What is the objective of reporting OTC derivative transactions?
Under EMIR firms conducting OTC derivative transactions have to report all trades to Trade Repositories (TRs) for the following asset classes of derivative: credit; equity; interest rate; foreign exchange; and commodity and others.
On 27 September the European Securities and Markets Authority (ESMA) published its Final Report including the technical standards which set out the format of information to be reported to TRs. This Final Report has been submitted to the European Commission for endorsement. The purpose of reporting is to improve the transparency of the derivatives markets, protect against market abuse and provide for systemic risk mitigation. ESMA acknowledges that the reporting requirements uunder EMIR are more extensive in scope than those under the Markets in Financial Instruments Directive (MiFID) and the Regulation on Energy Market Integrity and Transparency (REMIT) but considers that the reporting requirements will be useful to ensure firms’ compliance with other requirements in EMIR including the clearing exemption and, in future, ensuring that the clearing thresholds (the level at which non-financial counterparties are subject to mandatory clearing) are set at the appropriate level.
© Finextra Research 2014