to report
• 3rd party service providers can be used to assist firms

Even though the go live is in January 2026, the technical specifications/requirements will be published by May 2024, which means only an 18-month implementation window. Cappitech will be hosting webinars and customer forums to discuss the new requirements and how we are leveraging our industry leading SFTR solution to help the industry comply with their 10c-1 requirements.

S&P Global provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.