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September 24, 2013

ESMA rejects GFMA proposal on dual reporting | Risk.net

One of the major differences between EMIR and DFA is that under EMIR, both counterparties have the responsiblity to report using a single UTI. This has been a headache for the FX Market as there is no central infrastructure to accomodate this need and that's why GFMA proposed a ‘my-ref-your-ref' model to Esma in June, under which each party to a trade could assign a UTI and make it available to the other counterparty at the confirmation stage. It would then be the Trade Repository's task to match the two unique identifiers. As ESMA stick to their one Unique Identifier plan, GFMA is currently working with ISDA to tailor their prescribed workflows, to the peculiarities of foreign exchange. Nevertheless, supporters of dual reporting claim that being able to communicate the UTI to each other will be the biggest practical challenge.

However, James Kemp, managing director of the GFMA's global foreign exchange division in London, says regulatory insistence that only one UTI be submitted to a repository has prompted GFMA to reconsider its approach. It is now working with the International Swaps and Derivatives Association, which recently issued its own best practices for trade reporting of derivatives, to tailor Isda's prescribed workflows to the peculiarities of foreign exchange. "Given the legislative single UTI intent, it was difficult to work out whether or not it was even feasible to take the my-ref-your-ref approach. We've already been working with Isda on its proposal to match prior to the trade repository, and given the four other asset classes are going down that route, to add forex to that makes sense in the longer run, even though it will have its own considerable challenges," he says.

More details over at Risk regarding reporting FX using a single UTI. (subs required) Maria L.  

 

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