The start of collateral and valuations reporting under the
European market infrastructure regulation (EMIR) has been smoother than OTC and
listed derivatives transaction reporting requirements introduced in February,
according to industry experts.
From 11 August, both buy- and sell-side firms in Europe had
to begin reporting the collateral they post for derivatives trades along with
the valuations of transactions, in addition to the 85 fields already required
With the initial phase of EMIR reporting surrounded by
confusion and the subsequent sending of unmatchable data, market participants
say they have seen a surprising amount of efficient reporting in the first few
days under the new rules.
“On our side it has gone smoothly, we have a good rate of
acknowledgement across all types of instruments, so I would say that is quite
successful, we are really close to 100% of acknowledgement,” said David
Beatrix, business development manager, collateral access, BNP Paribas
“We have a good rate of integration, good feedback from the
repositories, so I would say we are in a much more comfortable position than in
The reporting mandates under the EMIR have posed a challenge
for buy-side firms across Europe, requiring the establishment of legal entity
identifiers and unique trade identifiers
, along with an extensive report having to be filed for each trade.
Even the smallest discrepancies in reports have meant that
trades will not match at the trade repositories with some experts
suggesting the matching rates are as low as 1-2%.
Due to these issues, there were concerns surrounding how the
market would comply with the additional requirements.
McLelland, CEO of the Depository Trust and Clearing Corporation’s European trade
repository, DDRL, said however, that the collateral and valuations process has
gone smoothly so far.
global trade repository collateral and valuation capabilities have been live for over a week, and
we have seen a large number of customers starting to report to us well in
advance of the compliance deadline,” he said.
observing millions of additional reports to our global trade repository service as a result of the
new reporting requirement, and we are processing this additional data without
“We will be
reporting this data to ESMA and the national competent authorities on a
daily basis beginning this week.”
As with the
first phase of trade reporting, the European Securities and Markets Authority issued a Q&A as a vague guidance for the additional requirements.
have voiced concerns in the past that these Q&As represent guidance rather
than formal instructions, meaning some parts of the reporting process are still
open to interpretation.
Chris Collins, director at Sapient Global Markets, said that
while the start of collateral and valuation reporting may have gone better than
expected, there are still issues surrounding the reports.
indications are that firms have to a greater or lesser degree met the new
collateral and valuation reporting rules and deadlines,” he added.
the uncertainty around the valuation models used, the proof remains in the
pudding as to whether the quality and content of those reports will meet the
standards expected by the regulator.”
Part of the
G20 agreement in response to the financial crisis was that all OTC derivatives
trades had to be reported to a trade repository.
one step further by enforcing similar rules for exchange-traded derivatives as
addition, it also required that buy-side firms take responsibility for
reporting, whereas in the US responsibility for reporting largely remains with
The aim of
trade reporting enforcements is to collect market data in order improve
transparency and reduce systemic risk in the derivatives markets.