Regulatory Reporting

In order to make OTC trading of financial derivatives more transparent and ease the process of uncovering systemic risks, the EU legislature adopted the “European Market Infrastructure Regulation” (EMIR) in July 2012.

 

The central requirement of the EMIR requires that market participants must report every derivative contract they enter into a trade repository (which is an entity that is authorized to collect records of OTC derivative trades). The ESMA (European Securities and Markets Authority) was given the task to put the legislation into action. The EMIR requires the reporting of all derivatives, whether OTC or exchange traded, to a trade repository. Entities affected by this legislation are central counterparties, participants of the financial sector and any trading participants who are not attributed to the financial sector. Participants can delegate this reporting obligation to counterparties or other third parties. Both OTC derivative transactions that include clearing obligations and non-clearing obligations are to be reported.

The reporting must include information about counterparties, type of the derivatives, trade details, clearing and evaluation of the underlying collateral. Furthermore, the European reporting obligation includes relevant changes during the lifecycle of a trade. The report must be issued latest one work-day after the trade (t+1).

 

The reporting obligation came into effect on 12.02.2014 for OTC as well as for listed derivatives. There is a backloading process with a period of 90 days for existing business or 3 years for expired business.

There are six global registered providers of the ESMA.

  • DTCC GTR – is the world’s largest clearing organization, and according to the Dodd Frank Act, it has been productive for the reporting obligation of Interest and Credit derivatives in the US since 12.10.2012.
  • REGIS-TR – is a joint-venture of the Spanish iberclear and Clearstreams.
  • UnaVista – is a subsidiary of the London Stock Exchange and the third largest trade repository in Europe. It also offers other services for e.g. MiFiD, AIFMD etc.

For these vendors we have comprehensive documentation and test environments in which the transactions of different types of products and messages can be uploaded.

In the Swiss market the Financial Market Infrastructure Act (FinfraG) also developed a transaction repository for derivative transactions, which came into force at the beginning of 2016. In this regard, the SIX (Swiss Exchange) acts as a central transaction repository in cooperation with swiss banks. We already have a solution: the tecconTR that is adapted to FinfraG, which can be used as an automated solution for larger users, as well as a service-solution for users with a low volume of transactions that require registration.

 

We offer the following services for connection of transaction registers:

  • Know-How / Consulting package for transactions repository:
  • We keep up-to-date on the legal finalization and technical developments addressed by the ESMA.
  • We stay in close contact with DTCC and REGIS-TR and have access to their documentation and test systems.
  • We have successfully connected several clients to the trade repository DTCC and REGIS-TR.

 

We provide consulting support in the following aspect:

  • Reporting scope in accordance with the current guidelines and reporting process/lifecycle
  • Data mapping with respect to DTCC GTR or REGIS-TR
  • Management of important identification keys, such as LEI and UTI
  • Technical connection of the trade repository