The Derivatives Market Institute for Standards (DMIST) has published a consultation paper on a proposed standard for position transfers. The organisation hopes to encourage automation in a process that is currently completely manual, in order to achieve “full operational efficiency”.
The process of position transfers today “requires the cooperation of clearing, front office, risk, and compliance departments”, writes DMIST in the paper. Standardising “aspects of the process” will likely improve efficiency, enhance controls, and reduce risk. The organisation proposes an ideal where automation will handle the process end-to-end, from taking in the required information and distributing it to relevant departments for approval, to uploading the information to exchanges and providing status updates to clients.
The details
The standard should fulfill two criteria. Firstly, it should establish a template clients can use to submit a position transfer request to their clearing members and for clearing members to easily upload position transfer data to CCPs. Secondly, there should be a corresponding template for CCPs to receive data from clearing members.
Two definitions of position transfers apply in the standard – simple and complex. The first refers to “partial position transfers with no change in beneficial ownership and no significant impact on open interest on a single CCP and where one receiving clearing member is involved”. The second refers to “partial position transfers that may require additional information and analysis”.
The deadline for submitting comments is 21 March 2025.