TR registration on track, readiness mixed

The European Securities and Markets Authority says it is on track to grant a licence to the first trade repository this month.

The European Securities and Markets Authority (ESMA) says it is on track to grant a licence to the first trade repository (TR) this month.

Registration decisions were first expected in July, but were pushed back to September and then to November. Reporting rules are now set to take effect on 12 February 2014, depending on when the first TR licence is granted.

Six TRs – Central Securities Depository of Poland, CME Group, the Depository Trust and Clearing Corporation (DTCC), IntercontinentalExchange, UnaVista and REGIS-TR – have submitted applications for licensing to ESMA.

The regulator is holding a board meeting tomorrow, when EMIR will be a topic of discussion. An ESMA spokesman said the TR registration is well on schedule for some time in November, but wouldn’t be drawn on whether a decision would be made at the meeting.

Both buy- and sell-side firms will have to report OTC derivatives to TRs under the European market infrastructure regulation. Stewart Macbeth, CEO, DTCC Derivatives Repository Ltd. and chief product development officer of DTCC Deriv/SERV, said readiness across the industry was mixed.

“A lot of higher volume users and financial firms have looked at all the data quite closely, and have views about how they will populate it,” he said. 

“Other users such as corporates will need to familiarise themselves with a smaller number of data fields as they potentially have less variety of derivatives products they trade.”

David Retana, managing director of REGIS-TR, said there were nearly 600 counterparties testing the TR’s system, and it appears German, UK and French participants were more prepared in comparison to other countries.  

“It does depend on the process of the company. We have customers that have started with this some years ago, and there are many others that haven’t picked a trade repository yet, preferring to wait for TRs to get approval,” he said.

As for what to expect after the go-live, Retana said the first stage of reporting was most definitely not going to be the best. “I foresee the next year will be a year of upgrades, not only for us, but participants as well.”

Macbeth said different entities have their own interpretations of the requirements and what they believe is compliant to the rules. He believed further guidance on data standarisation would only take place after the reporting deadline.

“This market is large and diverse. There are a lot of different sources of data and it’s a relatively open market. I don’t think there is a universal standard that can be applied,” Macbeth said.

“It’s going to be an interesting process over time.”