May 7, 2014

European Trade Reporting “Has Gone Quite Well” | Chairman of ESMA

A speech by Steven Maijoor, Chair, European Securities and Markets Authority comments on European Regulation and future challenges to market reform.

Steven Maijoor, Chair, European Securities and Markets Authority made a speech at todays AFME conference, much of which is a summary of recent events. He made a comment about the reporting of OTC and ETD which caught my eye:

"Since 12 February 2014, for almost three months now, derivatives are reported to trade repositories. Regulators now have access, or are in the process of setting up their access, to derivatives data which should help to have a clearer picture on the risks associated to those markets. So far, I believe that the reporting has gone quite well given the framework and the complexity of the project. "

and also

 "The work on EMIR has for example taught us that a mundane issue like the definition of reporting fields is an essential element for a reporting regime to work properly."

Given the recent article by Amir on "European Trade Reporting | What's The Point" – I'm not sure the people implementing EMIR feel the same way. This quote echoes the ClarusFT point of view:

In line with the requirement of the Regulation to publish aggregate positions by class of derivatives on the reported contracts on a regular basis and in an easily accessible way, trade repositories are providing figures on their website on a weekly, or in some cases, even daily basis. Having said that I believe that the information made public can be further improved. ESMA from its side is constantly monitoring the data in order to improve its reliability.

Other comments include:

  • ESMA will assist the European Commission to set the parameters for calculation of cash penalties for the participants that cause settlement fails;
  • Securities regulators however also need to step up their role on this and need more resources to collect and analyse data. It goes without saying that more data and analysis will also support our other important objective of investor protection.
  • ESMA is also discussing the way forward on some other challenges introduced by the clearing obligation such as the frontloading requirement
  • On average on a weekly basis all the repositories receive more than 120 million reports. As some firms seem not to have made the starting deadline of 12 February, we expect the number of new reporting entities and of trades reported to repositories to increase over the next months.

On the authorisation of CCPs and the potential for national regulators to artificially affect the timing of authorisation:

Some have suggested that they had expected some of the colleges to take a registration decision at an earlier point in time and that the delays illustrate that national interests had entered the discussion in the colleges. Being a participant to all colleges, I can tell you that the discussions in the colleges are on substance; the application of EMIR to the specific CCP. This is a complex and time-consuming process, involving complicated underlying issues and many different actors. The colleges bring to light potential differences between supervisory practices but the very same colleges ensure the convergence of these practices.

The main take away seems to be a new focus on gathering data on securities markets, the rest of the speech seems to reflect a "steady as she goes" direction. The full speech is attached below.

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