The UTI is an identifier which uniquely identifies a particular trade. It is used to:
- link the reports in respect of a trade made by the contracting parties;
- to link back to updates to the original report such as corrections and lifecycle events, and
- potentially to provide a link across trades which form part of a reporting chain
2.1. Construction of the UTI
The UTI can be any unique reference of up to 52 alphanumeric characters. However, to make the identifier unique globally, certain protocols have been agreed within the industry:
Include an identifier to uniquely identify the firm generating the UTI
The firm generating the UTI is then to add a code that is unique for that firm
These two simple elements together mean that any UTI generated will be unique.
The industry has agreed to use the CFTC namespace if allocated (this is a protocol applied in reporting to the CFTC), or characters 7-16 of the LEI code for the generating entity. This step will ensure that all UTIs are unique across firms.
The second step requires each firm to uniquely identify the trade within its systems. Typically, systems will allocate a sequential number to represent each trade entry. Firms with multiple systems may need to include a system identifier to ensure the reference is unique across systems.
Another useful approach for ETDs is to include the exchange trade reference plus an exchange identifier to avoid the risk of exchanges using the same identifier.
Using the above approach, a trade identifier unique across the industry can be constructed. There remains of small risk of conflicts (where the code is not unique due to the use of the CFTC namespace. However, this risk is de minimis due to the number of potential combinations.
2.2. Allocation of the UTI
As the UTI is to be used to pair the two trades reported, one trade from each of the counterparties to the trade assuming they both have a reporting obligation, the UTI needs to be shared between the two counterparties. That means a mechanism must be in place to distribute the UTI so that the two parties to the trade have access to the same UTI and can include it on their report for the trade.
The industry has agreed that this is best achieved using the following approach:
Where the trade uses central infrastructure such as a CCP or a matching platform the UTI will be created and distributed by that central party as they will be communicating with both counterparties to the trade. So matching platforms such as DS Match already have existing messaging to the parties using its services and they have augmented their messaging to include a UTI. Similarly, it is expected that where a trade is cleared, for example ETDs, the CCP will create and distribute the UTI.
Where a trade does not go through central infrastructure, the UTI should be shared directly between the counterparties with the UTI being generated by one of the counterparties.
2.3. Identifying the generating party (GP)
There are a number of options here. Clearly the two parties to a trade must agree who is the GP. However, agreeing this on a trade by trade basis is inefficient and likely to result, at the very least, in some confusion. Consequently, the industry working group for UTI has established a protocol which can be adopted. The protocol ensures that it is clear in virtually all scenarios who will be the generating party.
Some firms may not wish to adopt the protocol but may choose to either always be the GP or to never be the GP. This approach is fine if it is agreed with all your counterparties. Where you use one of two brokers and they agree to this approach that is fine. Generally, we would expect the broker for a client to take on the GP role.
Nonetheless, there will be firms who cannot get agreement of this nature with all their counterparties but it may still be worthwhile having the agreement in place for some of the counterparties.