Industry bodies the International Swaps and Derivatives Association (ISDA) and the Futures and Options Association (FOA) this week made available an agreement document to help market participants meet swaps reporting requirements under the European market infrastructure regulation (EMIR).
The legal document gives buy-side firms a mechanism for delegating their EMIR reporting responsibilities, which will come into force for listed and OTC derivatives on 12 February.
EMIR requires all market participants to report relevant trade data to a trade repository or if no repository is available, to regional market watchdog the European Securities and Markets Authority (ESMA). The ISDA and FOA agreement formalises the terms under which this reporting would take place between participants, such as an asset manager and a broker.
“This document is intended to help market participants meet their reporting obligations by providing a bilateral standard form of reporting delegation agreement whereby a reporting delegate may, on the clients behalf, report relevant data to a trade repository or ESMA,” ISDA stated.
The agreement covers a range of areas including the process by which reporting errors are corrected, how repositories are selected, the role of third parties in reporting data and the liability of parties involved when executing the agreement.
The document also contains an amendment clause by which firms can alter the terms or operational procedures should any rules change regarding reporting under EMIR.
Both parties to an OTC derivatives trade are required to individually report relevant data under the new Europe-wide rules and critics have raised concerns this will duplicate and fragment data. The rules that form the US equivalent to EMIR, under the Dodd-Frank Act, require only relevant sell-side firms to report OTC derivatives data to a repository.
ESMA has approved a total of six trade repositories.