The European Securities and Markets Authority (ESMA) has approved four trade repositories (TRs) in accordance with the European Market Infrastructure Regulation (EMIR), while having to accept a February 2014 start date for all derivatives trades in Europe after the European Commission (EC) rejected its attempt to delay the stipulations covering exchanged traded derivatives.
The new EMIR rules introduce new centralised clearing, reporting and transparency requirements in-line with the wishes of the post-crash Pittsburgh G20 meeting and are the European equivalent of the US Dodd Frank rules, with the important difference that the US is exempting exchange traded derivatives and solely focusing on over-the-counter (OTC) trades - so much for the planned international harmonisation.
The Iberclear/Clearstream joint venture Regis-TR, London Stock Exchange (LSE) UnaVista platform, Poland's KDPW and the Depository Trust and Clearing Company (DTCC) have all been greenlighted by ESMA as TRs for a 14 November start date, advancing this aspect of the EMIR rules. The CME Group application and one from the IntercontinentalExchange (ICE) are also currently being processed said ESMA in its latest regulatory update, in time for the 12 February 2014 start date for brokers; 90 days after the 14 November registration date which will see the rollout of the new infrastructure.
The new trade repositories are intended to strengthen the risk oversight and recording of derivatives trades on the global financial markets and also to help to ease the resolution of collapsed firms in the future - hopefully eliminating the need for the tortured ad hoc procedure unwinding Lehman’s positions after its bankruptcy on 15 September 2008.
All five derivatives asset classes, covering foreign exchange (FX), credit, interest rates, commodities and equities will be included under the 12 February 2014 EMIR TR start date, with brokers and market participants now having to scramble to ensure compliance.