Trade Repositories

This is the first in a series of four articles considering central bank payment systems self-assessments against the PFMIs.

Introduction and the Bank of England Example

In response to the financial crises of 2007-2009, at the behest of G20 governments, the Financial Stability Board and its constituent bodies developed broad global standards to shore up a system that had proven all too fragile – though it must be said that the public, regulated marketplaces did function throughout (except in isolated cases where for a few days their governments closed them for fear of collapsing prices). The same cannot be said of the freezing up of the far larger OTC and banks’ market operations in that period, which was the source of the economic and social damage inflicted.

Regulatory reform is ongoing and the role of independent bodies such as IOSCO in standard setting can be crucial.

It is no surprise that there have been a number of issues with the trade reporting mandate in Europe. In implementing the G20 financial reform programme, EMIR (the European Market Infrastructure Regulation) called for both sides of a transaction to be reported and a complex data field to be filled, with no uniformity of creation behind the identifiers that are crucial to identifying and matching trades.

ICE Trade Vault Europe, one of six approved European trade repositories authorised by ESMA (the European Securities and Markets Authority) to offer reporting functionality under EMIR (the European Market Infrastructure Regulation), has extended its trade repository registration to include the receipt of FX derivatives reports. The extension has been approved by ESMA.

The trade reporting mandate, which went live on 12 February 2014, has provided an added layer of cost to energy traders that will see ‘seven figure sums’ spent each year on reporting spot, futures and derivatives transactions to EMIR (European Market Infrastructure Regulation) authorised trade repositories in Europe. The data has come from EFET (the European Federation of Energy Traders), an Amsterdam-based industry group that represents a group of over 100 energy traders.