ETD reporting requirements unlikely to be delayed

ETD reporting requirements unlikely to be delayed


By Jonathan Watkins.


Reporting mandates for exchange traded derivatives set to come into effect in February 2014 are unlikely to be extended by the European Commission, FOWi understands.

The European Securities and Markets Authority (ESMA) had applied to the European Commission to push the date back by a year with a lack of clarity still surrounding reporting requirements.

According to comments made by European Commissioner, Patrick Pearson, the February 12 deadline is likely to stand.

Speaking to FOWi today, Stewart Macbeth, managing director, president and CEO, DTCC Deriv/SERVE and DTCC Derivatives Repository, said: "I moved to a position very recently that the extension won't be granted by the commission.

"Mainly from conversations over the last week or so and then yesterday I heard statements of that sort.

"So I think we are looking at listed reporting from February next year and we think there's a good chance of TRs being authorised by ESMA in November.

"I did honestly think that the ETD would be delayed but because we never had the commission confirmation we only had Emma's statement that ey had asked for the change to their delegated regulation.

"We couldn't be certain so we continued our internal development."

Delay was expected

FOWi reported in July that ESMA had applied for an extension in order to provide guidance on how market participants should report exchange traded derivatives.

According to industry experts, many had been presuming that the delay would be granted, however now trade repositories will have to wade through the regulatory confusion in order to prepare for February 2014.

Chairing a panel at FIA Burgenstock today, Kathleen Taylor, executive director, Futures and Options Association (FOA) said: "Everyone assumed this delay for reporting would go through. 

"In terms of working how reporting would work they have been focusing on OTC issues not on ETD, so we haven’t seen any progress."

Still a lack of clarity

Unlike reforms in the US, European regulations are requiring exchange traded products to be reported along with OTC contracts which were mandated to be cleared as a result of the G20 agreement in Pittsburg.

Europe's financial regulator charged with rolling out market reforms in line with the G20 mandates has already delayed reporting requirement for credit default swaps (CDS) and interest rate swaps (IRS).

The Commission has until November 6 to formally announce whether it will extend the deadline.

November 7 then represents the earliest day when TRs will be approved.

Making assumptions

Commenting on the confusion surrounding the European rules, on who and what will be reported Sara Cresswell, EMEA head of clearing operations at Goldman Sachs, said that the industry had to make assumptions due to the lack of clarity from regulators.

"We always knew from late last year there was a problem with the way the rules have been written," said Cresswell.

"The industry had to make assumptions, given that it wasn’t clear on what different market participants would be reporting.

"We had to make assumptions to move forward where we haven’t had the clarity we need from regulators."

Differing from US rules

Daniel Corrigan, head of industry relations and regulatory compliance, Una Vusta, London Stock Exchange Group, said: "We do keep asking ESMA, its up to them to say what fields they require, who should be reporting, what they should be reporting."

ESMA will now look to bring more clarity to its reporting rules in the four month gap before the deadline kicks in.

The aim is to harmonise data requirements and create consistency across the post-trade reporting regimes in both Emir and the Markets in Financial Instrument Directive (Mifid II).

The obligation will be placed on both counterparties to the derivatives contract, unlike Dodd-Frank rules in the US.

Daniel Corrigan, executive director and CEO of European trade reporting, added that under ESMA's rules, ETDs traded outside of Europe will count as OTC.

"If ETD was delayed for a year that won’t include futures and options traded outside Europe," said Corrigan.

"It’s a problem and it’s the same definitional problem.

"ETD reporting within Europe on contracts listed outside is going to be really interesting."



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