Trade Reporting Regimes

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TRAction Fintech was founded to reduce the compliance burden by taking care of your trade reporting. The requirements vary by jurisdiction and the following information may need to be reported:

  • the type of financial instrument;
  • the counterparties to a trade;
  • any intra-day modifications;
  • Legal Entity Identifier (LEI); and
  • transaction and product identifiers.

The data needs to be reported to the relevant regulator through a Trade Repository (TR) or other body nominated by the regulator.

The Objectives of Trade Reporting Requirements for OTC derivatives

The overarching objectives of the regulatory trade reporting regimes for financial products are to:

  • enhance the transparency of trade information available to relevant authorities and the public;
  • promote financial stability; and
  • support the detection and prevention of market abuse.

Europe – EMIR, MiFIR/MiFID II and SFTR

EMIRMiFIR/MiFID II and SFTR are separate regulatory regimes in Europe. Who do they apply to?

EMIRMiFID II/MiFIRSFTR
Applies to any entity established in the European Union (EU) that has entered into a derivative contract, and applies indirectly to non-EU counterparties trading with EU parties.Imposes transaction reporting obligations in respect of specified transactions in financial instruments where the underlying instrument is traded on a European Economic Area (EEA) trading venue.Both Financial Counterparties and Non-Financial Counterparties have the reporting obligations, including EU based entities including all its branches irrespective of where they are located and non-EU entities where the SFT is concluded by an EU based branch.

United Kingdom – UK EMIR, MiFIR/MiFID II and SFTR

EMIRMiFIR/MiFID II and SFTR have been onshored to the United Kingdom (UK) and are separate regulatory regimes in the UK. Who do they apply to?

UK EMIRUK MiFIR/MiFID IIUK SFTR
EMIR has been onshored into UK legislation as UK EMIR. The UK legislation requires entities entering into derivative contracts to report transactions to an FCA registered trade repository (TR), clear via a central counterparty (CCP) if subject to a mandatory clearing obligation and implement risk mitigation for OTC derivatives that are not cleared by a CCP.MiFIR/MiFID II reporting obligations in the UK are the same as the EU as they have been adopted locally by the UK parliament. It is important to note that UK entities will now have a dual-reporting obligation if the entity has executed its transactions via an EU branch or vice versa. We’ve developed a summary to ensure you are reporting your trades/transactions to the correct TR or approved reporting mechanism.Only Financial Counterparties have the reporting obligations, including all UK based entities and third country branches of UK based entities. Non-financial counterparties don’t have the reporting obligations.

Australia – ASIC Rules

ASIC trade reporting is governed by the Reporting Rules 2013 which provides a framework for the regulation of OTC derivatives reporting, clearing and trade execution. All Australian entities dealing in OTC derivatives are required to report transactions to an Australian Derivatives Trade Repository (ADTR) licensed by the ASIC. In terms of any specific reporting requirements and what your obligations are, we’ve covered all for you here.

Singapore – MAS Rules

MAS reporting requires the parties to a Specified Derivatives Contract (SDC) to report to a licensed trade repository or licensed foreign trade repository. For non-bank financial institutions and significant derivatives holders, the reporting obligations cover:

CurrentlyFrom 1 October 2021
Interest rate derivative contracts & credit derivative contracts onlyExpand to cover foreign exchange derivative contracts, commodity derivative contracts & equity derivative contracts

Hong Kong – HKMA

HKMA requires specified OTC derivative transactions to be reported to the HKMA trade repository – HKTR. The reporting obligation is double-sided, and all licensed banks, restricted banks and deposit-taking institutions must report in accordance with the regulation.

Canada

Derivative trade reporting in Canada is a single-sided reporting regime that requires OTC derivatives across all asset classes to be reported. The reporting regulation requires all derivatives transactions involving a local counterparty to be reported to a designated TR or to the Commission. The TR Rule outlines a hierarchy for determining which counterparty will be required to report a transaction based on the counterparty to the transaction which is best suited to fulfil the reporting obligation.

Background & Law Reform

Global commitment to derivatives reform arose out of the Global Financial Crisis (GFC) in 2008. The GFC highlighted structural deficiencies in the global derivatives markets and the systemic risk that those deficiencies posed to wider financial markets and the real economy. In the lead-up to the GFC, those structural deficiencies contributed to the build-up of large counterparty exposures for which the risks were not appropriately managed. With details of derivative transactions generally held only between the counterparties, in many cases those exposures were not transparent to other market participants and regulators.

The regulatory response, in the form of commitments by regulators around the world to implement derivatives reform, was made at the Group of Twenty (G20) Summit in Pittsburgh in 2009. Since then, transaction reporting regimes have been introduced in multiple jurisdictions and are continuing to be amended and updated. Read more about how ASIC and European Central Bank responded to this.