Europe Readies for Trade Reporting

Terry Flanagan

Markit, the financial data provider, has become the latest firm to launch a trade reporting service ahead of the deadline next week for counterparties to start reporting deals under new regulations.

The European Market Infrastructure Regulation (Emir) requires institutions on both sides of transactions to report their over-the-counter and exchange traded derivatives across five asset classes to one of six authorised trade repositories from 12 February.

Henry Hunter, managing director and global head of derivatives processing at Markit, told Markets Media: “The infrastructure has been set up but there is no doubt there will be some issues on February 12.”

Henry Hunter, MarkitSERV

Henry Hunter, MarkitSERV

MarkitSERV, Markit’s global electronic trade processing service for OTC derivatives. can report rates, credit and equities OTC derivatives for customers subject to Emir.

Hunter said the Emir reporting service went live last month as the regulations requires trade repositories to be seeded with historical deals. From February 12 data for new traders will be sent to the repositories.

Hunter said: “A good chunk of our client base, who already use us to agree trade details after execution and route trades to clearing houses and execution venues, are using us for trade reporting.”

He said that MarkitSERV had seen an influx of clients after derivatives clearing under the Dodd-Frank Financial Reform Act became effective last October. “We saw a big uptick in clients in 2013 as a result of clearing and they are using us for Emir reporting as well,” Hunter added.

As well as the US, MarkitSERV also provides trade reporting services in Australia, Hong Kong, Japan and Singapore. The system receives Unique Transaction Identifier (UTIs) from trading venues and clearinghouses, can generate UTIs when they are not provided and allows users to send, receive and agree UTIs across all workflows.

Despite reporting in other jurisdictions Hunter said there was still a fair amount of work that had been done to prepare for Emir.

”We had to add additional static data to allow mapping of LEIs (Legal Entity Identifiers) and jurisdictions,” he added. “We spent a long period encoding rule sets based on the static data to determine which trades have to reported, when and by whom in each jurisdiction.”

Last month Traiana, which is owned by inter-dealer broker Icap, said it would connect to four trade repositories – CME, DTCC, Regis-TR, UnaVista – through its Harmony TR Connect trade reporting service on February 12.

Harmony TR Connect will initially provide post-trade reporting of OTC and exchange-traded derivatives across foreign exchange and equity derivatives.

The system has already been implemented in the US, Australia and Hong Kong to meet their regulatory reporting requirements. Triana’s service also includes a unique transaction identifier which counterparties can share so that the correct identifier can be provided with initial trade repository submissions.

Stewart Macbeth, chief executive of DTCC Derivatives Repository Limited, said in a statement : “We recognise that compliance with Emir reporting requirements is a significant undertaking for buy-side and sell-side firms alike. We continue to promote an open model and support our clients by offering them flexibility and choice, either directly or through third parties.”

Image via iStock

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