Updates Coming to JFSA Derivative Reporting in April 2024

2024 will be a busy year for regulatory reporting updates. Adding to the list of regulations being revamped in 2024 is Japanese Derivative Reporting governed by the JFSA. Following a Consultation Paper from the JFSA earlier in the year, the regulator last month released their final report with an April 2024 go-live date. The go-live coincides with the April 29th start date for EMIR REFIT reporting in the EU and similar updates taking place in Australia, Singapore and the UK later in the year.

While there is much overlap between the global changes to derivative reporting taking place, the JFSA change is also introducing certain items that are unique to their region. In today’s blog we cover a number of the key changes.

Trade repository: Starting in 2024, firms will need to exclusively submit reports to the DTCC Data Repository Japan (DDRJ) or any other trade repository that becomes approved by the JFSA. This is a change from the current format where reporting entities have the option to report directly to the JFSA or DDRJ.

Expansion to 139 fields: Reportable fields are being expanded to 139 data element fields with 137 of them required on the 2024 go-live date (UPI and Delta fields will be staggered in at a later date). Following a similar trend taking place with other regulators, the JFSA is harmonizing reporting standards to that in other jurisdictions. As a result, the 139 fields, their descriptions and allowable values are sourced from those used by the CFTC, ESMA for EMIR and revised critical data elements (CDE). While the field changes create a hurdle for meeting the 2024 deadlines, the overlap of reportable fields across the globe is expected to make it easier for firms to manage their cross-jurisdiction reporting in the future.

Dual sided reporting, UTIs and pairing: While common in other jurisdictions, the JFSA is introducing the concept of Unique Transaction Identifiers (UTI). As a dual-sided reporting regime, both counterparties submit their side of a trade. To enable matching of data, both firms are to use the same UTI for the submission. The JFSA is utilizing a ‘waterfall’ approach for deciding who the UTI generating firm is. Hierarchy of the generator includes whether a CCP, clearing member, trading platform or confirmation platform was used or is a party to the trade. In cases where generating and sharing UTIs is difficult or not available in a timely fashion, the JFSA allows firms to have a bilateral agreement in place to designate one counterparty as the default generator.

To support reporting firms with sharing and enriching UTIs, Cappitech is expanding its UTI connect sharing platform to support global derivative reporting regimes such as EMIR and the JFSA. Learn more about the initiative here.

Action & Event types: Within the JFSA reporting changes is a new process for lifecycle messages that uses the Action and Event Type values and format that was introduced by the CFTC in their December 2022 Part 45 update. Submissions will include an Action Type such as New, Modify, Compression and Early Termination, which is defined by the Event Type that triggered the Action. Allowable Events include Trade, Compression, Credit Event, Corporate Event and Novation. One

Back reporting of existing positions: Similar to EMIR, firms in Japan will be required to submit updates of new data elements for positions open prior to the April 2024 go-live date. The regulation provides a 180 day period from the go-live date for updates to be submitted. Positions closes before the end of the 180 period won’t need to be updated. It’s worth noting that while firms do have the 180 grace period to assist with back reporting, there are potential operational benefits for enacting all of the back reporting updates from day 1. This will allow a firm to align all of its reporting records from the start.

Learn more here to start your preparation for JFSA reporting

Ron Finberg
About the author: Ron Finberg
Ron is Executive Director, Product Specialist at S&P Global Market Intelligence Cappitech and helps customers with their compliance of EMIR, MIFIR, SFTR, MAS and ASIC derivative reporting. Ron is an ongoing contributor of regulatory focused content and webinars and leverages his over 20 years’ experience in the financial industry. He was also awarded the Editor’s Recognition Award for Best RegTech Vendor Professional in the RegTech Insight Europe Awards 2021.