The European Securities and Markets Authority (ESMA) has approved the registrations of the first four trade repositories (TRs) under the European Market Infrastructure Regulation (EMIR).
The Depositary Trust and Clearing Company, Polish CSD KDPW, Regis-TR in Luxembourg and Unavista in the U.K. submitted applications to become TRs in March this year. The registration applications covered the reporting of all types of contracts under the reporting obligation irrespective of whether the contracts are traded on or off exchange. Consequently, financial institutions will not have to use the services of two or more repositories.
Steven Maijoor, ESMA Chair, says: “Registering the first European trade repositories is an important component in making derivative markets more transparent and resilient. TRs play a fundamental role in the surveillance of derivatives markets and in risk monitoring. The data gathered by TRs will enable regulators to identify and reduce the risks associated with derivative markets.”
TRs will centrally collect and maintain the records of derivatives contracts reported to them. The registration of these TRs means that they can be used by the counterparties to a derivative transaction to fulfill their trade reporting obligations under EMIR. The registrations will take effect on Nov. 14 2013, with the reporting obligation beginning on Feb. 12 2014. EMIR mandates reporting of both over-the-counter (OTC) and exchange-traded derivatives to trade repositories; it further places the reporting obligation on both counterparties to the trade and as such impacts a larger number of entities than regulations implemented in other jurisdictions.
ESMA now assumes supervisory responsibility for the TRs who must continue to comply, on an on-going basis, with the regulatory requirements set out under EMIR.
Located in London, with a data center in The Netherlands, DTCC’s European trade repository will support trade reporting mandated under the European Market Infrastructure Regulation (EMIR) which is due to begin on Feb. 12 2014.
“Reporting for all five derivatives asset classes – credit, interest rate, equity, FX and commodities – which will commence simultaneously on 12 February 2014, will be a significant undertaking for the industry and the next 90 days will be crucial for achieving compliance with EMIR. Our focus is now on helping European dealers and end users of derivatives to meet their reporting obligation in time.”
The registered TRs cover all derivative asset classes –commodities, credit, foreign exchange, equity, interest rates and others – irrespective of whether the contracts are traded on or off exchange.
REGIS-TR is the European trade repository owned by Clearstream (Deutsche Börse Group) and Iberclear (BME). In addition to its core reporting and reconciliation service, the repository will deliver reconciliation services, links to exposure management solutions and third-country domestic solutions. REGIS-TR Deputy MD Nicolas Boatwright says the repository spent four and a half years in preparation for launch – as from when G20 discussions first began to map out actions to increase transparency in the derivatives market.
“The trade repository applications’ process opened in March this year with ESMA conducting an exhaustive review looking at candidates’ ability to meet its stringent requirements. REGIS-TR is happy to have fulfilled these requirements completely,” he says
“The joint venture is an extension of services provided by the wider exchange groups of Clearstream (Deutsche Boerse) and Iberclear (BME) respectively. REGIS-TR is complementary to the existing integrated business model for Deutsche Boerse, for example, whereby customers can choose to trade, clear, settle and now report their transactions within the Group – helping to take on a role in reducing market risk.
“REGIS-TR’s approach is to offer the trade repository services for all manner of derivatives whether traded on exchange or OTC. We have developed an infrastructure that caters to all segments of the market that have a reporting obligation.”
Boatwright added there are opportunities to establish links and share synergies with non-EU countries. “Switzerland is planning to introduce a reporting obligation in 2015. With that the plan is to cover off every OTC trade in Europe wherever they are traded.
“We’ve had discussions with other trade repositories and infrastructures around the world too, including Strate in South Africa, to make available and license our technology with them.” In addition to spreading its geographical scope, REGIS-TR plans to add the reporting of energy-related derivatives to its services suit, as and when requirements are confirmed for this under the Regulation on Energy Market Integrity and Transparency (REMIT).
Mark Husler, CEO of UnaVista, the wholly owned post-trade software provider from LSEG, says: “We are delighted to have received regulatory approval for our new trade repository. This will enable our customers to fulfil all of their EMIR reporting obligations across all asset classes. We will use our extensive experience from reporting over 1.5 billion transactions a year for MiFID, to assist our customers to be ready for the February go-live date.
“We have seen a positive response from customers using our test environment and many have already signed up to our trade repository, we look forward to working with them to ensure readiness for the implementation of the EMIR regulations.”
ESMA is currently processing further TR applications.
European Supervisory Authority Approves First Four Trade Repositories
The European Securities and Markets Authority (ESMA) has approved the registrations of the first four trade repositories (TRs) under the European Market Infrastructure Regulation (EMIR).