Rival trade repositories have joined forces to draft recommendations for the European Securities Market Authority (ESMA) on how to share data amongst themselves.
ESMA today confirmed a meeting was held yesterday with a group of trade repositories (TRs) about the issue of reconciliation - an area that could limit the effectiveness of G-20 led derivatives rules to reduce the opacity of the OTC derivatives market.
Under the European market infrastructure regulation (EMIR), OTC derivatives trades must be reported to TRs. This requirement is to kick-in on 1 January.
At least six organisations have applied to ESMA to become a TR, which would reconcile reported trades to give regulators an accurate picture of transactions.
However, there isn't a direct provision allowing TRs to share data with each other, and TRs appear unclear on whether the reconciliation requirement allows it.
Mark Husler, head of business development for information services at London Stock Exchange Group, who looks after TR-hopeful UnaVista, said it had set up a working group with other repostories to discuss the issue, and has since presented a joint-proposal to ESMA.
"That dialogue is continuing with the regulator, outlining how the group of trade repositories will inter-operate amongst each other," he said.
"We need to reconcile trades on a daily basis to assist regulators, but also clients because different sides of a trade may elect different service providers."
Stewart Macbeth, CEO of the Depository Trust & Clearing Corporation (DTCC)'s Deriv/SERV LLC, also a TR-applicant, said for the reconciliation process to work, each TR needed to have a system that worked collectively.
He said the proposal is to have a protocol allowing TRs to share data between each other, and look at how the process would be carried out.
"If a TR has a one-sided submission of the trade, it can publish the unique trade identifier to other TRs, giving them the opportunity to say whether they have the remaining data."
"You would then bilaterally exchange more detail in the trade and perform the reconciliation," he said. "Achieving reconciliation without compromising the security of the information is paramount."
Macbeth said DTCC was open to sharing a "reconciliation venue" with other TRs, but others were looking at handling it internally.
"Discussions are taking place at an industry level, but nothing is definitive at this stage," he said.