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February 21, 2020

Welcome to the Roaring Twenties of Transaction Reporting

Alan explains the four Rs of SFTR and what comes next for regulatory reporting in the US, Europe and Korea.

The paint is fresh on the newly minted decade and we have only a few fast vanishing weeks until the rubber hits the road on SFTR. That said, I’m a firm believer that the go-live date of any regulation is an important milestone but is really the start of the journey and not the end of the tale. In motoring terms, sure you’ve driven through the town and out through the suburbs, but you’re hitting the motorway rather than arriving at your destination. A lot of energy, thought and money may have gone into SFTR projects but the 11th of April is by no means then end of the effort. As I commented previously SFTR is the Securities Finance equivalent of EMIR and we’re 6 years into EMIR with no sense whatsoever of job done on the European OTC derivatives reporting.

This isn’t really an SFTR piece either. Instead as we Charleston the 20’s and embrace a new decade I thought it made sense to consider what lies ahead for our transaction reporting community. And like an episode of Sesame Street it appears that this broadcast is brought to us by the number 4 and the letter R. [Though I’m not sure if that makes me Big Bird, Bert or Ernie!].

So what are the four R’s?

Well there’s the Re-Arch. Our favourite Trade Repository/Swap Data Repository is bringing the GTR2.0 architecture to CFTC reporting and Canadian reporting. Reporting under these regimes to DTCC GTR will be greatly changed as a result. We’ll bid farewell to old stalwarts like the Position Build and embrace younger nimbler behaviour like the ‘latest is greatest’ Trade State model instead. We’ll consume our last Enhanced Position Report and move onto a high fibre diet of Trade State reports. Originally this re-architecture was planned to coincide with the CFTC changing the Dodd-Frank reporting rules but due to the Commission dragging their heels somewhat DTCC are Re-Architecting the GTR US Data Center this year ahead of the CFTC changes.

Which brings us neatly to the next R, the ReWrite. The CFTC ReWrite of Part 43 & Part 45 of the Dodd-Frank reporting rules to be more precise. As I observed back in 2017 in The CFTC Roadmap and Christmas 2019, change is a coming and has been in the works for a long time now. Well Christmas 2019 has been and gone. I’m still power-walking to try and burn off those festive season excess calories. But the CFTC ReWrite is still an ongoing initiative with an assumed Q4 2021 implementation date based on the CFTC publishing the Parts 43 & 45 consultations this week.

Next up would be the ReFit. The EMIR Refit also seems to have been ongoing for quite a while but is also still a work-in-progress and running through until 2021. The ReFit is the EU Commission and ESMA taking the prescribed opportunity under the EMIR regulation to assess what’s working well, what’s working not so well and more importantly to tweak things where the impact on firms is considered not proportionate to the benefits the regulators get. The ReFit has been a bit of a snoozefest without many big changes but nonetheless the mandatory delegation for small Non-Financials coupled with the new requirement to get explicit permission to report will impact small and big firms alike.

Finally, there is the ReVamp of MiFIR/MiFID II RTS 22 transaction reporting. Ok you got me. I may have christened that one myself in order to get my R’s theme to work! But whaddya say. It’s catchy, succinct and if you all just be kind enough to follow me on this one it might just stick. The ReVamp (™ Alan McIntyre) is ESMA and the European NCAs taking a good hard look at themselves in the mirror and suggesting what changes and tweaks should be made to MiFIR RTS 22 reporting in order to improve the market surveillance mandate they are trying to enforce. In other words they want to ReVamp MiFIR reporting (see it works, right?) in order to make it less onerous on the reporting firms and more useful for the regulators. This process is also likely to last well into late 2021.

So the Gift That Keeps Giving, the continued burden of Transaction Reporting regulatory changes and requirements is clearly far from done. And that’s without considering any remedial work or regulatory changes that might arise out of SFTR if the go-live doesn’t go swimmingly. I skipped including the SEC having just fired the starting gun on SBSR. I considered “Resurrection of SBSR” but didn’t think it would stick and SBSR felt like I was reaching too much after my inclusion of the Revamp. We also didn’t cover Korean KRX reporting which also goes live this year. (It doesn’t start with an R so it didn’t fit the theme or make the list). And of course that’s without mentioning bloody Brexit. Dammit, I just mentioned it……


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