BNP Paribas to provide client derivatives reporting under EMIR via DTCC trade repository

30 July 2013

BNP Paribas Securities Services is outsourcing its derivatives trade reporting obligations under the European Market Infrastructure Regulation (EMIR) to the London-based DTCC Derivatives Repository Limited (DDRL). The European arm of the Depository Trust & Clearing Corporation (DTCC) will assist the bank’s buy and sell-side clients as the new rules requiring most over-the-counter (OTC) trades to be reported to a central repository and to effectively be cleared ‘on change’ via a central counterparty (CCP) clearinghouse, come into effect. This deal covers the sometimes neglected reporting obligations.

EMIR requests all financial market participants to report both their OTC and listed derivative transactions to a trade repository, in-line with the wishes of the post-crash Pittsburgh G20 meeting to enhance transparency on global markets, mitigate systemic risk and ensure that unwinding trades in the event of another collapse such as Lehman Brothers on 15 September 2008 is never again so complicated.

Central repositories will act as information warehouses under EMIR in Europe and Dodd-Frank in the US, storing the details of all derivatives trades exclusively for reference and inspection by regulators. One party to the contract can delegate the reporting obligations to the other, or a third party can be used to reduce not only cost but the time burden to parties and systemic risk. It is this latter option that BNP Paribas Securities Services is pursuing by partnering with DDRL.

Commenting on the link-up, Helene Virello, head of collateral management services at BNP Paribas Securities Services, said: “A large number of industry players still associate EMIR exclusively with clearing. As a result, many may be unprepared to comply with reporting provisions entering into force in January 2014. Our agreement with DTCC provides an effective solution to fulfil the legal obligation in a timely and cost effective manner. As such we expect strong demand for third party reporting services.”

EMIR requests the reporting of an extensive range of information which goes much beyond execution and confirmation details. Information on valuation, on the collateral held, on the rationale of the trade and on the identity of the final beneficiary is also required.

“The generation of the reporting may result in a very cumbersome and time consuming burden for our clients,” warned Virello. “Information must be taken from many sources, aggregated and reconciled using common identifiers [the new global Legal Entity Identifier (LEI) rules are also a post-crash compliance burden facing banks -Ed].

“Along with our Collateral Access products, we can now accompany our clients through the entire transaction process from trade capture to reporting,” continued Virello. “Electronic affirmation and confirmation and liquidity solutions are all covered, and we are ideally placed to carry on reporting on behalf of trading parties.”

According to Andrew Green, global head of derivative account management at DTCC Deriv/Serv, the firm is very pleased to establish this connectivity with BNP Paribas, pointing out that it will ensure the bank’s wholesale clients can meet their regulatory obligations under EMIR for all five derivatives asset classes. “Furthermore, by reporting their trades to a DTCC repository once, clients of BNP Paribas can meet their reporting obligations in multiple jurisdictions, where such obligation exists,” he adds. “Having this discussion with their service providers or dealers, or with a trade repository, is paramount to ensuring they are ready to meet their regulatory obligations.”

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