SWIFT, the financial messaging provider for more than 10,000 financial institutions and corporations across 212 countries and territories, has announced its Affirmations application, which is designed to offer compliance assistance to asset managers, treasurers, traders and others active in the changing over-the-counter (OTC) derivatives market, now complies with the European Market Infrastructure Regulation (EMIR).
EMIR is the European equivalent of the US Dodd Frank regulation which among much else legislates for the need to introduce central repositories, centralised clearing and so forth in the OTC derivatives market. By parading its compliance with EMIR, Dodd Frank and other regional rules implementing the wishes of the post-crash Pittsburgh G20 meeting for more transparency and traceability on global financial markets, SWIFT is obviously hoping to attract people to its stand at the impending Sibos 2013 trade show, due to start shortly 16-19 September in Dubai, UAE. Most other vendors will be displaying their compliance-ready solutions too ahead of the annual jamboree.
SWIFT says its Affirmations offering supports compliance by making multi-asset class electronic confirmation matching accessible to players of all sizes and will no doubt be hoping to push this message at the trade show.
Currently, many foreign exchange (FX), money market (MM), derivative, swap and commodities transactions are confirmed by email or fax, or not confirmed at all, says SWIFT. The operational and settlement risks introduced by this manual process are unacceptable in today’s environment, and the regulators want to see them eliminated.
Article 11 of EMIR (in force since March this year and discussed in the bobsguide FPL blog at that time) is concerned with risk mitigation for non-centrally cleared OTC derivatives, and requires ‘timely confirmation, where available, by electronic means, of the terms of the relevant OTC derivative contract’. In light of EMIR, there is a clear need to ensure all client trades are confirmed with an electronic audit trail.
As Paul Taylor, director of global matching at SWIFT, says: “Under the terms of EMIR, investment banks need to automate the processing of confirmations not just with their market side counterparty brokers, but also with their investment manager and corporate buy-side clients. SWIFT’s Affirmations solution, implemented in conjunction with the cloud-based Alliance Lite2 (AL2) connectivity option and Accord, serves the requirements of both sell and buy side firms and makes automating treasury confirmations easy and cost-effective for all market participants.”
SWIFT’s Affirmations application relies upon the collective’s Accord-compliant matching engine, which gives end users such as investment managers and corporates a single screen view of the details of all their trades with all their counterparties, enabling them to accept or reject them with a simple mouse click.
Bobsguide will be producing a daily show report from the Dubai World Trade Centre (WTC) venue on 16-19 September.