DSB Launches Second Consultation on UPI Fee Model

The consultation covers UPI data access mechanisms, file download timing, user fees, a proposed contingency fund, cost allocation, invoicing, and capex amortisation.

The DSB (Derivatives Service Bureau) has launched its second consultation on the UPI (Unique Product Identifier) fee model, focusing on the UPI timeline and seeking industry views on services and costs.

The UPI is designed to facilitate effective aggregation of OTC derivatives transaction reports on a global basis. The DSB has been designated as the sole service provider of the future UPI system, functioning as the issuer of UPIs and the operator of the UPI reference data library.

The UPI will be required in jurisdictions with mandatory reporting for OTC derivatives – including Australia, Japan, Hong Kong and Singapore – from late 2022 onwards to ensure that products are reported to trade repositories consistently across FSB jurisdictions.

The UPI service is set to go live in July 2022.

According to the DSB, regulators in 13 G20 jurisdictions have indicated that the rules to support UPI reporting are either already in place or expected to be in place by mid to late 2022, with final adoption timelines subject to availability of the UPI service and market consultation.

Regulators largely expect that all asset classes will be reportable via a “big bang” approach. Expectations for UPI reporting timelines largely converge around T+1.

In January, the DSB launched its first consultation on the fee model principles for the UPI, examining expectations around UPI adoption.

This second consultation seeks further industry feedback on additional detail following the responses received in the first consultation, covering:

  • projected user estimates (i.e. approximately 20,200 entity groups representing 135,000 organizations that currently report data to trade repositories)
  • data access mechanisms (4 fee-paying mechanisms and 2 non-fee-paying mechanisms)
  • user file download timing (proposed T+0 timing for the OTC ISIN record including the UPI; T+1 for the full UPI record)
  • user fee structure (proposed to be similar to the fee model use for the existing OTC ISIN services)
  • proposed contingency fund (to address unplanned costs during implementation and the first few years of the service)
  • cost allocation policy (to be based on synergies between the UPI services and the OTC ISIN service)
  • invoicing (proposed to be paid in advance, as with the existing service provision)
  • amortisation of capital expenditure (proposed repayment period of four years)

Feedback provided in response to this consultation will be collated and incorporated into the Final UPI Fee Model Consultation Report, to be published on 27 September 2021.

The consultation, available here, is open for comment until 9 July 2021.

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