European derivatives trade repository REGIS-TR has introduced a connectivity enhancement that will allow customers to report their trades using SWIFT.
The joint initiative between the repository and the financial messaging provider comes ahead of the European Markets Infrastructure Regulation which will mandate the clearing of OTC derivatives trades through a CCP and the reporting of those trades to a repository. In the framework of the joint initiative, REGIS-TR customers will be able to access the derivatives trade repository and report directly to it using SWIFT.
REGIS-TR, the joint venture between Clearstream and Spanish CSD Iberclear, currently offers access and reporting interfaces to its customers through a web-based application and XML-formatted files. The SWIFT messaging capability will have particular importance to customers registering trades in foreign exchange derivatives as SWIFT accounts for high percentage of FX trades being confirmed electronically.
Thilo Derenbach, co-managing director, REGIS-TR, said Regulation such as EMIR and Dodd Frank, which will push more OTC derivatives on exchanges, is one of the regulatory drivers as to why REGIS-TR exists. One other element is the value proposition that comes with the regulatory reporting of OTC derivatives, which is important as clients seek more integrated services. Through Deutsche Borse and Eurex as a CCP the subject of putting OTC derivatives trades through these infrastructures was close to our hearts and our reporting service is something we could offer as part of that value chain. At the same time, customers of the Spanish CSD wanted a partner that operated beyond Spanish borders.
Jess Benito, co-managing director of REGIS-TR, said the enhanced capability delivered by the inclusion of SWIFT messaging was an important benefit requested by REGIS-TR and SWIFT clients. A trade repository such as REGIS-TR needs to be accessible to as many potential users as possible by as many ways as possible to allow for efficient and cost-effective reporting of derivatives data by customers to the Registry. SWIFT is recognised across the world as the industry standard and we are delighted to bring its benefits to our clients and to contribute to the overall transparency and efficiency of the OTC derivatives market.
Alain Raes, chief executive, EMEA, SWIFT, added: This co-operation builds on our strong presence in the OTC derivatives markets, particularly for FX and metals
By July 2013 all trades in OTC derivatives will have to be reported to a repository. And we need the information electronically in the most efficient way possible, said Derenbach. By taking the information in from market participants as a repository, these participants wont have to keep their trade data in house before combining it with a repository. They can just push it out to the repository.
Then there is the collateral offering. As part of a larger exchange group, we can work with SWIFT to bring an integrated service, including risk reporting, risk mitigation, on exchange clearing for OTC derivatives and maximize collateral for those trades that are not OTC. In a central clearing environment, we can put in the collateral management engine, linking and providing value throughout that value chain, in SWIFT confirmation formats. The goal of REGIS-TR as a trade repository is to keep the financial resource burden away so that regulations dont add a cost and we can instead provide a chain of services through Clearstream, Deutsche Borse, BME (Spanish stock exchange) and Iberclear.
REGIS-TR rolled out its FX trade reporting service in November 2011 which will enable customers to report their trades in compliance with EMIR, due to be enforced in 2013, while also being able to match and confirm their positions with counterparties. The trade repository also handles interest rate swaps and derivatives based on commodities with further expansion planned to include equity-based derivatives and Credit Derivative products before the end of 2012.
(JDC)