Esma Seeks Trade Reporting Postponement

Terry Flanagan

The European Securities and Markets Authority (Esma) is seeking to postpone the start date of mandatory reporting of exchange-traded derivatives transactions to trade repositories by one year, until 2015, in order to develop guidelines and recommendations on reporting of ETDs and on the need for counterparties, trade repositories and regulators to have the necessary time to implement them.

Under Emir, Esma has responsibility for establishing technical standards with regard to the format and frequency of trade reports to trade repositories.

In a letter to the European Commission on August 6, Esma said “it was a matter of urgency” that the postponement be granted.

“The implementation work provided evidence to Esma of the complexity of reporting of trades subject to the rules of a trading venue and executed in compliance with those rules, including the processing by a trading venue after execution and the clearing by a CCP within one working day of execution,” the letter said.

Market participants, meanwhile, are building out their capabilities for complying with Emir’s trade reporting obligation.
BNP Paribas Securities Services is outsourcing its derivatives trade reporting obligations under Emir to the London-based DTCC Derivatives Repository Limited (DDRL). The European arm of the Depository Trust & Clearing Corporation (DTCC) will assist the bank’s buy and sell-side clients as the new rules requiring most OTC trades to be reported to a central repository and to effectively be cleared ‘on change’ via a central counterparty (CCP) clearinghouse, come into effect.

“A large number of industry players still associate Emir exclusively with clearing,” said Helene Virello, head of collateral management services at BNP Paribas Securities Services. “As a result, many may be unprepared to comply with reporting provisions entering into force in January 2014. Our agreement with DTCC provides an effective solution to fulfill the legal obligation in a timely and cost effective manner. As such we expect strong demand for third party reporting services.”

Central repositories will act as information warehouses under Emir in Europe and Dodd-Frank in the U.S., storing the details of all derivatives trades exclusively for reference and inspection by regulators.

One party to the contract can delegate the reporting obligations to the other, or a third party can be used to reduce not only cost but the time burden to parties and systemic risk. It is this latter option that BNP Paribas Securities Services is pursuing by partnering with DDRL.

“Along with our Collateral Access products, we can now accompany our clients through the entire transaction process from trade capture to reporting,” said Virello. “Electronic affirmation and confirmation and liquidity solutions are all covered, and we are ideally placed to carry on reporting on behalf of trading parties.”

Emir requires the reporting of an extensive range of information which goes beyond execution and confirmation details. Information on valuation, on the collateral held, on the rationale of the trade and on the identity of the final beneficiary is also required.

“By reporting their trades to a DTCC repository once, clients of BNP Paribas can meet their reporting obligations in multiple jurisdictions, where such obligation exists,” said Andrew Green, global head of derivative account management at DTCC Deriv/Serv. “Having this discussion with their service providers or dealers, or with a trade repository, is paramount to ensuring they are ready to meet their regulatory obligations.”

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