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Dealers Fear Reporting Clash Under SFT Regulation

By Louie Woodall
May 21, 2015, Risk

Total return swaps and other securities financing trades could be subject to double reporting requirements and collateral haircuts under proposed EU regulation.

Dealers in the equity derivatives market fear some of the most frequently used equity swap trades could be subject to duplicative reporting requirements under the European Union’s forthcoming regulation on securities financing transactions (SFTs), amid tense trialogue negotiations to determine which products will be brought into scope.

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Buy Side ‘Can’t Justify’ Clearing OTC Derivatives in Europe Yet

By Jon Watkins
May 19, 2015, The Trade

Buy-siders at this year’s Euroclear Collateral Conference have said they are not clearing OTC derivatives in Europe until regulators make it mandatory.

With the rollout of new central clearing rules for OTC derivatives now penciled in for early 2016, the general consensus among panelists and the audience was that they would not be clearing the bilateral products prior to implementation.

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U.S., Europe Liaise on Clearing

May 14, 2015, Markets Media

With the emergence of swap execution faciltities and the subsequent central clearing of trades as mandated by Dodd-Frank and Emir, the world’s clearinghouses are becoming increasingly important as points of risk in the global financial system, according to U.S. Commodity Futures Trading Commission Chairman Timothy Massad

One of the most important cross-border issues before the Commission is clearinghouse recognition and regulation. “This is an issue that transcends swaps,” Massad told a U.S. Senate committee on Thursday. “It is of equal concern to participants in the futures and options markets because the same clearinghouses handle clearing for many products.”

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Europe Set to Reconsider Dual-Sided Reporting

By David Wigan
May 9, 2015, IFR

European regulators are set to reconsider rules that require both sides on a derivatives trade to take responsibility for trade reporting, in a move that will bring the eurozone more in line with the US.

Under the new approach, European counterparties will retain the right under European Market Infrastructure Regulation to delegate reporting to the counterparty to the trade, but will not be required to report its trades accurately if the delegated party fails to do so, according to regulatory sources. In other words, the delegator will no longer be legally responsible for the trade data reported, effectively relieving smaller firms of that burden.

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ISDA and Markit Team to Deliver EMIR Trade Tool

By Gabriel Suprise
May 11, 2015, GlobalCapital

The International Swaps and Derivatives Association and Markit have partnered to launch a trade classification tool for EMIR, which will allow investors to determine clearing obligations.

The two firms teamed up to offer the EMIR Clearing Classification Tool, a trade classifier that allows investors trading interest rate swaps to determine their clearing obligations under the European Market Infrastructure Regulation mandate as determined by the European Securities and Markets Authority. 

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Comment: Data Integrity and Post-Crisis Regulatory Reform

By Mark Brennan
May 7, 2015, Banking Technology

As in the universe of human ethical behavior, the precise definition can be hard to nail down – though, as with human conduct, we practitioners feel we recognize it when we see it.   What does it mean for data to be whole, sound, or perfect?  Clearly, accuracy is paramount.  As long as there have been information technology systems serving financial services, data integrity has obtained as a core principle:  each business fact must be mapped to understandable datum; system functionality must produce, or derive, correct data.  But an adjacent principle is transparency:  unless behavior – or information – is clearly delineated or articulated, there can be no integrity.

Thus the global regulatory drive for transparency in financial markets has in turn given way to an urgent need for data integrity.  Going back to the G20 summit in Pittsburgh in September 2009, following the great recession, the world’s leading countries agreed that there needed to be more transparency and risk mitigation for the global derivatives market, in the form of organized clearing, reporting and trading.  These principles were later enshrined in Dodd-Frank’s Title VII, and are at varying rates of progress in the EU in the form of the EMIR and MiFID II regulatory initiatives.

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Banks Face “Mad Rush” to Prepare for MiFIR

By Elliott Holley
May 5, 2015, Banking Technology

Financial institutions will need to maintain records, report transactions and supply reference data under the European Commission’s forthcoming MiFIR regulation. But those who expect plenty of time for implementation and no regulatory conflicts are likely to be disappointed, according to a new report by analyst firm Aite.

MiFIR is the regulation associated with MiFID II, which seeks to harmonise the trading of securities across the European Union. However, unlike a directive, the regulation cannot be interpreted by national regulators but will be imposed directly into law. According to the report, MiFIR Reporting Requirements – Not for the Fainthearted, MiFIR is currently far from finalised, with many of the technical standards still to be worked out by ESMA. The amount of work still to do, combined with the tight deadline for implementation, suggests that a mad rush towards implementation in the final six months is more than likely.

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ESMA Adds Second-Level Reporting Validation

By Helen Bartholomew
April 27, 2015, IFR

The European Securities & Markets Authority has introduced an additional layer of validation requirements for registered trade repositories to ensure the completeness of data submitted on swap transactions under the European Markets Infrastructure Regulation.

As part of a newly published question and answer paper relating to implementation of EMIR, Europe’s key swaps market regulator confirmed a new two-step validation process to ensure reporting is performed according to the new regime and in line with rules set out in the technical standards.

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ICE Clock Ticks Amid Margin Row

By David Wigan
April 18, 2015, IFR

Just over a month before the window shuts on ICE Clear Europe’s application for authorisation under the European Markets Infrastructure Regulation, the clearing house has come under attack by dealers concerned that its proposed margin models will lead to a surge in collateral costs.

ICE Clear Europe has disclosed to its clearing members the expected initial margin impact of implementing EMIR, under which it will charge the clearing broker based on the higher of its current one-day gross margin model (based on US rules) or a new two-day margin number, presented on a net basis and adjusted with anti-pro-cyclical measures, under EMIR. 

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Asia Set for Smooth Reporting Switch - DTCC

By Cian Burke
April 14, 2015, FOW

DTCC said the lessons learned from EMIR had aided the transition in Asia.

Asian markets are making a more orderly transition to new derivatives reporting regimes than their European peers, according to global trade repository the Depository Trust & Clearing Corporation (DTCC).

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