Market participants on both sides of the Atlantic are concerned about the increasing costs of staying compliant with OTC derivatives trade reporting requirements.
A survey by Sapient Global Markets shows that 61% of the buy- and sell-side participants believe the costs associated with trade reporting will rise by a minimum of 25% over the next two years.
The results also showed that 35% were concerned about staying compliant as the rules continue to change.
Despite numerous vendors offering solutions for trade reporting, the results of the survey showed that 72% of respondents had invested in in-house systems to meet reporting rules. Only 16% have opted for third-party vendor solutions, and 6% for managed service solutions.
Trade reporting requirements for OTC derivatives came into force in 2012 for the US and 2014 for Europe, and struggles have persisted in both regions relating to data quality and complying with the new rules.
“It is apparent from these findings that existing approaches to trade reporting have created inconsistent processes, resulting in significant operational, compliance and cost implications,” said Randall Orbon, senior vice president at Sapient Global Markets. “Firms, particularly those that have invested heavily in internal solutions, now face a fundamental question: can they afford to continue down this route and remain compliant?”