New Trade Repository to Launch in Europe
Abide Financial, the independent regulatory reporting firm, is applying to become an authorised trade repository in Europe as the region looks to improve the quality of reporting before new regulations come into force.
Abide said in a statement that it has applied to become a trade repository under the European Market Infrastructure Regulation, joining the six repositories who have already been authorised by the European Securities and Markets Authority.
John Abel, founding director of Abide Financial and chief executive of the trade repository, told Markets Media that the company has been a reporting hub for Emir since the regulations came into force in February last year.
“Becoming a trade repository completes our pipeline and lets us offer a seamless service,” added Abel. “We will be the only trade repository who has direct control of reporting from end-to-end.”
Abide said it is expected to be among the largest three trade repositories by processed volumes of Emir reportable transactions. Anthony Arnold, regulatory and operational compliance director, and Jo Hide, operations director, who both worked at CME Group’s Emir trade repository are managing the application process and will oversee the new repository. Hide also previously worked at the London Stock Exchange’s UnaVista trade repository.
Abel said: “In the last four years we have been an approved reporting mechanism for MiFID. When we entered the market there were four competitors and we have gained a 20% share .”
Abide was founded in 2011 and is also a regulatory reporting mechanism for Remit, which covers wholesale energy transactions, and will apply to become an approved reporting mechanism under MiFID II. “We aim to offer a one-stop-shop,” said Abel.
Some of the existing trade repositories are owned by exchanges and are also expanding their trade reporting services for MiFID II. The new regulations expand reporting from equities to other asset classes including exchange-traded funds, bonds, structured financial products and derivatives from January 2017, although that deadline may be delayed by a year. The new reporting requirements also require new details such as the personal identity of traders and the identification of algorithms.
In September the London Stock Exchange Group said it had agreed to build a MiFID II compliant trade reporting service with Boat Services so that customers can meet their multi-asset reporting requirements via UnaVista. In the same month Deutsche Börse, the German exchange operator, and Regis-TR, the European trade repository, also said they are launching a MiFID II reporting service. Regis-TR is jointly run by Deutsche Börse and Iberclear, part of Spanish exchange operator BME Group.
Deutsche Börse said: “The two entities report more than 7,000,000 transactions daily in line with Emir, and 15,000,000 transactions monthly in line with MiFID I to supervisory authorities in various countries.”
However there have been problems with the poor quality of data reported under Emir, particularly the absence of Unique Transaction Identifiers and Unique Product Identifiers, and with reconciliations between repositories. The UTI is meant to uniquely identify each OTC derivative transaction at trade repositories but its format and usage has not inconsistent.
In August Esma published four reports on how Emir has been functioning to provide input and recommendations to the European Commission’s review of the regulation.
“Data quality is very important and has been Improving,” added Abel. “Esma has made big inroads and Level 2 validation has helped.”
Since October Europe trade repositories have had to perform Level 2 validation. The added validation requires the contents of the required fields to be verified to ensure they meet the reporting technical standards – initial validation just checked if a field was complete or blank.
Abel said: “We will continue the drive to improve quality and we perform a more comprehensive set of validation than required by the regulations.”
Icap, the inter-dealer broker and provider of post trade risk mitigation services, invested in Abide Financial in September through Euclid Opportunities, Icap’s early stage fintech funding business
Steve Gibson, managing director of Euclid Opportunities, said in a statement: “As an increasing number of financial services companies are looking for effective ways to optimise their post trade reporting capabilities, we believe the opportunity for Abide Financial is significant.
Abel said: “The Icap investment helps us accelerate our development plans and it also broadens our contact base.”
Icap uses Abide Financial to manage its MiFID and Emir reporting and Remit reporting obligations on behalf of clients. Other Abide clients include BNP Paribas, CMC Markets, Instinet Nomura and Saxo Bank.
Abide said it has achieved organic revenue growth of more than 90% year-on-year since commencing trading and is positioned for a strong start to 2016. In addition to operating in Europe, Abide Financial also provides regulatory reporting services in Australia, Singapore, Canada and the US.
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