The reporting requirement into DTCC asks for a very specific format with a large number of columns that need to be filled out mandatorily. The sheer volume of trades that needed to be reported made it a very daunting task as the company would need to cross reference LEI, UTI and timestamp of execution for each trade.
Photo of Mark Johnson from Reval collecting the award on behalf of Debdatta Banerjee and Ian Gibson, eBay Inc.
Senior Treasury Manager
Senior Treasury Analyst
eBay Inc. is an American multinational corporation and e-commerce company, providing consumer to consumer and business to consumer sales services via the internet. It is headquartered in San Jose, California, United States.
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When EMIR came into force on 16th August 2012, it was very apparent that eBay Inc. and its subsidiaries, which is a multinational corporation with a large part of its business based out of Europe, would have to comply with these regulations. A large part of the regulation focuses on reporting of derivative trades into DTCC which was something that most corporates would have to figure out how to implement in the coming months. eBay’s solution was targeted primarily at creating customised reports leveraging their existing foreign exchange (FX) platform to report all their FX trades into DTCC in a format that was acceptable to DTCC.
“Leveraging the module of the trade system that we already had in place, allowed us to extract a lot of the pre-existing data and cut back on execution time.”
Ian Gibson, Senior Treasury Analyst, eBay Inc.
The main challenges that eBay encountered in regard to the new OTC derivatives regulations could be divided into two categories:
First, was the sheer size of the portfolio that needed to be reported into DTCC, in the correct format and aligning across the various OTC FX derivatives that the company held in the portfolio.
Secondly, the very strict reporting requirements that had been prescribed by DTCC also posed a challenge. eBay Inc. therefore required a solution that would allow them to efficiently manage these new requirements.
The population of trades that needed to be reported went back all the way to August 2012 so it was extremely helpful to have a trade database in place. But more was needed to help solve this challenge, so eBay turned to Reval who had developed an EMIR module – and eBay began to test this to see if it had the capability of meeting a large corporate’s reporting requirements. For this, eBay worked very closely with Reval’s engineering and legal teams to ensure all the DTCC reporting details were met. The reporting function is not a one-time requirement and hence if eBay had chosen Excel, it would have required constant monitoring, there would be no automatic update of eligible trades and also LEIs and UTIs would need to be mapped in separately every time.
Debdatta Banerjee, Senior Treasury Manager at eBay recalls: “leveraging the module of the trade system that we already had in place, allowed us to extract a lot of the pre-existing data and cut back on execution time. We tried to remove manual touch points of maintenance or upkeep to reduce the risk and use a system to automate the process reporting as much as possible to showcase best practices as well as to adhere to the regulatory requirements.”
Best practice and innovation:
In terms of innovation, this solution takes a very challenging task – eg the reporting requirement into DTCC that asks for a very specific format with a large number of columns that need to be filled out mandatorily – and makes it look easy. “The sheer volume of trades that needed to be reported made it a very daunting task as we would need to cross reference LEI, UTI and timestamp of execution for each trade. If we did not have the Reval module then it would have been an insurmountable task of going back to the counterparty banks and trying to obtain this information. eBay worked with banks to get LEIs and UTIs to create a basic template with some of the trade details that Reval would need to pull in the rest of the information. Then we uploaded this basic template into Reval and Reval created the much larger DTCC mandated template which was exportable in CSV format and ready for upload into DTCC,” says Ian Gibson, Senior Treasury Analyst.
On the best practice front, according to Banerjee, “this solution has addressed a number of philosophies that eBay always looks to embrace. These include using technology for straight through implementation and reducing manual touch points wherever possible. Also, we were able to implement the EMIR solution by leveraging the current platform rather than trying to seek out a new platform or solution and this really helped to maximise our overall efficiency.”