Market Impact
The recent announcement of CME to wind-down its trade repositories in Australia and Europe, Abide Financial, and NRR has caught many by surprise. In this article we discuss the aftermath of this development, its market impact as well as the challenges faced by affected reporting entities.
Alexandros Costantinou, Director of MAP S.Platis and MAP FinTech explains:
“If a reporting entity has not been directly or indirectly reporting to CME, then we do not expect any material impact. However, this still remains to be seen. On the other hand, reporting entities that have been reporting to CME, either directly or indirectly, will definitely be impacted. These reporting entities will need to work with a new Trade Repository (TR) or Third Party Provider. Practically, this means that they need to negotiate new agreements, switch their reporting, migrate data and open positions and ensure consistent reporting, among others.”
According to ESMA, as of July 2019 CME TR had 146 clients and a market share of around 12% in Europe, which represents the 4th largest volume market share out of six active TRs. Although CME TR was relatively small-to-medium size in terms of clientele and volume, CME Group’s Abide Financial and NEX Regulatory Reporting businesses have been key players in the market. Combined with CME’s presence in Australia, it looks like a significant number of market participants will be impacted by this development. Additionally, Australian reporting entities will face a unique challenge since the only alternative choice of TR in Australia at the moment is DTCC Data Repository.
Another issue to consider is that CME announced that the wind-down process would be completed by 30 November 2020 with the final reporting date being 13 November 2020. This means that affected entities will have less than 6 months to prepare for the necessary changes. For some entities, this short timeframe, coupled with the COVID-19 situation, will result in a time-sensitive, substantial and costly administrative burden.
Despite the above, there are solutions for those affected entities to minimize the impact and smoothen the transition. For example, MAP FinTech, via its fully automated processes, is prepared to help affected entities migrate from CME and Abide swiftly, seamlessly and at no extra cost, under the support and guidance from its dedicated compliance support teams in the UK and Europe and its Australian partners.
The role of Trade Repositories in the derivatives market
According to the latest ESMA report, Trade Repositories (TR) continue to play a central role in enhancing the transparency of derivatives markets and reducing risks to financial stability.
Bloomberg Trade Repository Limited (BTRL) became the first TR to renounce its registration. The withdrawal became effective on 1 March 2019 after ensuring that all BTRL clients were transferred to an active TR of their choice.
The expected wind-down of CME is different to the circumstances involving BTRL as the volume of BTRL was very small compared to CME. Despite this, given the integral part that TRs play in the derivatives market and the upcoming Securities Financing Transactions market through SFTR reporting, we do not expect any changes for the time being to the framework and structure of TRs in the EU. Of course, a lot remains to be seen on how well the market adapts to this new development, one that is certainly worth monitoring.
How MAP FinTech can assist all the potentially affected entities?
ΜΑΡ FinTech can assist clients to switch over from any Trade Repository or third party provider (including clients of CME Group affected by the latest developments) in the following ways:
- Ensure accurate reporting via customised health-check reviews
- Ensure smooth transition with minimum effort
- Automate your reporting and minimize the risk of errors
- Facilitate reconciliations between back office data and data reported
- Validation and enhancement of data
- Support delegated reporting
- Ensure timely reporting
- Assist with data transfers and especially outstanding positions to a new Trade Repository
- Store your reported transaction data
- Provide tailored and comprehensive support
- Compliance Q&A Service
MAP FinTech’s Transaction Reporting Solution is a comprehensive solution with a high level of automation and extended field validation that is designed to assist firms comply with EMIR’s and MiFIR’s transaction reporting requirements. Our solution allows clients to enjoy a cost-efficient, integrated solution delivered via a single platform, together with the rest of Polaris’ offerings and our team of experts’ impeccable support services.
For more information on MAP FinTech’s Transaction Reporting Solution, please visit our website at www.mapfintech.com or contact our team at +357 2535 1335 / +44 207 060 5540 or via email at info@mapfintech.com.