This Week: DSB, Deutsche Bank, McKay Brothers, and more

DSB adds UPI into OTC Isin test environment  

The Derivatives Service Bureau (DSB), which provides reference data for derivates, has enabled users of its OTC International Securities Identification Numbers (Isins) to add another product classification code, the Unique Product Identifier (UPI), to their OTC Isin records in a testing environment. 

The UPI is designed to improve the process of aggregating OTC derivatives transaction reports to help authorities analyze OTC trade reporting data and identify systemic risk and market abuse. The CFTC will require market participants to use the UPI for swaps recordkeeping and data reporting in the United States beginning in January 2024. Meanwhile, upcoming compliance dates for the Emir refit are due to bring counterparties to report both the OTC Isin and UPI in the EU and UK, dependent on scope. 

Under Emir, firms will be required to report the OTC Isin for all OTC derivatives traded on a trading venue or systematic internalizer. For pure OTC derivatives, though, firms will have to report using the UPI. 

Emma Kalliomaki, Managing Director of the DSB, told WatersTechnology that collaboration between authorities, markets, and the DSB has been critical. “We’ve done a lot of work over the last few years on the identification hierarchy for OTC derivatives, and ensuring alignment between the OTC Isin, the UPI, and the CFI,” Kalliomaki says. 

The integration of UPI into the OTC Isin UAT environment will allow firms to test changes to their systems ahead of the UPI Service’s launch on October 16, 2023. 

“Production launch has been geared to give users at least nine months in UAT before the first regulatory mandate and at least three months in production before the first regulatory mandates,” Kalliomaki says.

“Firms need to consider where in their workflows they will insert the retrieval of the identifiers, whether they want to cache the data internally or continually message the DSB via API, and how to bring all that data together to fulfil the ultimate objective of reporting under different regimes. That is why we think it’s so important to have UAT open for a long time in advance of the compliance dates of the regulation—so firms can test it and better understand their workflows and the options available to improve how they integrate the data,” she adds. 

Federal Reserve hands Deutsche $186 million fine over AML and governance 

The Federal Reserve Board on Wednesday fined Deutsche Bank $186 million over violations of sanctions compliance and anti-money laundering control orders. The board found that Deutsche lacked sufficient internal anti-money laundering (AML) controls and governance processes during its prior relationship with the Estonian branch of Danske Bank. 

In addition to the fine, the board has also issued a consent order requiring Deutsche Bank to complete critical requirements of previous board orders. 

Separately, the Federal Reserve also issued a written agreement to address insufficient governance, risk management, and controls within Deutsche Bank. 

McKay Brothers International launches market data service, distributes Cboe UK cash equities at LSE

McKay Brothers International (MBI), a market data and wireless bandwidth provider, has begun distributing Cboe UK cash equities raw data at the London Stock Exchange at its lowest known latency. The distribution, which uses MBI’s wireless QRD service, distributes the full Cboe UK CXE and BXE feeds in their native exchange format. 

The equities data from Cboe UK is sourced at Slough-LD4 and distributed at the LSE’s Telehouse North 2 data center.

Axioma integrates Equity Factor Risk Model into EDS platform. 

Business analytics and investment management tool Axioma has announced the expansion of its partnership with Equity Data Science (EDS), a management platform founded in 2017. The partnership integrates the Axioma Equity Factor Risk Model Suite into the EDS Investment Process Management platform. 

The Axioma portfolio construction tool uses daily and historical coverage from 1997 for the UK and 1982 for the US to create statistical and macroeconomic factor risk models.  

Citi integrates Delta Capita’s QMA software, becomes minority investor 

Delta Capita, a managed services and technology provider, has signed a deal with Citi to integrate its workflow management software, QMA, into the bank’s systems. As part of the deal, Citi will become a minority investor in the Delta Capita majority-owned subsidiary. The investment will be used to commercialize and scale QMA in order to bring it to market. 

IPC Systems partners with CryptoStruct to offer market data to its Connexus Crypto users 

IPC Systems, a communications and cloud connectivity provider for financial markets and electronic trading, has partnered with market data and algorithmic trading company CryptoStruct to provide data to IPC’s Connexus crypto ecosystem. 

IPC launched Connexus Crypto in 2021 as the company’s solution for cryptocurrency trading. The partnership with CryptoStruct will give IPC users access to low-latency market data and greater opportunities for arbitrage. 

Users can choose to receive data via the cloud or via the existing backbone infrastructure from IPC. 

BondWave launches new portfolio management tool 

BondWave, a financial technology firm and affiliate of First Trust Portfolios, has launched a new feature in its Effi Portfolio Analytics suite. The feature, called Rules, allows users to create and apply specific rules, or criteria, to client portfolios. 

Once a rule is created, an investment constraint or portfolio objective can be assigned to accounts. Rules can include duration, credit rating, and sector allocation. 

FalconX partners with CF Benchmarks to release crypto derivatives 

FalconX, a prime brokerage for digital assets and a CFTC-regulated swaps dealer, has partnered with cryptocurrency index provider CF Benchmarks to release crypto derivatives contracts.  

The contracts, which provide access to the crypto derivatives market via swaps, options and non-deliverable forwards (NDFs), are settled using indexes administered by CF Benchmarks, currently registered under the UK Benchmarks Regulation (UK BMR). 

Using single asset reference rates, the contracts allow clients to invest in bitcoin settled against the CME CF Bitcoin Reference Rate, and to ether settled against the CME CF Ether-Dollar Reference Rate. 

ESG Book launches ESG Performance Score Tool, finds companies lagging 

ESG Book, a sustainability data and technology provider, has launched a data tool that assesses corporate sustainability performance. The assessments are based on standards published by the International Sustainability Standards Board (ISSB) in June 2023.  

The ESG Performance Score uses publicly available data to measure a company’s corporate sustainability performance. It also offers data on media and NGO coverage to chart public perception of the company’s sustainability performance. 

Using the ESG Performance Score, ESG Book analysis has suggested that despite global increases in sustainability reporting, many companies are inadequately disclosing financially and industry-relevant metrics.