The latest derivatives reporting delay by the European Securities Market Authority (ESMA) has been linked to the regulator’s “chaotic” workload.
ESMA has urgently asked the European Commission to put off the start date for the reporting of exchange-traded derivatives (ETDs) to trade repositories by one year to January 2015, saying current technical standards did not distinguish between OTC derivatives and ETDs.
The request comes less than five months from when reporting of trades is meant to begin. OTC derivatives reporting is still scheduled to start on 1 January 2014.
Virginie O’Shea, from consultancy firm Aite, said the delay was fairly expected as ESMA has a long list of regulation to look at, including the European market infrastructure regulation (EMIR) and preparing for final MiFID II rules.
“It’s a little chaotic for them because they’ve got too many technical guidelines to work through.”
The number of people dedicated to each regulation is not as high as it should be, O’Shea said.
“They don’t quite have the resources that are necessary to output everything as quickly as possible, or as required by deadline. That is having an impact on implementation times.”
Further guidance
In a letter to the Commission, ESMA executive director Verena Ross wrote the delay would give market participants scope to digest further guidance, as technical standards does not differentiate between methods of trading.
“Without further guidance, ETD reporting would not be consistent, and would not serve the purposes for which it was conceived.”
Ross said ESMA had evidence of the complexity of reporting trades subject to venue rules, including the venue’s execution processes and clearing to a central counterparty.
An ESMA spokesperson wasn’t available to comment.
The regulator earlier this year also delayed TRs registration approval deadlines from June to September, pushing back reporting deadlines for OTC derivatives to January 2014.
Stewart Macbeth, CEO of TR-applicant Deriv/SERV, a part of the Depository Trust & Clearing Corporation, said reporting of five asset classes of OTC derivatives on a single day would be a huge undertaking for market participants.
“Decoupling listed instruments from the reporting requirements for OTC derivatives is a prudent move, which will help streamline the reporting process,” he said.
Mark Husler, head of business development for information services at London Exchange Group, who looks after TR-hopeful UnaVista, said the repository was ready for the 2014 deadline, but after consultation with market participants would support a deadline extension.
“We will of course abide by this new timetable and be ready when reporting requirements come into force,” he said.
ESMA must amend existing technical standards to extend the reporting deadline, which the Commission has three months to approve.