A Technical Overview of Spotlight: Unlocking the Secrets of OTC Derivatives

Kyle Loomis · May 7, 2024

A Technical Overview of Spotlight: Unlocking the Secrets of OTC Derivatives

In the secretive world of over-the-counter (OTC) derivatives, precise and up-to-date information is not merely an advantage—it's a necessity. Spotlight has revolutionized this secret market by providing essential insights that enable derivatives buyers and sellers to anticipate market trends, develop innovative trading ideas, and secure competitive deals.

Spotlight's Competitive Edge

Spotlight is unique in its comprehensive approach to data coverage, being the only platform that captures all uncleared OTC transactions executed by US swap dealers. This exclusive access allows Spotlight to clean, transform, and deliver a dataset that is indispensable for sales and trading professionals. Our platform not only facilitates in-depth analysis but also allows users to navigate the entire universe of transactions, offering sophisticated reports on the swap market’s dynamics.

Use Cases

Pricing Optimization

  • Visibility into Lost Trades: By examining the specifics of lost trades, users can understand and rectify pricing strategies that are less competitive, thereby refining their approach.
  • Margin Adjustment: Insights into competitor pricing enable users to adjust their margins effectively, ensuring they remain competitive without sacrificing potential profits.

Trade Idea Generation

Using Spotlight, you can identify and exploit new product opportunities, such as unique trade structures.

Spotlight empowers its users to track and analyze product trends, observing significant shifts in price or volume that could indicate emerging opportunities or risks.

Data

Our primary data comes from CFTC Part 43 trade submissions to major US Swap Data Repositories, including CME, DTCC, and ICE. We enhance this raw data by leveraging other data and specifications:

  • CFTC Part 43 Technical Specifications
  • ISDA OTC Derivatives Taxonomies
  • Market Identifier Codes
  • Other Market Data and Specifications

Challenges with Data Quality

The data sourced from SDRs often contain inaccuracies and intentional obfuscations, particularly with product details designed to conceal trade specifications. These challenges require sophisticated solutions to decode and interpret accurately.

Transformation Process

Our data transformation process is meticulous and multi-layered:

  • Standardization: We standardize data by renaming and aligning columns for uniformity.
  • Normalization: We clean erroneous values and map product attributes for consistency and accuracy across datasets.
  • Unmasking: We reveal obscured product details by cross-referencing with other datasets, adding depth and precision to our analysis.

Results

The outcome is a meticulously curated dataset that presents a clear and comprehensive view of all uncleared OTC transactions. This includes new trades as well as modifications, novations, and cancellations, detailed with contract specifications, dates, products, sub-products, underlying assets, prices, volumes, terms, and much more.

Summary

Spotlight is not just a data provider; it is a strategic partner for anyone navigating the complex waters of the OTC derivatives market. By transforming raw data into valuable insights, we equip our clients with the tools they need to optimize pricing, enhance margins, and ultimately drive more profitable trading strategies. Join us at Spotlight, and turn information into your most powerful competitive advantage in the OTC derivatives market.