The implementation of OTC derivatives market reform will cause data levels to surge as much as 400% above current levels, says TABB Group in new research published today. Electronic trading, clearing, reporting, risk management and other Dodd-Frank Act and European Market Infrastructure Regulation (EMIR) reform-mandated processes will produce and consume massive amounts of data never seen before by the swaps market.
- “OTC derivatives market reform in the US and across Europe is at the center of this data challenge and he who holds the data, and knows what to do with it, will hold the power,” says Kevin McPartland, a principal at TABB, director of the firm’s new fixed-income practice and author of “Technology and Financial Reform: Data, Derivatives and Decision-Making.”
- Although relationships will continue to be essential across all regulated markets, he adds, “Just like equities, futures and options before them, OTC derivative market winners and losers will be determined by the strength and intelligence of their technology infrastructure.”
- Drawing on interviews with top-tier swaps dealers, buy-side firms, exchanges, clearinghouses and swap-execution facilities (SEFs), TABB estimates that OTC derivatives market participants will spend $3.4 billion in 2011 on clearing and back-office technology alone.
