FinfraG obligation for reporting derivative transactions to a TR from 01/10/2017

On 3 April, 2017 The Swiss Financial Market Supervisory Authority (FINMA) approved the Swiss SIX Trade Repository AG as a trade repository. At the same time FINMA also recognised the Luxemburg based REGIS-TR as a foreign trade repository for the receipt of reports in accordance with FMIA (Financial Markets Infrastructure Act), also known as FinfraG (see press release here and the relevant FINMA Guidance here).

With the approval / recognition of these two repositories, FINMA effectively set the clock for the commencement of trade reporting. In particular, Article 130 of the Financial Market Infrastructure Ordinance (FMIO) states that:

“The duty to report to a trade repository under Article 104 FMIA must be fulfilled at the latest by the following deadlines following the first authorisation or recognition of the trade repository by FINMA…

As such, reporting under the new rules shall be phased-in as per the following schedule:

1 October 2017

Reporting counterparties which are either central counterparties (CCP) or financial counterparties (FC) which are not small; (CCP/FC+).

1 January 2018

Reporting counterparties considered small (FC-) and non-financial counterparties (NFC) which are not small; (FC-/NFC+)

1 April 2018

All other cases. Note that transactions between two small non-financial counterparties (NFC-) do not have to be reported.

In addition to the phasing-in of FinfraG the concurrent implementation of MiFID II (January 2018), EMIR II (November 2017) and CRS (May/June 2017) will strain the resources of financial institutions operating in multiple jurisdictions, as they struggle to stay afloat of the new requirements. ΜΑΡ FinTech’s Derivatives Transactions Reporting service (DTR) has been developed with reporting entities’ increasing obligations in mind. Our FinfraG DTR service is configurable to satisfy reporting obligations under FinfraG with connectivity to both SIX Trade Repository AG and REGIS-TR.

Challenging Common Reporting Standard (CRS) Deadlines

Looming CRS filing deadlines could prove challenging for many financial institutions. Reporting institutions residing in one of the 52 tax jurisdictions that opted for early adoption of the CRS, will this summer be called to submit considerable volumes of information about their account holders.

The Common Reporting Standard was introduced and develop by the Organisation for Economic Co-operation and Development (OECD) with G20 countries and in close cooperation with the EU for the Automatic Exchange of Information (AEOI) that will have a significant increase in the customer due diligence and reporting.

The scope of financial institutions required to report:

Nearly all Financial Institutions that maintain client accounts are considered Reporting Financial Institutions under CRS. These include: Depository Institutions such as banks, credit unions and savings and loans associations; Custodial Institutions such as brokers and custodian banks; Investment Entities including entities that invest in financial instruments or manage financial assets; as well as Specified Insurance Companies such as life insurance companies. Exceptions are few and include Government and International entities some exempt collective Investment Vehicles, some regiment funds etc.

Companies maintaining customer accounts should examine their status under CRS as in all likelihood they would be subject to reporting requirements and time is running short. Financial Institutions relying on in-house technical solutions may find CRS transmittals particularly difficult. The risk of financial penalties and loss of reputation associated with non-compliance could be removed by opting for centralised automated solutions which offer much more robust validation engines.

MAP FinTech’s CRS Reporting solution (running on our proprietary one-stop Polaris reporting hub) features an easy to use interface and fully automated data collection, validation and reporting cycle.