A closer look at Trade Repositories

Trade Repositories - transparency

We have previously discussed how under the new provisions of the European Market Infrastructure Regulation (EMIR) one of the key directives is the obligation to report all derivatives contracts to Trade Repositories (TR), which are essentially entities that centrally collect and maintain the records of all derivatives trade related data.

Because the main aim is to enhance the transparency of the derivative markets and, especially in the aftermath of the world financial crisis, to reduce the spillover risks to the overall financial stability, the European Securities and Market Authorities has been tasked according to the EMIR stipulations with the registration, supervision and recognition of Trade repositories.

In particular, Article 55 EMIR provides that “a trade repository shall register with ESMA. The registration of a trade repository shall be effective for the entire territory of the Union”.

Once a TR is registered ESMA will then supervise it in order to ensure that it complies on an on-going basis with all EMIR requirements. This will be done in order for regulators in each member state to be able to gain access to data and details of derivative contracts, enabling regulators to  fulfill their own respective missions.

Since the requirement to report derivatives transactions to trade repositories under EMIR will come into force on 12 February 2014 it is imperative that all affected firms, including forex and binary options brokers should have already made their plans to able to timely meet the reporting obligation. This could be done either by delegating the reporting arrangements or through a direct connection with a TR, registered or recognised by ESMA.

As of 14 November 2013, there were four TRs registered with, and recognised by, ESMA for all asset classes, and they are namely:

  • DTCC Derivatives Repository Ltd. (DDRL), based in the United Kingdom
  • Krajowy Depozyt Papierów Wartosciowych S.A. (KDPW), based in Poland
  • Regis-TR S.A., based in Luxembourg; and
  • UnaVista Ltd, based in the United Kingdom

On 5 December 2013, two further TRs were added to the list CME Trade Repository Ltd. (CME TR), which is also registered for all asset classes, and ICE Trade Vault Europe Ltd. (ICE TVEL), which however will only deal with commodities, credit, equities and interest rates.

According to Article 59(3) of EMIR ESMA is obliged to publish the list of approved TRs and it is also responsible to update the list within five working days following the adoption of a registration decision.

ESMA is said to be currently considering further TR applications but it should be stressed that since ESMA registration is a must for TRs, in order to fulfill your EMIR reporting obligation you should only choose ESMA registered and recognized TRs. Thus, the burden of discerning whether an entity satisfies this criterion or not falls on your own shoulders. Indeed, fulfilling the EMIR reporting requirements is particularly burdensome, so because the deadline is fast approaching, you should act now. When exploring your options, also consider the MAP ERS reporting solution, offered by leading consulting firm MAP S.Platis.