# Banks Lead Industry Preparations for MiFID II Reporting of OTC Derivatives Reference Data Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2017-12-15 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: DSB Reports Rise in Contract Submissions Meta Description: Find out how DSB users are changing, including growth in fee-based contracts for ISIN creation and programmatic connections for automated operations. URL: https://financedigest.com/banks-lead-industry-preparations-for-mifid-ii-reporting-of-otc-derivatives-reference-datahtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/fd151217-3-1736843141251-compressed.jpg) _Contract Submissions Suggest Changing Profile of DSB User Base_ The Derivatives Service Bureau (DSB) reports today on progress in new contracts received for fee-based services. These include creation of new International Securities Identification Numbers (ISINs) for OTC derivatives and programmatic connections to the DSB which enable fully automated operations and real-time updates. As of 7 December, 77 entities have submitted contracts in which fees are applicable, more than [doubling the number reported](https://www.financedigest.com/deliveroo-reports-doubling-in-gross-order-value-in-first-half.html "Deliveroo reports doubling in gross order value in first half") last month.  Another 74 firms have registered for no-cost [data services](https://www.financedigest.com/meeting-the-data-challenge-in-financial-services.html "Meeting the data challenge in financial services"). Emma Kalliomaki, managing director of the DSB, says, “In the run- up to the January deadline, our administrative and technical staff are working overtime to facilitate user [contracts and expedite integrations](https://www.financedigest.com/the-next-upcoming-years-to-see-the-oral-solid-dosage-contract-manufacturing-market-integrating-constructive-innovation.html "The Next Upcoming Years To See The Oral Solid Dosage Contract Manufacturing Market Integrating Constructive Innovation") with user systems for MiFID II readiness. Not surprisingly, we have found that organizations that helped shape our policies and operations through the DSB’s industry consultations tend to have easier onboarding experiences because they are better informed and prepared.” A [trend emerging](https://www.financedigest.com/blood-bag-tube-sealer-market-to-witness-excellent-revenue-growth-overview-emerging-trends-and-forecast-by-2028.html "Blood Bag Tube Sealer Market to Witness Excellent Revenue Growth, Overview, Emerging Trends and Forecast by 2028") among the fee-based contracts is the higher than expected proportion of participation by banks (both global and regional), major buy-side firms and smaller trading venues. Anticipated participation by larger trading venues has not yet materialized. According to indications received by the DSB, some organizations owning multiple [trading venues may limit](https://www.financedigest.com/indias-carmakers-back-zero-duty-on-limited-british-imports-under-trade-deal-sources.html "India’s carmakers back zero duty on limited British imports under trade deal – sources") ISIN-creation activity to only a few of their venues, rather than all as previously expected. **Evolving DSB Fee Distribution Profile** The breakdown of fee-paying users is as follows: - 66 Power Users – connecting programmatically - 5 Standard Users – ISIN creation via web interface - 6 Infrequent Users – low-volume ISIN creation via web interface The DSB is an [industry utility](https://www.financedigest.com/demand-for-electrical-safety-insulating-gloves-is-strong-in-the-power-utility-industry-unveils-fact-mr.html "Demand for Electrical Safety Insulating Gloves Is Strong In The Power Utility Industry Unveils Fact.MR") that operates on a cost-recovery basis – that is, recovering its overhead cost through user fees. No profits are obtained from [cost recovery](https://www.financedigest.com/uk-car-output-rises-in-august-soaring-costs-cast-shadow-over-recovery.html "UK car output rises in August, soaring costs cast shadow over recovery") operations, and each additional contract lowers the fees for all others. Final fees for the first contract period from 2 October 2017 to 31 December 2018 will be announced on 15 January 2018, and based on contracts received by 5 January 2018. [Considering the contracts](https://www.financedigest.com/4-questions-to-consider-before-embarking-on-a-contract-packaging-expansion.html "4 questions to consider before embarking on a contract packaging expansion") received to date and indications from the larger trading venues, the DSB is projecting that fees paid by investment banks may be required to cover 60 percent of the overhead of the service, with 15 percent of costs covered by vendors and the buy-side. With the delay in contract submissions and indications of reduced numbers of contracts from larger venues, the DSB is estimating the venues’ [share of overhead recovery](https://www.financedigest.com/european-shares-rally-as-china-stimulus-lifts-recovery-hopes.html "European shares rally as China stimulus lifts recovery hopes") may be as little as 25 percent. Malavika Solanki, Principal Consultant at Etrading Software, the [Management Services](https://www.financedigest.com/cyclic-innovation-to-drive-the-medical-case-management-services-market.html "Cyclic innovation to drive the Medical Case Management Services Market") Partner of the DSB, notes, “The increased activity seen in the last month was driven by firms wishing to be in production by mid-December. However, new contracts continue to arrive and are moving through the onboarding process at a [steady pace](https://www.financedigest.com/ecb-should-raise-rates-at-steady-pace-chief-economist-says.html "ECB should raise rates at steady pace, chief economist says"). We look forward to [working with industry to further evolve the service](https://www.financedigest.com/hybrid-working-a-risk-or-opportunity-for-the-financial-services-industry-2.html "Hybrid working: a risk or opportunity for the financial services industry?") and deliver greater operational efficiencies.” **ISINs Available for Regulatory Reporting** Users have created more than 625,000 ISINs since the [service was opened](https://www.financedigest.com/how-open-source-technology-is-securing-the-future-of-financial-services.html "How open-source technology is securing the future of financial services") in October for on-demand ISIN generation and retrieval. The DSB’s initial adopters had focused on equity derivatives, with increasing volume of FX and interest [rate products](https://www.financedigest.com/organic-milk-powder-market-regional-industry-segmentation-analysis-by-production-consumption-revenue-and-growth-rate-by-2027.html "Organic Milk Powder Market Regional Industry Segmentation, Analysis by Production, Consumption, Revenue and Growth Rate by 2027") appearing in recent weeks. **Meeting the SLA** In the first two months of operation, the DSB has met all its performance and resiliency targets, including surpassing the 99.9% availability rate of the service level agreement (SLA) with zero outages in production. Similarly, the performance of the system has surpassed the 1000ms requirement of the latency SLA, with the DSB processing 99% of all requests within 220ms. “The resiliency and performance targets of the [service reflect](https://www.financedigest.com/e-commerce-fulfillment-services-market-to-reflect-impressive-growth-rate-to-during-forecast-period-observes-tmr.html "E-commerce Fulfillment Services Market to Reflect Impressive Growth Rate to During Forecast Period, Observes TMR") industry feedback in Q1 of 2017 to meet the trading venues’ end-of-day ISIN reporting requirements of MiFID II. Since then, we have seen mounting interest from [banks to incorporate DSB reference data](https://www.financedigest.com/banks-struggle-to-harness-big-data.html "BANKS STRUGGLE TO HARNESS BIG DATA") into their front-office trading flows to meet MiFID II intraday transparency requirements.  We are pleased that the DSB’s modern technology is enabling the industry to step up to these entirely new reporting requirements,” says Sassan Danesh, Managing Partner at Etrading Software, providing the day-to-day management of the DSB. **Governance** The DSB operates in accordance with the ISO principles of a numbering agency for the provision of ISINs – and the principles of open and equitable access. The DSB has conducted additional consultations on topics such as technology infrastructure, operations, product scope and functionality. The DSB is keen to [remain in open](https://www.financedigest.com/eex-markets-to-remain-open-as-power-prices-soar-statement.html "EEX markets to remain open as power prices soar – statement") dialogue with industry as the service evolves so that industry views continue to shape its planning. The DSB is currently welcoming [applications for its technology](https://www.financedigest.com/u-s-lighting-products-market-recent-strategies-trends-technology-innovation-analysis-application-by-tmr.html "U.S. Lighting Products Market: Recent Strategies, Trends, Technology Innovation, Analysis Application by TMR") and advisory committee which is due to be set up in 2018. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---