european regulations report - implementation, impacts and solutions

Research Report – 2013/002a

Updated 16th

September 2013

European Commodity Market Regulations

Implementation, Impacts and Solutions Part 1 of 2

Sponsored by

European Energy Market Regulations

© Commodity Technology Advisory LLC and ETR Advisory Ltd, 2013, All Rights Reserved. 2

Contents Introduction .................................................................................................................................................... 5

Big Compliance comes to Energy Trading ....................................................................................................... 6

Background ..................................................................................................................................................... 7

The Banking crisis of 2007/2008 ................................................................................................................. 7

MiFID II ........................................................................................................................................................ 7

Basle III/CRD IV ........................................................................................................................................... 8

The EU “Third Package” and REMIT ............................................................................................................ 8

Key Themes ..................................................................................................................................................... 8

EMIR Rules Overview ....................................................................................................................................10

Different types of party under EMIR ........................................................................................................10

REMIT Rules Overview ..................................................................................................................................11

Timings ..........................................................................................................................................................12

The EMIR Threshold for Non-Financial Counterparties ................................................................................13

Threshold calculation................................................................................................................................13

Trade Reporting ............................................................................................................................................15

Trade Reporting for EMIR .........................................................................................................................15

What must be reported? ......................................................................................................................15

Where data should be reported? .........................................................................................................15

Which data must be reported? ............................................................................................................15

When should data be reported? ..........................................................................................................16

Backloading ..........................................................................................................................................16

Trade Reporting for REMIT .......................................................................................................................16

Which data must be reported? ............................................................................................................16

Where should data be reported to? .....................................................................................................17

What data types must be reported? ....................................................................................................17

Non Standard Trades ............................................................................................................................19

Data Destinations .....................................................................................................................................19

Implementing a trade reporting solution .................................................................................................20

Solution types .......................................................................................................................................20

Required Solution Activities......................................................................................................................21

Data sourcing and gap analysis ............................................................................................................21

Data mapping and capture ...................................................................................................................21

Configuration choice and connection mechanism ...............................................................................21

Data enrichment ...................................................................................................................................21



Pre trade data .......................................................................................................................................21

Issues being encountered .........................................................................................................................22

LEIs (Legal Entity Identifiers) ................................................................................................................22

The UTI (Unique Trade Identifier).........................................................................................................22

Which rules apply to a trade?...............................................................................................................22

Changing requirements ........................................................................................................................23

Risk Management .........................................................................................................................................24

Timely confirmation ..................................................................................................................................25

Portfolio Reconciliation and Dispute Resolution ......................................................................................25

The reconciliation process ........................................................................................................................25

Typical modes of operation ..................................................................................................................25

Bilateral reconciliation ..........................................................................................................................26

Outsourced Reconciliation ...................................................................... Error! Bookmark not defined.

Contractual Changes required for Portfolio Reconciliation and dispute resolution ............................26

Portfolio Compression ..........................................................................................................................27

Bilateral Compression ...........................................................................................................................27

Multilateral Compression .....................................................................................................................27

Is it worth compressing if it is not mandatory? ....................................................................................28

Daily mark to market/model ................................................................................................................28

European Regulatory Solutions Directory ....................................................................................................29

Types of service and software ..................................................................................................................29

Trade Repositories ................................................................................................................................29

Reporting Services ................................................................................................................................34

NASDAQ OMV .......................................................................................................................................34

Specialist Reporting and aggregation software ....................................................................................36

The solution includes; ...........................................................................................................................38

E/CTRM offerings ..................................................................................................................................42

Portfolio Reconciliation/Dispute Resolution ........................................................................................45

Portfolio Compression ..........................................................................................................................46

TriOptima triReduce .............................................................................................................................46

Trade Surveillance ................................................................................................................................47

About The Authors ........................................................................................................................................50

Aviv Handler..............................................................................................................................................50

Dr. Gary M. Vasey .....................................................................................................................................50

ComTech Advisory ....................................................................................................................................51

ETR Advisory .............................................................................................................................................51



About the Sponsor ........................................................................................................................................52

TriOptima ..................................................................................................................................................52



Introduction Increased regulation and oversight of European energy and commodity trading has commenced as

various aspects of the EMIR (European Market Infrastructure Regulation), REMIT (Regulation on

wholesale Energy Market Integrity and Transparency), and other regulations start to bite. These

regulations are already having an impact on trading and risk management business practices and

may have far reaching and as yet, even un-thought of consequences for the industry. Unfortunately,

the authorities have yet to define some of the detail and clarity needed to be able to determine this.

This research, conducted jointly by industry leading analysts and experts, Commodity Technology

Advisory and ETR Advisory, aims to help to clarify the issues and to examine the impact of regulation

on software requirements in the trading and risk management business function. It looks at the

current implementation schedule of the regulations and examines some of the implementation

impacts of the yet to be defined details of the regulations. It also reviews the software, services and

platforms available in the market to support aspects of the European regulatory environment and

establish the readiness of European traders for operating under the regulations.

The research is focused on understanding:

• Implementation time frames and what this means to traders

• The unknowns and yet to be defined details and their implications

• A review of solutions, services and platforms in the market designed to support these

regulations

• Readiness of trading organizations from a business process, technology and holistic

standpoint – This will be a separate report issued as Part 2B

Upon completion of data gathering and interviews, we will draft a follow up report including detailed

survey results and analysts conclusions. That report will also be available for download to industry

professionals via our various websites.

Less than a week after releasing this report on 13th September 2013 there were already several

changes in dates and rules. The report is therefore updated as of 16th

September 2013



Big Compliance comes to Energy Trading The energy and broader commodity-trading world is in the process of its latest stage in its maturity:

That of “Big Compliance”.

The rules that most energy traders will have to implement not only require a great deal of IT work,

but also some process re-engineering and an acceptance of the fact that compliance will occupy a

significantly larger component of overall activities and budgets on an on-going basis. One can argue

as to whether this is appropriate for an industry that many feel is “non-systemic”, but as things stand

most of these changes will happen with the result that industry business processes, practices, the IT

landscape and possibly even the players, will change.

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Background The upcoming rule sets stem initially from two sources:

1) Reactions to the Banking crisis of 2007/2008

2) The EU “3rd Package” - which further aims to create a single European gas and power

market.

The Banking crisis of 2007/2008 Following the crisis, several initiatives kicked off in order to attempt prevention of a repeat. Key

amongst these was the declaration that arose out of the 2009 G20 Pittsburgh Summit, which stated:

“All standardized OTC derivative contracts should be traded on exchanges or electronic

trading platforms, where appropriate, and cleared through central counterparties by end‐

2012 at the latest. OTC derivative contracts should be reported to trade repositories. Non‐

centrally cleared contracts should be subject to higher capital requirements.”

In essence, the objective of this declaration was a reduction in the “systemic risk” that brought the

crisis about.

Each G20 country undertook to conform to the declaration, and this has resulted in several

initiatives including Dodd Frank in the US, and EMIR (European Marketing Infrastructure Regulation)

in the EU. Other G20 countries are also in the process of implementing their versions.

Amongst the principles encompassed in the declaration, were:

- Transparency

- Move to standardized exchanges

- Risk reduction

These have led to a variety of pillars including reporting of trades to repositories, a move to OTC

Clearing, several risk reduction techniques and the desired imposition of mandatory position limits

on commodities.

MiFID II In addition to EMIR, other initiatives were created in order to address the issues. In Europe, this

includes MiFID II. The Markets in Financial Instruments Directive (MiFID) came into force in 2007 and

introduced several new concepts for financial companies, such as “passporting” i.e. the requirement

to be able to execute equally in any European location, and a requirement to provide best execution.

It introduced the concept of a Multilateral Trading Facility (MTF) to which certain transparency and

operation rules apply.

However, the majority of commodity traders received an exemption from these rules.

MiFID II extends the original initiative in many ways, including a wider ranging Organized Trading

Facility (OTF). Of particular interest to our market are two items:

1) The potential removal of the commodity trader exemption , in many cases,

2) Mandatory Position Limits (which in the US are being implemented within Dodd Frank).



Basle III/CRD IV The Basle III accords modify the Basle II accords targeted at the banking industry. These outline how

banks should calculate their capital requirements, for credit, market and operational risk, amongst

other things. Basle III moves to a more prudent capital calculation methodology and capital ratios for

banks. This includes the use of Credit Value Adjustment (CVA) and similar measures. In Europe, the

rules are being implemented as the fourth Capital Requirements Directive (CRD).

Some of the new capital calculation rules could well apply to energy traders, although probably not

until 2017. However, these are yet another set of rules that should be on Energy Traders’ radars.

The EU “Third Package” and REMIT The European Union third package was adopted in 2009. It aimed to further open up Europe’s gas

and power markets using several means including unbundling previously vertically integrated gas

and power companies, the move to standardize TSOs, and the creation of a single market.

As part of this framework, the Regulation of Wholesale Markets Transparency and Integrity (REMIT)

aims to increase transparency within the market, by the prohibition of insider trading, and aims to

further limit market abuse.

The prohibition of market abuse involves not only avoiding attempted and actual market

manipulation, but also reporting trade and “fundamental” data to the authorities.

REMIT applies to all wholesale physical Gas, Power, LNG and Emission trading in Europe as well as to

connected derivatives.

Key Themes There are four key “themes” identifiable across all of these new initiatives and these are explored in

the body of this report:

- Trade and Position Reporting – reporting of trades under EMIR and REMIT and also position

reporting under MiFID II

- Clearing - OTC Clearing as mandated under EMIR

- Risk Management – Rules such as Portfolio reconciliation and compression under EMIR as

well as CRD IV rules

- Trade Monitoring and Surveillance – Under REMIT as well as MAD II



The table above summarizes the regulations and the four key themes.

Although linked, each stream requires a different set of process and IT changes. We will be

addressing them separately, with this particular report focused on trade reporting and risk

management.

Reporting Clearing Risk Management Trade

Monitoring

EMIR To Trade

Repositories

To applicable OTC

derivatives for FC

and NFC+

Timely Confirmation

Portfolio,

Reconciliation,

Dispute Resolution,

Portfolio

Compression,

Daily mark to

market (FC, NFC+)

REMIT Power and gas

physical and

financial to RRMs

Fundamental data

to RISs

None

manipulation

rules apply to

physical and

financial gas

and power

MiFID II Real time position

reporting and

limits

various

MAD II Extends MAD



EMIR Rules Overview As outlined above, EMIR is based on the declaration at the G20 Summit in Pittsburgh in 2009. It

entered into force on 16 August 2012. The European Securities Market Authority (ESMA)

implements EMIR, and the local National Compliance Authorities (NCAs), such as the UK FCA,

enforce it. The Regulatory Technical Standards to implement many of the rules were proposed in

December 2012 and subsequently approved by the European parliament in February 2013.

EMIR has four key themes:

Trade Reporting – This requires all derivatives (OTC and Exchange Traded) to be reported to

third party “Trade Repositories” (TR). Both sides of the deal must report the trade using the

same identifier, within T+1. At the time of writing, this requirement is to commence on 12th

February 2013 for all OTC derivatives.

Clearing of OTC Derivatives – It is desired that as many OTC derivatives as possible are

cleared via CCPs. This will generally apply to more standardized derivatives. There will also

be new rules about the margin requirements of uncleared derivatives but these are not yet

finalized.

Risk Mitigation – Five sets of rules designed to mitigate risk: Timely Confirmations, Portfolio

Reconciliation, Dispute Resolution, Portfolio Compression, and Daily Mark to Market/Model.

These rules are explained in more detail in the section below.

CCPs (Central Clearing Counterparties) – Rules about the running and funding of CCPs that

are not relevant to the Energy Trading business.

Different types of party under EMIR EMIR defines four types of party:

1) Financial Counterparties (FC) such as banks and other financial institutions

2) Non-Financial Counterparties (NFC) – all other EU-based entities. These are divided into:

a. Over the “threshold” (NFC+) - those who trade over a certain amount per year

b. Under the “threshold” (NFC-)

3) Third country – those outside the EU

NFCs must determine their status by using a different threshold number for each asset class as

follows:

• Credit - €1bn

• Equity - €1bn

• Interest Rates - €3bn

• FX - €3bn

• Commodities €3bn

The numbers above refer to annual gross notional numbers. Only “unhedged” trades are to be

included in this number. Only one of these numbers must be breached in order for the trading entity

to be considered “over the threshold”.

It has been obligatory to report being over the threshold since 15th

March 2013. All market

participants are obligated to be calculating their totals on a daily basis, using a 30-day average.

Those under the threshold have a more lenient interpretation of the rules, as will be outlined below.



REMIT Rules Overview The objective of REMIT is to promote market integrity and transparency in the European gas and

power markets, and it entered into force in December 2011. The EU-level Agency for the

Cooperation of Energy Regulators (ACER) are responsible for implementing the rules with local

National Regulatory Authorities (NRAs) enforcing them by implementing national laws. It applies to

all physical wholesale gas, power, LNG and emission trading in Europe, and derivatives based on

them. REMIT is an EU level “Regulation”, which each country must implement. ACER publishes

“guidance” on how it thinks the rules should be implemented but these are non-binding.

REMIT has two pillars:

Inside Information – From December 2011 it was prohibited to trade using inside information. The

information in scope relates to physical information that could be used to the receiving party's

advantage, such as knowledge of an unplanned outage. If in possession of such information, market

participants may only trade under very limited circumstances. The approach to compliance so far has

been to publish the information as soon as possible usually on a company website (known as the

“REMIT Page”). The information can also be published to transparency platforms managed by

certain parties, such as the National Grid in the UK.

Prohibition of Market Manipulation ‐ Once REMIT is “implemented” by the European parliament, it

will be prohibited to attempt to or actually manipulate the markets. The ACER guidance contains

many details of what comprises market manipulation, divided into: a) false or misleading

transactions, b) price positioning c) transactions involving deception and, d) dissemination of

misleading information.

In addition to prohibiting this activity, REMIT requires that all trade and fundamental data be

reported to ACER 6 months after the rules come in. This gives rise to the second trade-reporting

requirement, which is outlined in the section below.



Timings This diagram summarizes the various timings of EMIR and REMIT:-

15th March 2013 Daily Threshold Calculation

Confirms T+7/5

15th Sept 2013 Portfolio Reconciliation

Dispute Resolution

Compression

Q4 REMIT "Implemented"

12th February 2014 EMIR OTC Derivative Trade Reporting

12th

May 2014

EMIR Backloading (Trades after 16th August

2012)

Q3 OTC Clearing for FCs

15th September

2014 Remaining EMIR Risk Management

1st January 2015 EMIR ETD Reporting

The timetable above shows a summary of the dates as at the time of writing. However, it is worth

noting that many of these dates, particularly for trade reporting, have slipped and some could slip

again.

For example, originally, EMIR trade reporting was planned to go live in two batches:

1) Interest rate Swaps and Credit Default Swaps – July 2013

2) All other derivatives – January 2014

Over the course of the first half of 2013, the first date slipped, so that it became the same as the

second date, i.e. 1st January 2014. However, since the dates “merged” the date for exchange-traded

derivatives has moved out by a year to 1st January 2015

Less than a week after publishing the original report both OTC dates were moved out from 1st

January to 12th February 2014. It will be interesting to see if these dates split again or are moved

again. However it is prudent to assume that the go live will be as planned. In order for the dates to

hold, Trade Repositories must be “Approved” by ESMA by the 7th

November 2013.

Similarly, the REMIT dates have slipped. Originally, the rules were to have been “implemented” by

the European parliament by 29th June 2013. However this has not occurred. It is expected that they

will be implemented by year-end.

Reporting is to start 6 months after implementation. However, this would require that the

infrastructure is ready. We recommend that participants keep a close eye on developments.



The EMIR Threshold for Non-Financial Counterparties Non-financial counterparties that are over the threshold must bear more onerous requirements than

those that are under, as summarized in this chart:

NFC- NFC+-

Trade Reporting All trades to be reported All trades to be reported

including daily market to mark

information and collateral

information

Clearing OTC Clearing not mandatory OTC Clearing Mandatory

Timely Trade Confirmations Currently must confirm within

T+7 going to down T+2 in

August 2014

Currently must confirm within

T+5 going to down T+1 in

August 2014

Portfolio Reconciliation Must reconcile either quarterly

or annually depending on size

of portfolio

Must reconcile daily, weekly or

quarterly depending on size of

portfolio

Portfolio Compression Must compress trades for

portfolios with over 500 trades

Must compress trades for

portfolios with over 500 trades

Daily Mark to market Not required Must mark to market or model

daily.

The requirement to clear, when it comes in, could require a great deal of extra capital from the

market participants, Therefore, many market participants consider it to be desirable to be under the

threshold.

Threshold calculation Since 15th March 2013, it has been obligatory for NFCs to calculate their threshold values on a daily

basis using a 30-day average, and to report to the NCA if over.

In order to be considered to be over the threshold, a market participant needs to be over one of the

following:

• Credit - €1bn

• Equity - €1bn

• Interest Rates - €3bn

• FX - €3bn

• Commodities €3bn

The gross notional value of the balance of each number is taken. There are however, some

important considerations:

Group level calculation – The value to be used is the total for all entities in the group, no

matter where they are. Therefore, a small subsidiary of a large non-EU group could find

itself over the threshold. The participant must calculate each number for each group

member and sum those on a gross basis to see if they are over. If the group company is in a

third country which is a “recognised regime”, that total may not need to be included.



Hedges – Hedged trades do not contribute to the threshold. Hedges under EMIR are defined

as a trade being one of the following:

a) The trade is already defined as a hedge under hedge accounting rules (e.g. IAS 39)

b) It is designed to objectively “reduce risk” of assets, services, inputs, products,

commodities or liabilities that the NFC owns

c) It is designed to reduce the risk of a hedge instrument as defined above

It is important to record the hedge status of each trade to determine if it is a hedge or not.

NCAs are already auditing NFCs that are not over the threshold and so it is important to

record the hedge reason.

What is a derivative? – When calculating the threshold it is important to consider which

trades are considered “derivatives” under EMIR. This definition is not simple but is generally

defined as a trade that is settled for cash, but also as a trade that is transacted via a

multilateral trading facility (MTF), which is particularly important for physical forwards which

could otherwise not be considered thus. This was confirmed by the FCA on 12th

September

2013.

Different execution venues, platforms and brokers may or may not be MTFs, and there is a

current trend for certain platforms to delist themselves from the MTF list. Since the list will

be dynamic, any solution to calculate threshold values will need to be able to cope with such

changes. The FCA have announced their intention to say which platforms are to be

considered MTFs on 16th

December 2013.

If an intra-group trade is not a hedge (although it often will be), then both sides of the trade

count towards the threshold i.e. double the notional.



Trade Reporting EMIR and REMIT each have trade reporting requirements: EMIR for OTC and Exchange Traded

Derivatives, and REMIT for physical wholesale gas power, LNG and emissions trades as well as their

derivatives.

At the time of writing, EMIR OTC trade reporting is due in February 2014, with REMIT due in July

2014.

REMIT specifically has a goal of “avoidance of double reporting” which is intended to remove the

need to send any data twice under both EMIR and REMIT. This is turning out to be difficult in

practice.

In this section, we will first examine the trade reporting requirements of each rule set and then bring

them together.

Trade Reporting for EMIR

What must be reported?

EMIR requires all derivatives trades to be reported, by any party transacting them. This is in contrast

with Dodd Frank in two key ways:

1) Dodd Frank only requires OTC trades to be reported, EMIR requires Exchange Traded

deals(ETD) as well

2) Both sides of the trade must report, using the same Unique Trade Identifier (UTI).

It is likely that exchange traded deals could be reported by the exchanges themselves. However, the

obligation to report remains with the market participant. Lack of clarity about this issue, and about

which Entity IDs to put into certain fields, recently caused the reporting date of ETDs to be pushed

backwards into 2015.

When deciding what a derivative is, careful consideration must be given to the type of instrument

and where it is executed. This is discussed in more detail in the “calculating the threshold “section.

Where data should be reported? EMIR trade data must be reported to a registered “Trade Repository” (TR), a third party who will

make the data available to ESMA runs a trade repository. Several entities have applied to be TRs at

the time of writing and most are detailed in the services catalogue at the end of this report.

The first approvals of registrations are due at the end of September. Reporting to them happens just

over 3 months after approval (so if none are approved, the reporting date would slip again).

When reporting, market participants can either send data straight to TRs, get someone else to do it

on their behalf, or send the data via “Reporting Services”. All of these options are considered in the

services directory at the end of this report.

Which data must be reported?

Detailed data differs per asset class. However, the data can be divided into the following categories:

Entity Identification – Of the parties involved in the trade. Will include the reporting entity,

counterparty and others such as the beneficiary (if not the counterparty) broker etc.

Contract Information - Information about the deal and contract, including where it was

executed. UPIs preferred. Could require a complex product type derivation.



Transaction Information – Trade level details such as quantity, notional etc., requires the

Unique Trade Identifier.

Trade Type Specific Information - Different sets of fields for IR, FX, and Commodity etc.

Commodity profiles are multi record.

Option Information - Strike, call or put, etc.

Confirm Information – About the trade confirmation.

Clearing Information – Including the Clearer ID and time of clearing.

Status – “New/modify/cancel/termination/compression/valuation update/other.” – Each

time a trade changes it must be resent with a new status.

In addition to the above, FCs and NFC+s must report collateral and valuation information on a daily

basis. However, this reporting will only start 6-months after the initial reporting.

Some details of this data are examined in the “realities of implementation” section below.

When should data be reported? Data typically should be reported to a repository by the end of the next working day. This includes

when some of the data, such as the confirmation data, is missing. It should be sent later in an

update. Trades executed after 4pm count as the next day’s trades in terms of measuring T+1.

Backloading

EMIR came into force on 16th

August 2012. This means that any data on trades in existence then

must also be reported or “backloaded” to repositories. By implication, it is important to locate this

data as soon as possible.

Backloading is required in several stages:

Trades still open on the first reporting date (i.e. February 12th

2014) – 3 months later (i.e.

May 12th 2014)

Trades executed after August 16th 2012 but that matured before the first reporting date- 3

years after reporting date

Trade executed before August 16th

2012 but that were still open on 16th

August 2012 – 3

years after reporting.

Trade Reporting for REMIT

Which data must be reported?

REMIT reporting falls into the following two categories at the highest level:

• Trade Data – Data related to trades and orders

• Fundamental Data – Data related to the physical state of the grid, e.g. outages, loads, etc.

Here we focus on trade data.

REMIT covers Physical Power, Gas, LNG and Emissions, as well as their related derivatives.

Technically, therefore some of the derivatives will fall under both REMIT and EMIR. However, ACER

has put forth a principle of the “avoidance of double reporting”. In theory, this means that if you

report data under EMIR you do not have to report it again under REMIT. However, since REMIT

requires additional data elements to EMIR, it is not yet clear how and if this will work in practice.



Where should data be reported to?

ACER will be collecting all of the reported data and using it to monitor the market for abuse. A

system called “ARIS” (ACER’s Regulatory Information System) is being built for this purpose.

Because of the large number of market participants, ACER do not wish for data to be sent to them

directly, instead, they need to be sent via intermediaries called “Registered Reporting Mechanisms

(RRMs). These third party facilities will each have their own way of collecting the data and

forwarding it to ACER.

An EMIR TR could also be an RRM, or it may not be one. An RRM that is not a TR could forward the

data to the TR as well, or they may not. This is discussed in the “Data Destinations” section.

What data types must be reported?

REMIT requires pre trade data, i.e. order information, to be reported as well as trade data through

the lifecycle. The order information includes orders for unexecuted deals.

REMIT defines four “Data Views” which different data elements required within each view. These

are:

- Order view – Elements required to be sent when an order record is sent

- Execution view – Elements required to be sent when a trade is executed

- Confirmation/Clearing – Elements required to be sent when a trade is confirmed and/or

cleared

- Non Standard View – Elements required for a complex “nonstandard” trade (see below)



The data elements can be summarized by this table:

Order Execution Clearing

/Confirm

Non

Standard

Identification Of the various parties, including

broker etc. Likely to require LEIs.

Includes market place ID

P x x x

Contract Info about the deal and contract,

including where it was executed.

UPIs preferred, Could require a

complex taxonomy

p x x

Order Order Type (Market, Limit etc.,) x

Transaction Trade level details such as quantity,

notional etc. + UTI

p x x p+ PDF

Trade type

specific info

Different sets of fields for IR, FX, and

Commodity etc. For commodity

profiles are multi record. Includes

physical data

x x

Option Info Strike etc. x x

Confirm Info When confirmed, details to be filled

in

Clearing Info When confirmed, details to be filled

in

x

Status New/Split/Modify/Cancel/

Terminate/Other

x x x x

The full field list is found in the document on the ACER website at

http://www.acer.europa.eu/remit/Documents/Recommendations%20on%20REMIT%20Records%20

of%20transactions.pdf



Non Standard Trades

For trades that are considered “complex”, it is only necessary to send a subset of 23 data elements.

In addition, there is a requirement to send a PDF scan of the contract to ACER. Details about how

this will work, and also about which trades are defined as non-standard are not yet known.

Data Destinations Ultimately, EMIR data must reach a Trade Repository, and REMIT data must reach an RRM. However,

there are several different combinations and services available:

1) TR Only – Some EMIR TRs will only accept EMIR data. If choosing one of these, it will also be

necessary to send data to an RRM separately

2) RRM Only – Similarly some RRMs will only accept REMIT data

3) TRs that are also RRMs – some TRs have committed to becoming RRMs

4) RRMs that forward to TRs – some prospective RRMs will accept all data and forward the data

to an EMIR RRM

5) Reporting services – Some third party services are planned that will take in all of the data

and report it to both TRs and RRMs

TRs will not be approved by ESMA before November 9th 2013, and the upcoming RRMs are also yet

to be announced therefore when choosing it is important to note that not all services advertised

may go live and contingency plans should be made.

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Implementing a trade reporting solution

Solution types

Every market participant is required to implement a trade reporting solution in some form. This may

be very simple, for example uploading a trade spreadsheet to a repository, or it may require a large

amount of engineering, for example for a multi-site market participant with several ETRMs. It is also

possible to delegate the reporting to another party, or several parties.

There are several different types of configuration available, which can be summarized by these

levels:

Level Key features Pros and cons Typical

participant type

Delegated Another party reports on the market

participant’s behalf, This can either

be as a specialized service or in some

cases for a set of deals, for example,

an exchange reporting all trades

executed there, or pre trades for

REMIT.

+ Less work for participant

+ Less prone to error

-No audit log for

participant

- Could be expensive.

- Participant is still liable

for errors

Small traders, or

as a partial

solution for any

type

Manual A manual spreadsheet/csv upload to

a repository or reporting service.

Some repositories will offer on

screen trade entry.

+Easy to use for smaller

traders

+Good way to send trades

already in spreadsheets

even for larger players

-Lack of auditability

-Prone to error

Small participant

with few trades

or as a partial

solution for larger

participants

Outsourced Duty of reporting outsourced to

another party. The party will either

have the most of data already, or

provide a simple mechanism to take

the data The provider will perform

some tasks such as data enrichment.

+Less work for participant

+ Less prone to error

- No audit log for

participant

- Could be expensive.

- Participant is still liable

for errors

Smaller traders

that already

execute most of

their trades

outside of their

own

environment.

Direct Sending the data directly to a

repository. RRM and/or a reporting

service.

+ More control

+ Lower running cost

- Could require a large

project to set up

- Requires in house

expertise

Medium and

larger

participants

It is also possible to use a combination of these methods. For example, exchange traded deals could

be sent by an exchange, and OTC ones via another route.



Required Solution Activities While this document is not intended to be a comprehensive guide to building a reporting solution,

here we identify some key tasks that the majority of participants will need to undertake to have a

working solution:

Data sourcing and gap analysis

Before data can be provided to any destination, it must be sourced from somewhere, be it the

E/CTRM(s), trading platform or spreadsheet.

It is important to perform a data gap analysis as early as possible to ensure that you have all of the

required data from each product type traded. This will involve going through each product type

traded, and for each field required (under EMIR or REMIT) ensuring that you know here it can be

found. It is not sufficient to simply map to the source field in an E/CTRM, It is also necessary to

ensure that the business process in place updates this field.

Data mapping and capture

There must be a mechanism in place that can rapidly identify all qualifying trades (new, modified,

voided etc.), extract the required data items for reporting purposes from possibly multiple systems,

and format the data appropriately for transmission to the trade repositories. Furthermore, the data

must be validated for missing items, correct formats and codes, and corrections must be made

manually or automatically prior to transmission.

Whatever systems are in use to capture and process trades including vendor provided, home grown

or even spreadsheet-based solutions, they must contain all of the required data items that are to be

reported. Furthermore, there must be processes in place to ensure the capture these data items for

reporting purposes.

Configuration choice and connection mechanism

It will be necessary to select the “shape” of configuration choice. It is possible to select several

configurations; for example, a large participant could report most OTC and physical trades directly,

but chose to use the exchange’s facilities to report ETD, and to upload some rarely traded physical

deals manually.

If not outsourcing completely and building an internal solution, it will also be necessary to select a

connection mechanism. This could involve either building one internally, or purchasing reporting

software that has adapters built in. The incumbent E/CTRM system may also have built in adapters

to one or more destinations.

Data enrichment

The various reporting destinations require entities and product to use standard identifiers, such as

LEIs, EICs, UPIs, and ISINs etc. There are several entity records for most deal types, and each requires

different product information. In addition, some other information, such as “Counterparty status”

flags are required.

As a result, each trade must be “enriched” with appropriate standard data. The difficulty of this task

varies by number of trades, trade types and source system.

Reporting software will usually offer a solution to the issue, which will be particularly useful to those

with multiple E/CTRMs. In addition, many of the outsourced services offer a partial solution.

Pre trade data

REMIT requires that pre trade information such as order information be forwarded to ACER. The

arrangements for this forwarding are not yet clear. However, it is likely that execution venues will

provide facilities (at a cost) for delivery of such data. Participants should monitor market

developments to see how this will be handled. We will also be covering it in a later report.



Issues being encountered

This section outlines some issues being encountered in the market by those implementing trade

reporting solutions. Updates will be issued regularly.

LEIs (Legal Entity Identifiers)

An LEI is a globally unique identifier for counterparty. The LEI initiative also arose from G20 desires

after the banking crisis, to create a globally uniform mechanism to identify an entity in a transaction.

This eventually led to the Financial Stability Board (FSB) issuing a paper and outline for how such a

database could be constructed and governed. The global database is not yet ready, but a “pre LEI”

database is being formed, and others already exists in the absence of a final global version.

EMIR will require the use of LEIs, or pre LEIs upon go live, although they have not yet been defined

for all entities.

Market participants will need to:

- Add facilities in place to map their existing entity Ids to LEIs

- Add facilities so that it is possible to store an LEI for each entity going forward.

The UTI (Unique Trade Identifier)

Trades sent to EMIR repositories need to contain a 52 character UTI. Under EMIR, both sides of the

trade must send in a deal with the same UTI. The generation of this ID and the workflow around are

leading to a great deal of uncertainty at the time of writing. In particular:

Generation of the UTI – There is no mandatory mechanism for the generation of the UTI, which has

been left by ESMA to “the industry”. An ISDA working group is currently attempting to provide for a

recommended solution although this is not yet final or accepted by all in industry.

The commonly accepted approach depends on whether the trade is executed on a platform or not. If

it is, then the platform should generate the ID for both parties.

For bilateral trades, the consensus is that the seller should generate the ID and provide it to the

buyer. However until this is agreed, the resolution is as yet unknown.

Workflow around the UTI – However the UTI is generated, it needs to somehow make it into one or

both party’s ETRM systems, and be sent to a repository.

If the trade is executed on a trading platform, it will be necessary to extend the interface between

the platform and the ETRM to capture the UTI before the trade is sent to ESMA.

For bilateral trades, the capture of the ID is harder: the generating party must find a way of

providing it to the other side, and this will need to be electronic since manual entry of a 52 character

code is not an option.

The obvious place for the code to come in is on the trade confirmation. However, that may not

arrive until after the trade must be reported to ESMA.

The solution to the issue will need to evolve over the next months.

Which rules apply to a trade? It is important to have a granular and flexible mechanism to ensure that trades get “routed” to the

correct place under the right rules.

Firstly, the definition of a derivative under EMIR is not always straightforward and subject to change.

The rules as outlined in the “threshold calculation” section require:



- A “hedge marker” to be placed on all trades in the source system. In some cases, a rule could

be used to derive this, for example if all hedges are in specific portfolios. In other cases, they

will need to be marked manually.

- It is import to have mechanism in place that can deduce whether a trade has been executed

on an MTF. The list of MTFs keeps changing, and this must be factored into the solution

Furthermore for some trades executed via brokers it may be difficult to determine the place

of execution in the first place. Expect the recent FCA ruling to be modified as well.

Similarly, with REMIT, it will be necessary to have a flexible mechanism in place in order to

determine which trades to cover.

Changing requirements

As market participants get closer to go live and further into their projects, more detailed issues are

emerging. At the same time, messages from regulators repositories and others give rise to changes

and intricacies.

It is important to keep a close eye on developments. This can be accomplished over various forums

including the website www.enegrytradingregulation.com and via updates to this report through

time.

Advertisement



Risk Management EMIR specifies five different measures that must be adopted by market participants:

Timely confirmations – All trades must be confirmed (matched) within a certain timeframe

Portfolio reconciliation- Uncleared bilateral trades must be reconciled between each set of

parties at pre-defined intervals

Dispute resolution – Dispute resolution procedures to be put in place for trades in dispute

for more than 5 days

Portfolio Compression – Certain parties must perform mandatory compression on OTC deals

Daily mark to market/model – Trades to be marked to market or model by certain parties.

The requirement and timeline can be summarised by this chart:

Rule Summary FC NFC+ NFC- Timing

Timely

Confirmation

Bilateral Trades

to be confirmed

(and matched)

within the given

timetable.

T+1 T+2 Requirement for T+7/5

came in on 15th

March

2013. Window narrows

every few months until

August 2014 when the

timings shown here will

be required.

Portfolio

Reconciliation

Uncleared trades

to be matched

periodically

between

counterparties.

Daily for portfolios

greater than 500

trades.

Weekly for portfolios

with between 51 and

499 trades.

Quarterly otherwise.

Quarterly for

portfolios of

more than 100

trades.

Annually

otherwise.

Starts on15th September

2013.

Dispute

Resolution

All to have

processes in place

to identify, track

and monitor

disputes. Formal

procedure if more

than 5 days.

Report

all

disputes

over 15

days

and

15M

EUR

Procedures must be in place. Starts on15th

September

2013.

Portfolio

Compression

OTC trades to be

“compressed”

periodically.

Twice a year for portfolios with more

than 500 trades.

Starts on15th

September

2013.

Daily mark to

market/model

All trades to be

either marked to

market or model

on a daily basis.

All trades that are

sufficiently liquid to be

marked to market

daily and the values

sent as part of trade

reporting. Otherwise

they must be marked

to model and values

sent.

Not required.



Timely confirmation The timely confirmation requirement of EMIR is intended to reduce risk and encourage a move to

electronic confirmations.

The confirmation deadline refers to the time the trade is confirmed as matched, rather than when it

is sent.

Portfolio Reconciliation and Dispute Resolution EMIR requires that counterparties reconcile their portfolios of uncleared trades from 15

th September

2013 onwards, as follows:

FC and NFC+:

More than 500 trades: Daily

Between 50 and 499 trades: Weekly

49 or less: Quarterly

NFC-:

More than 100 trades: Quarterly

Less than 100 trades: Annually.

Where an NFC- is the counterparty of an NFC+ or FC, the NFC- timings apply.

Generally, for those with many reconciliations to perform, there is a good case for automation, if it

does not already exist. There is clearly far less work to perform for an NFC-, which reduces that case

and will give rise to the reconciliations being performed manually.

However, NFC-‘s are advised to calculate exactly how long this will take. A medium sized utility with

20 counterparties with over 100 trades will still need to do 20 of these per quarter, i.e. one every 3

working days, and also have the overhead of the annual reconciliations, which may be numerous.

Consideration should therefore be given to at least a “semi-automatic” solution.

The reconciliation process In order to reconcile trades, the two parties must exchange the position each thinks it has with the

other. In order to do this each party must provide data to the other so that it will be “matched”.

(Usually via a file). The file will contain a pre agreed set of fields, known as the “key terms” that can

be used to identify a specific trade. In addition, fields such as price and notional and sometimes

mark to market will be sent.

The parties then take each file and compare them using the key terms. Those where the key terms

and positions are the same are declared a “match”. If there is no match or a large difference in views

are marked in dispute. In reality, not all fields will always match, and so the parties declare a

“tolerance” for the key terms.

Those that are in dispute then are checked and if that cannot be resolved, the dispute resolution

procedure commences. There are various ways in which this may happen:

Typical modes of operation

In general, there are three usual modes of operation:

• Bilateral – where counterparties exchange files (either one or both ways).

• Third Party Service provider – Where a third party is involved in the reconciliation, to

organise it as a central service.

• Agent – Where another party performs the reconciliation on the counterparty’s behalf.



Bilateral reconciliation

Before reconciliation starts, counterparties will need to establish procedures/systems to monitor

how often they must reconcile with each entity. This may vary over time.

Once established, a reconciliation schedule needs to be agreed with the other party (except for daily

reconciliation).

On the day of the reconciliation, the parties exchange data files. In some cases, only one party sends

the file for the other to check. The fields contain the data in the key terms as well as position data.

They then run matching processes, using the key terms and tolerances. If there are “breaks”, the

parties communicate and fix them, or if necessary initiate the dispute resolution procedure.

The matching itself can be performed by specialist software, or using a spreadsheet. Spreadsheets

can be complex in this area, although the introduction of the UTI will make this task easier.

The benefit of the bilateral approach is that it is simple to use, especially for those with a small

number of reconciliations to perform

The drawback is that any counterparty with more than a handful of reconciliations to perform will

need to send a large number of files to different counterparties on the correct dates. This can

become logistically complex and lead to operational risk, and the wrong fields being sent to the

wrong places, risking a breach of confidentiality.

Third Party Service Provider

An alternative of bilateral reconciliation is to use a third party to assist in the process. –Using this

method a third party service such as the triResolve service provided by TriOptima is used centrally to

organise reconciliation. They do not however, perform the reconciliation from a legal perspective.

They simply organise the process and make it easier than a bilateral reconciliation.

When using the service provider model, each subscriber sends a file on a regular basis to the service

provider, containing data regarding other subscribers.

The service then calculates how often reconciliation is necessary and performs the appropriate

scheduling. It then performs the matches and informs the subscribers of any disputes, after

following a prescribed process.

There are several benefits to this approach: Firstly, only one set of data needs to be sent for all of

the subscribing counterparties. This greatly reduces operational risk and the logistical overhead.

The second benefit is that the service will provide scheduling services on behalf of the client. This

removes the scheduling overhead of the bilateral approach. A service provider will be able to

optimise the schedule whilst taking into consideration all of the subscribers simultaneously.

Agent Using this paradigm a third party performs the reconciliation on the participant’s behalf. The entire

process is outsourced to another party, who perform the reconciliation on their behalf. They will be

given the portfolio to reconcile and advise of disputes if they arise and cannot be resolved by the

agent themselves.

Contractual Changes required for Portfolio Reconciliation and dispute resolution Market participants are required to amend their ISDA and other contracts in order to accommodate

these changes, the contract should encompass the new protocols that permit information sharing

for the appropriate key terms in order to reconcile, as well as requiring the reconciliation to take

place.

See the ISDA website for more details.



Portfolio Compression

Portfolio Compression is the process of reducing the number of trades in a portfolio whilst

maintaining a risk equivalent position.

Reducing “unnecessary” trades with a counterparty reduces credit risk and settlement risk.

EMIR mandates compression for FCs and NFC’s every six months for counterparty portfolios with

more than 500 trades. EMIR also “encourages” compression wherever possible.

Compression is not always easy or desired by all in an organisation, although it is desired by the

credit department and has many benefits once in place in terms of risk management.

Compression can be performed either bilaterally or multilaterally.

Bilateral Compression

When one counterparty attempts compression directly with another, there are several steps:

1- Identify counterparties – It is necessary firstly to identify which counterparties are being

compressed with and when to schedule them for.

2- Identify areas for compression – An analysis of the portfolio must be carried out in order to

determine which trades may be compressed, if any.

3- Agreement of compression – the two entities must then agree the set of trades

4- Execute compression – execution of a compression involves terminating the deals being

compressed, and replacing them with new ones.

5- Mark trades- The new trades must be marked as “resulting from compression” in EMIR trade

reporting. The ETRM system will need to record this as a reason for the trade.

Multilateral Compression

Compression involving several parties can be a great deal more effective than bilateral compression.

Multilateral compression involves viewing the trades between all of the counterparties in a group,

and then reducing them down as much as possible using a combination of trades and closures. The

more parties involved in a compression, the more benefit it will have.

TriOptima‘s triReduce service offers such a service, both within the energy industry and within

banking.

Multilateral compression involves the following steps;

1- Set calendar – multilateral compressions take place periodically (typically quarterly

depending on market characteristics).

2- Send in trade portfolio – each party sends in candidate trades with the other entities in the

group to the service. Nominate trades – each party agrees to the compressions from the

suggestion list

3- Dress rehearsal – on a specific day, the compression is “simulated” by all parties

4- Execution – On a nominated day, all of the agreed trades are closed out and new ones

created. Service suggests trades – the service will suggest which trades can be compressed,

which trades will need to be closed out and which new ones created

A typical cycle lasts two weeks, with trade submission and matching in the first week, and dress

rehearsal and live execution the second week.

As with bilateral compression, all trades resulting from a compression must be marked and reported.



Is it worth compressing if it is not mandatory?

As outlined above there are many benefits to compression, in particular credit risk reduction. One

other benefit that applies in particular to non-financial counterparties, is the reduction in total Gross

Notional Value. By compressing enough trades, an NFC- may be taking them further away from the

threshold, which could be considered a great advantage. Other benefits include:

o Capital cost: With the Basel III leverage ratios it is quite beneficial to reduce gross

notional

o Balance sheet: Compression also reduces gross mark-to-market, which under IFRS

accounting will decrease your balance sheet

o Operational costs and risks: Compression leads to fewer trades that needs to be

processed through its lifecycle, i.e. fewer lifecycle events like scheduling,

settlements, payments, etc. to process, where each step has a cost and risk

associated

Daily mark to market/model

All FCs and NFC+s are required to mark all trades to market daily. If this is not possible then trades

must be marked to an approved model.

It is also necessary to report these valuations daily, as part of trade reporting, six months after the

initial reporting date.



European Regulatory Solutions Directory

We have made an effort to identify a variety of possible solutions for the European Regulatory

environment and assembled this directory. This is most certainly not the total picture and we will add

to it through time to try to keep it up to date. Please note that the product descriptions are often

lightly edited versions of the vendor’s web content associated with the product and we are not

responsible for any errors in this content. Please also see the CTRMCenter software directory.

Types of service and software There are a variety of services and software that can be considered when implementing trade-

reporting solutions:

Trade Repositories – Trade Repositories that have applied under EMIR.

Reporting Services – Third party services to which data can be reported and sent on to a TR

or RRM. In most cases these will be acting as RRMs

Specialist Reporting and aggregation software – Software specifically designed to take in

data from one or more sources including ETRMs and reference data systems and send it to

one or more Trade Repositories and /or reporting services

ETRM offerings – Adapters from ETRM vendors that link their systems (only) to one or more

destinations.

Exchange Offerings – Exchanges offering to report information about deals executed there.

Trade Repositories

As of the time of writing, several repositories have applied for authorization under EMIR. These will

not be approved until at least the 24th September 2013. Once approved, the reporting requirement

starts 3 months and 5 days later (i.e. the 1st January 2014).

A number of organizations have applied to ESMA for registration as Trade Repositories including;

• the CME Group,

• the London Stock Exchange,

• Intercontinental Exchange (ICE) Trade Vault,

• REGIS-TR,

• LSE Unavista

• The Independent Data Repository,

• KDPW-TR and,

• The Depository Trust and Clearing Corporation (DTCC).

It is interesting to note the provenance of several of these applicants as some already act as Swap

Data Repositories in the USA and others as approved reporting mechanisms under MiFID. All of

these entities plainly have some degree of experience in collecting and storing trade data.

In the USA, Swap data repositories (“SDRs”) were new entities created by the Dodd-Frank Wall

Street Reform and Consumer Protection Act (“Dodd-Frank Act”) in order to provide a central facility

for swap data reporting and recordkeeping. Some seven entities applied to become SDRs but two

applications were later withdrawn and a third does not cover commodities as an asset class. The

four remaining include BSDR LLC, CME, DTCC and ICE where BSDR LLC is a new entity specifically

created for the purposes of becoming an SDR. CME, DTCC and ICE are all applying for registration

under EMIR too.



LSE has some experience as regional trade repositories for MiFID. Only REGIS –TR and the

Independent Trade Repository Ltd. have no real prior track record having been specifically set up for

EMIR, although with a test system having been live already for several months; REGIS TR is proving

to be popular. KDPW-TR is the central securities depository of Poland and has some experience of

working with large amounts of trade data as a result.

CME Group

The CME's Swap Data Repository Service already provides public data on swap transactions and

stores confidential trade and position data for regulatory purposes, in accordance with the Dodd-

Frank Act. The CFTC approved its repository service as a swap data repository (SDR) for credit default

swaps, interest rate swaps, commodities and foreign exchange asset classes.

CME Europe's cross-asset trade repository solution is to launch on 1st January 2014 in line with the

first reporting requirements, In addition to operating for CME's global clearing and execution

facilities, it will accept non-cleared bilateral OTC and exchange trades executed anywhere in the

market.

The CME Repository Service leverages the CME ClearPort front-end, a gateway to CME reporting and

clearing post-trade services. This common point of connectivity offers messaging efficiency and

lower maintenance costs.

LSE

The London Stock Exchange Group also has applied to ESMA for its UnaVista platform to be a trade

repository across all asset classes for both exchange traded derivatives and OTC derivatives.

UnaVista currently operates as a European Approved Reporting Mechanism (ARM) under the MiFID

regime for all asset classes and markets. LSE believes that by becoming a trade repository for all

asset classes across all venues, its customers will only need to connect once to meet both their EMIR

and MiFID reporting requirements.

As a MiFID Approved Reporting Mechanism (ARM), UnaVista already reports c1 billion multi-asset

transactions annually to multiple regulators, including over 300 million derivatives on behalf over

600 clients. As a hosted central utility, UnaVista will utilize its inbuilt reconciliation engine to

facilitate the ESMA requirement for contract details to be reconciled before reporting to the various

different trade repositories

ICE

ICE has decided to establish ICE Trade Vault Europe Limited (ICE Trade Vault Europe) as a Trade

Repository (TR) for the reporting of derivatives trade data to meet requirements of the European

Market Infrastructure Regulation (EMIR). It plans to serve the commodities, credit, interest rate and

foreign exchange asset classes.

In June 2012, ICE Trade Vault, LLC (ICE Trade Vault US) became the first Swap Data Repository (SDR)

in the U.S. to receive provisional regulatory approval from the CFTC and the Vault began accepting

credit default swaps trade data in October 2012 followed by commodities trade data in February

2013. Since its inception, ICE Trade Vault US has already accepted around fifteen million trades.

Since ICE provides direct access to the core energy and commodity market infrastructure, it believes

itself to be a qualified trade repository for those markets. Through the ICE trading platform and

clearing houses, as well as ICE eConfirm, ICE sees an opportunity to simplify workflows and trade

data reporting requirements for market participants, helping its customers achieve efficient and

cost-effective compliance with evolving regulations.



• Utilizes ICE eConfirm as the front-end application for counterparties to submit data to ICE

Trade Vault, thereby enabling market participants to use their long-established connectivity

solutions with fewest modifications possible

• Distributes real-time trade data to market participants and provides historical data for online

viewing and access. Participants will control permissions for regulatory reporting purposes

as well

• Features a high-performance, scalable data warehouse and reporting platform

ICE is likely to also act as an RRM.

REGIS-TR

REGIS-TR is a European trade repository created as a joint venture by Clearstream Banking S.A.

(Deutsche Börse Group) and Iberclear (Bolsas y Mercardos Españoles). Its services have been

operating live since 2010. Derivatives based on interest rates, foreign exchange, commodities and

equities are currently eligible for registration at REGIS-TR, which will enable full compliance with

EMIR for all asset classes and listed derivatives before the reporting obligation comes into places.

Key characteristics of REGIS-TR are as follows;

• European provider, fully compliant with EMIR, with a Financial Market Infrastructure (FMI)

license

• Co-owned by two neutral securities services infrastructures, providing services from

Luxembourg, holding data exclusively in the EU

• One-stop-shop for the registration of all types of derivatives on all asset classes

• Flexible access for all types of counterparties (financial and non-financial entities)

• Competitive price list allowing full price transparency and predictability. Fee caps for all

users

• Commitment to be a REMIT RRM

• Flexible trade delivery mechanism spanning simple upload of csv files to a web services

based XML sending mechanism.

REGIS-TR will enable full compliance with EMIR’s derivatives reporting requirements. However, it

also allow customers to meet their obligations for transaction reporting under the Markets in

Financial Instruments Directive (MiFID), the Regulation on Energy Market Integrity and Transparency

(REMIT) and repo agreements and securities lending reporting under the Capital Requirements

Directive (CRD IV).

In addition to its statutory trade repository activities, REGIS-TR may also offer its clients extra

services such as electronic matching and confirmation services, independent valuation services and

exposure management.

REGIS-TR and TriOptima have also recently announced that they will provide portfolio reconciliation of

REGIS-TR’s trade repository data with data in TriOptima’s triResolve reconciliation service for OTC

derivatives as requested by their clients.



The Independent Trade Repository

CapitalTrack, a vendor of a data transfer database and network, Capital Market Daily Portal, a data

network, technology and services vendor, and Fincore, a software vendor, have established a new

company, Trade Repository, and hope to win ESMA approval for its Independent Trade Repository

product.

The Independent Trade Repository will allow users to submit the details of their trades on

spreadsheets to its online database. The Independent Trade Repository believes that it will be

particularly attractive to market participants because it is not affiliated to a clearinghouse and

because the companies operating it have an expertise in data management.

DTCC

DTCC’s Global Trade Repository (GTR) Service provides full coverage of all cleared and uncleared OTC

derivatives products within each major asset class. Trade submissions will be supported for 100% of

products traded in each asset class regardless of whether trade is electronically processed or

bespoke – paper confirmed.

A customer of a Repository may selectively elect to enable reporting for one or more

jurisdiction/regulation that is supported by that Repository. For example, a member of the DDRL

legal entity may elect to report to any combination of ODRF, HKMA, CSA, and ESMA.

The above TR entities can also be registered as foreign TR in other jurisdictions, e.g. Canada and

Australia.

The GTR service supports a multitude of data submissions including real-time price reporting,

transaction details, confirmation records, and valuation data.

The GTR service provides open access to third-party providers to promote efficient reporting

processes – this includes:

• Electronic Execution Platforms

• Confirmation Providers

• Clearing Houses (CCPs)

• Inter-dealer brokers

• Custodians

• Any other middleware providers

The GTR is brought to the energy industry by EFETNet who have partnered with DTCC in the US and

will offering forwarding of trades under EMIR to the repository via the eRR service.



KDPW-TR

On 2 November, the Central Securities Depository of Poland (KDPW) launched the trade repository

service (KDPW_TR) in response to Regulation No. 648/2012 of the European Parliament and of the

Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (“EMIR”).

According to Article 48.5a of the Act on Trading in Financial Instruments of 29 July 2005 as amended

by adding provisions concerning novation, the Central Securities Depository of Poland (KDPW) may –

under the rules set out in separate rules – collect and store information concerning trade in financial

instruments and information concerning such instruments. The detailed operating rules of KDPW_TR

are set out in the Trade Repository Rules.



Reporting Services

NASDAQ OMV

NASDAQ OMX already provides a service for Nordic Market Participants for MiFID trade reporting

(TRS) to local Financial Supervisory Authorities (FSA) and will extend this reporting service to cover

EMIR derivative reporting to Trade Repositories.

It offers its members reporting services regarding:

• Establishing connectivity with relevant Trade Repositories

• Reporting of derivatives contracts traded and cleared on NASDAQ OMX’s markets

• Reporting of OTC derivatives transactions that are not traded or cleared by NASDAQ OMX

• Ability for members to append required data to derivatives transactions for reporting

• Daily updates to the Trade Repository of collateral and mark-to-market valuations

• Reporting feedback of submitted reports

NASDAQ OMX further aims to extend its service to include reporting obligations under REMIT for the

energy market.

It provides the option of full service reporting of all required data and a complimentary reporting

service where NASDAQ OMX and the Customer jointly complete the reports.

For derivatives cleared with NASDAQ OMX where the Market Participant keeps position-segregated

accounts per beneficial owner, NASDAQ OMX can complete the Trade Repository report with all

required data without the need for interaction from the Customer. For Customers with a setup

where NASDAQ OMX does not have access to all required data or where the Customer selects to

submit its own reports to a Trade Repository but need NASDAQ OMX to complement their reports

with some data, it will offer a partial reporting service according to the alternatives described below:

• For Customers that connects to a Trade Repository themselves for reporting, NASDAQ OMX

will duplicate the missing data at the Trade Repository to the report created by the

Customer.

• Alternatively, the Customer can complete partial reports created by NASDAQ OMX and

submit the reports to the Trade Repository through NASDAQ OMX. This option does not

require direct connectivity to a Trade Repository for the Customer.

• OTC derivatives transactions that are not traded or cleared by NASDAQ OMX may also be

submitted via the service interface. This option, also, does not require direct connectivity to

a Trade Repository for the Customer.

The service is provided with a flexible interface where the Customer can select to interact with the

service via a provided application or by uploading fixed formatted files.

The Trade Repository application is a desktop application that enables the Customer to perform the

following activities:

• View status of submitted reports

• View status of individual reported transactions

• Search for historical reports



• Review and confirm NASDAQ OMX generated reports

• Complement partial NASDAQ OMX generated reports with additional data before

submission

• Create new transactions for reporting

• Export data to external systems

Vendor – Nasdaq OM

http://www.nasdaqomx.com/europeanclearing/traderepositoryservices/

EFETnet eRR

EFETnet’s electronic Regulatory Reporting (eRR), is an industry wide solution to an industry

wide problem; implementation of regulatory reporting requirements is having a significant

impact on the wholesale European energy market. Operational processess and systems are

under pressure because of the changing regulation and investments in IT are inevitable to

comply with all regulatory reporting obligations. EFETnet developed eRR, a single

standardized interface for regulatory reporting, delivering reporting compliance for REMIT,

EMIR, MIFID, CRD IV etc. eRR operates through a single open industry standard interface

providing connectivity to the different regulatory repositories.

eRR will be offered as an add on to EFETNet ‘s confirmation matching service, which is

already used widely in the industry. Trade information will be sent using the same protocol

and format and for confirmation matching. Trade information will only need to be sent once

for both confirmation and regulatory reporting.

EFETNet uses the CpML format to represent trades. In order to encourage that use of this

format as a standard, its management is now being given to an independent body run by

EFET and the CIO Council. This will permit other vendors to use CpML in order to encourage

interoperability. The initiative to carry this out has already begun.

Vendor – EFETnet

http://www.efetnet.org

TrayPort Complete

Trayport Complete is designed to reduce the operational costs and delays associated with

trading energy commodities. The Complete suite of real-time solutions will provide market

participants with transparency and control over their post-trade activity. With Complete,

users will be able to accurately manage and monitor their post-trade workflows across the

160+ markets accessible through Trayport's platform immediately following the trade.

Complete will be seamlessly integrated with existing Trayport products and will enable users

to:



• Clear – Users can see the status of trades in real-time across all clearing houses and

counterparties on the Trayport network through one screen. Complete Clear is live

and available for CME ClearPort, LCH, MEFF, NOS and SGX. Connectivity to European

Commodity Clearing AG (ECC) and OMIClear will be announced in the coming weeks

• Confirm – Users will be able to confirm standardized terms of a trade immediately

post execution with up to 400 counterparties and 17 brokers on the Trayport

network. Complete Confirm will enable users to define their own confirmation

processes and workflows to meet their internal requirements. This will improve

efficiency, optimize workflows and reduce operational risk and the processing costs

associated with energy trading.

• Report – Users will be able to report as close to real time as they choose to

European regulatory authorities and trade repositories. Complete Report will be

designed to satisfy REMIT and EMIR regulatory reporting obligations at the point of

execution. Further reporting obligations and jurisdictions will be added in the future.

• Control – With Complete Control, users will be able to manage post-trade execution

with transparency and control. The real-time monitoring application will allow all

counterparties to the trade to track the progress of their trade and immediately

identify and resolve any questionable trades at the point of execution, significantly

reducing operating risk and cost.

Vendor – Trayport

http://www.trayport.com

Specialist Reporting and aggregation software

EMIR-ate.com

emir-ate.com is a service provided by Treamo Business Consulting GmbH. and is a cloud-based SaaS-

solution that helps corporates comply with the reporting requirements of EMIR. It interacts with

existing systems and tools (TMS, spreadsheets, trading platform) as well as with the Trade

Repository. It is a service that ensures EMIR compliance at the press of a button.

The trades will be reported via XML files. At the moment, the Trade Repository requires approx. five

minutes for the return message that either confirms the correctness of data or contains a list of

errors. EMIRate will convert these status messages in an understandable format and will present the

result of the return message in the list of trades, where users can, for example, filter all those

transactions, which have been sent but not yet acknowledged. The same also applies to messages

regarding the reconciliation status.

Vendor – Treamo Business Consulting GmbH

http://www.emir-ate.com



DeltaconX/Tradelogic

DeltaconX Captures the compliance data held in your trading, financial, and logistical systems,

transforms them into the correct message structures, and routes them to the appropriate regulatory

reporting destination such as Trade Repositories, CCPs, RRMs, ARMs, and ACER. Response and status

messages are captured as part of the submission process and relayed back to the source systems. A

full audit trail of data processing and transfers is maintained. There is no need to upgrade your

trading system as all the required and missing data can be added directly in DeltaconX.

DeltaConx is being offered to the market together with TradeLogic as implementation partners.

Vendor: CH Consult GmbH

http://www.deltaconx.com

Finalyse

FINALYSE offers an automated solution for the new European Market Infrastructure Regulation

(EMIR). This solution can be easily implemented on site or externalized towards Finalyse (Third

Party).

The goal of this solution is to allow customers to be EMIR compliant with a minimum of investment

costs and to benefit from our expertise in terms of European regulation and implementation

solutions.

The main advantages of the solution are:

• EMIR Compliant Data Model

Our EMIR data model is compliant with the new regulatory standards of the European

Securities and Markets Authority (ESMA) and is built according to the most modern and

advanced data model design techniques (full auditable, security and normalization).

Furthermore, it will store a complete history of all transactions.

• Automated Data Quality Checks

Our EMIR data model is verifying the data for completeness and is transforming the client’s

specific naming conventions into the EMIR required taxonomy. Specific data quality errors

are monitored and reported for improvement.

• Automated Reporting to Trade Repository

Our solution is an automated process flow for the reporting of modifications, valuations and

trade terminations towards one of the major trade repository systems. Furthermore, the

process reports information coming back from the TR (e.g. uncommitted trade reports).

• Easy Implementation or Full Outsourcing

Finalyse’s solution for EMIR consists of a data model concept and process flow which can be

easily implemented on site. The remaining workload is to build a bridge between our ready-

to-use solution and the client’s internal data system(s). Furthermore, customers can

delegate the reporting as well towards Finalyse, which will act as Third Party.

Vendor – Finalyse

http://www.finalyse.com



Seven2one

Steria Mummert Consulting AG and Seven2one Informations systeme GmbH offer companies subject

to reporting requirements a mature, holistic solution for secure, transparent and cost efficient

reporting that is fully compliant with the EMIR and REMIT regulations.

The solution includes;

• EMIR/REMIT compliant data model

• Automated collection of data from upstream systems and reporting: any data format

possible, no adaptation required

• Stable, automated and auditable reporting processes

• Integrated data quality checks ensure highest data quality

• Simple and transparent monitoring of data, processes and reports

• Easy implementation in your own company, full outsourcing or SaaS

• Can be expanded to comply with future reporting requirements (e.g. MiFID, Bafin)

• Secure investment with added value and full cost control (fixed price offer)

• Wide variety of functions (portfolio comparison, risk cockpit, compliance relevant

evaluations, e.g. market manipulation, market abuse)

• High professional utility, e.g. mapping of electricity products with complex profiles, mapping

of orders for REMIT, serves all asset classes (FX, IR, commodities)

• Immediate implementation, project can be started immediately

• Full control over reportable data, data streams and generated reports

• Reporting with added value: expandable without programming to comply with further

reporting obligations (e.g. MiFID, BAfin) even up to the production of an internal reporting

tool for trading and risk management

• Tried and tested standard software solution offers a high degree of reliability

• Rapid integration of new reporting obligations through modular updates

• Strong partners offer extensive experience with both the technology and sector

• A broad range of services provide optimum support - from professional consulting on the

regulatory framework to the implementation of an automated solution to operation of the

software

Vendor – Seven2One

http://www.seven2one.de



Impendium Elements

Impendium Systems Elements is a Private Cloud Platform that enables you to be compliant with

multiple regulations throughout the world using a single solution. Unlike traditional approaches and

vendors we incorporate the technical elements of common global regulations onto the Platform

enabling you to be compliant sooner. Report to regulators, central banks or even internal

departments using Elements in a timely and cost efficient manner whilst having a complete single

view of your regulatory data.

Elements is a specifically engineered regulatory platform. Impendium Systems Regulatory Advisory

Board – made up of industry and regulatory experts – continuously studies the global regulatory

roadmap and ensures that key regulatory components are incorporated directly into the Platform.

Elements services many current financial regulations including as Dodd-Frank, EMIR, REMIT and

MiFID and work is underway on future regulations such as MiFID II and MAD II.

Vendor – Imperium Systems

http://www.impendiumsystems.com

Lombard Risk REFORM

The Lombard Risk REFORM platform is a highly configurable solution designed to help firms manage

predominantly trade-related processes – such as pre-/post-trade processing and regulatory

transaction reporting.

Right now firms are using REFORM to meet the global regulatory transaction reporting

requirements. Lombard Risk REFORM is designed for real-time regulatory transaction reporting, will

interface seamlessly with an organization’s banking (or other) systems, and is ideally suited for EMIR

(as well as Dodd-Frank, MiFID and REMIT) that are being introduced to monitor and regulate the

OTC derivatives market.

Vendor – Lombard Risk

http://www.lombardrisk.com



OpenLink – RegCube

The EMIR and REMIT business intelligence solution is an extension of OpenLink's CubeIntelligence

portfolio. The new online analytical processing (OLAP) based cube offering provides financial

institutions and organizations in other verticals, particularly energy firms, participating in energy and

financial trading a speedy and cost-effective way to comply with the new reporting and

reconciliation requirements.

The CubeIntelligence team has developed the OpenLink REG Cube to ensure clients continue to have

access to the market while remaining compliant with the new regulations set to come into force this

year.

The OpenLink RegCube offers firms the ability to:

• Generate the regulatory reports that firms must provide daily to trade repositories and

registered reporting mechanisms

• Send the data to EMIR TRs and REMIT RRMs

• Calculate and record the gross notional values in line with EMIR

• View the EMIR and REMIT values for the entire firm and also drill down, by all categories into

trade level detail if required

• Easy integration of multiple source systems (whether produced by Openlink or not) using a

simple interface which offers trade enrichment with reference date and other complex rule

based transformations

• Specify which trades, books or products are in scope of the regulations so users can filter on

these criteria to calculate the EMIR and REMIT values for the in-scope trades only

• Enrich and transform data before sending to the Repository using a complex transformation

engine

• Perform bilateral portfolio reconciliation using the data already in the cube combined with

file production and matching facilities

The cube is integrated with other cubes such as the Risk Cube. It can be used as the basis of a cross

company business intelligence solution.

Openlink also supply an “accelerator” from Endur and IRM so that those systems can be connected

to the cube with a short implementation time.

Vendor - OpenLink Financial

http://www.olf.com



eOpt PriceHub e·Comply

PriceHub e·Comply has been developed by e·Opt Solutions, a Germany based provider of solutions in the

Energy Trading space. It is a comprehensive tool for Regulatory Reporting under EMIR and REMIT and is

targeted towards the obligations of most medium to small sized energy companies in Europe. It is a viable

tool for this market and though currently built for EMIR and REMIT, it can be easily extended to serve

future Regulatory challenges.

e·Comply has an intuitive and transparent workflow. It offers extensive Reporting and interfacing

possibilities as well as an open data model for upstream source systems, thereby making bespoke

interfacing to ETRM or other systems achievable with limited effort. e·Comply already has a downstream

interface for REGIS-TR and as other Repositories and RRMs expose their interfaces, e·Opt plans to update

its interfacing as well.

Two key differentiators of e·Comply have are firstly its ability to seamlessly report Orders to Trade under

REMIT, and secondly its Third Party Reporting module. The former uses online interfacing to Trayport and

other platforms to gather orders. The Third Party Reporting module allows companies to offer Reporting

Services to smaller clients with limited resources and trading operations.

With Regulators expected to be increasingly intrusive, the Trade Annotation function is a useful tool to

answer background questions on Trades and Orders.

e·Comply has been built as a comprehensive Compliance tool for organizations, rather than being limited

to EMIR and REMIT. It is deployed as an inward as well as outward looking tool, helping Compliance

Managers to satisfy internal as well as external demands.

The team behind e·Opt, led by its CEO, Rajeev Bhatt traces its roots to years of Energy Trading and Risk

Management experience. The PriceHub suite with its various modules for Forward Curves, Price Data

Management, Pricing and related areas, have been built using their experience in Trading and

Technology.

Vendor – e Opt Solutions

http://www.eopt.org



Pioneer Solutions Compliance Tracker

Pioneer Solutions' ComplianceTracker provides enterprise-wide compliance tracking,

performance monitoring and reporting for corporate, regulatory, environmental and other

compliance requirements.

ComplianceTracker supports the following:

� Compliance requirements administration

� Performing activities and monitoring

� Approving activities and monitoring

� Triggers and exception management

� Compliance management

� Reporting

Vendor – Pioneer Solutions

http://www.pioneersolutionsglobal.com

E/CTRM offerings

It is anticipated that most of the E/CTRM vendors will be involved with initiatives to ensure that they

too are ready for the new regulations and many are particularly in the energy side of the business.

Mostly, this involves insuring that their offerings include the ability to capture all of the data items

required for trade reporting both in terms of the database and screens to enter the data. Some may

go beyond this fairly minimal requirement such as OLF and Pioneer who have both announced other

initiatives (see the listings elsewhere in this directory). Other vendors that have been proactive in

marketing their capabilities to date have included Allegro and Contigo while Triple Point has been

actively involved as well. These vendors have various connectivity tools as well that might well play a

role in communicating or reporting to trade repositories or reporting services.

Many of the E/CTRM vendors will also be keen to emphasize their reporting, audit trailing and

workflow capabilities with regard to REMIT and trade monitoring. Only SunGard can boast a true

trade surveillance product (see entry in this directory) but many others will feel that they can offer a

number of tools to inspect and analyze trade data.

Allegro

Allegro Derivative Regulation provides a transparent and structured process to manage the

transformation of trade execution and valuation data into required regulatory standards for

EMIR/REMIT and directly transmits this data to registered trade repositories and reporting

mechanisms. Allegro also provides monitoring against clearing thresholds and facilitation of

portfolio reconciliation and compression requirements.

Vendor: Allegro Development

http://www.allegrodev.com



Contigo

Contigo’s enTrader is a sophisticated multi commodity energy trading and compliance

platform. enTrader has been designed to be easy to use, easy to implement and delivers

client benefit quickly, without an extended implementation and configuration period.

enTrader provides a scalable platform, and is currently being used by energy companies

ranging from new market entrants through to some of the largest European utilities. It is

equally suitable for small trading houses, brokers and market makers with no physical assets

and a tight commodity coverage through to the largest financial and physical trading asset

heavy organisations. This includes companies operating in multiple markets with multiple

currencies and with international fuel logistics chains.

enTrader has been designed to handle all of the data required by EMIR and REMIT in

accordance with the current specifications. All of the fields required by the regulations are

stored as per the rules, and the system is capable of handling the different aspects of rules,

such as EMIR trade statuses, LEIs, product identifiers etc.

Contigo is working with its clients in order to be able to send data to EMIR Trade

Repositories by the end of 2013. The system will also handle REMIT reporting, from both a

trade data and fundamental data perspective.

Vendor: Contigo

http://www.contigoenergy.com

Triple Point

Commodity XL is being enhanced to support the key requirements of the REMIT and EMIR

regulations in the area of transaction reporting, mitigation of operational risk, clearing

threshold monitoring, and trade life-cycle auditing. For these and related financial regulation

(e.g. Dodd-Frank), the underlying business logic is modelled in Commodity XL so transactions

are monitored, processed and reported according to the governing regulations. Users need

to choose their preferred Trade Repository, CCP, and Electronic Confirmations service

providers so that appropriate communications channels may be configured within

Commodity XL.

For EMIR ‘Timely Confirmation’, EFET eCM and ICE E-Confirm standards for electronic

confirmations are supported. For EMIR and REMIT transaction reporting, connections to

RegisTR and ICE Trade Vault trade repositories are offered, and will be completed in time for

the commencement of EMIR transaction reporting, based on the current ESMA ITS RTS

documents and timelines. Connectivity to other services such as EFET eRR and ACER ‘ARIS’

can be configured.



For REMIT requirements regarding anti-market abuse, and transparency, Commodity XL

provides a full log of all user interactions with the database regarding the trading life-cycle.

This audit log can be inspected by external authorities in the event of an investigation into

suspicious trading activity as defined under REMIT, MAD/MAR, and MiFID.

Vendor: Triple Point

http://www.tpt.com

SunGard

SunGard are delivering an EMIR/REMIT solution to Aligne clients through the implementation of

a standard adaptor. This adaptor utilises the flexible Aligne 3.0 AUX fields to allow clients to

augment native Aligne data through the Importer and then store this on the Aligne database

before communicating an EMIR file to accredited Trade Repositories using standard Aligne

ReportServer functionality.

For those clients who wish to create datastores outside Aligne, standard Aligne reporting

functionality can be used to create exports of Aligne-held data.

By leveraging off the knowledge gleaned by successfully providing SunGard clients with a

solution the US Dodd-Frank, SunGard are confident that the EMIR/REMIT Adaptor will be

delivered in time for the commencement of EMIR reporting in early 2014

Vendor: SunGard

http://www.sungard.com

OpenLink

See entry above for the RegCube.



Portfolio Reconciliation/Dispute Resolution

In the area of portfolio reconciliation, we are currently aware of only one third party service (there

are bilateral solutions and agents available)although we understand that others maybe planned by

EFET, for example. Additionally, some of the data repositories such as REGIS-TR will perform

portfolio reconciliation as a part of their activities and it is conceivable that they may offer such a

service in the future. Otherwise, portfolio reconciliation will be a largely manual process.

TriOptima triResolve

triResolve is designed to help manage counterparty exposures and provides portfolio

reconciliation, margin call management and dispute resolution. triResolve highlights any

areas of dispute from the individual transaction level up to the margin call. Users have

access to a web-based, flexible platform that enables communications between

counterparties and even internally to provide detailed information to resolve differences. In

the proactive reconciliation process, differences are researched immediately and resolved so

they don’t persist contributing to disputed collateral calls. However, if a collateral dispute

does arise, the triResolve communications capability enables counterparties to research and

resolve the problems in real time.

triResolve is an alternative to bilateral portfolio reconciliation, which can quickly evolve into

a messy process, which involves sending around a great deal of files and is very prone to

error.

triResolve has applied its expertise to the range of challenges in the bilateral collateralization

process introducing margin call calculation and administration functionality as well as

reconciliation of key ISDA CSA terms. Margin calls can be issued, accepted or disputed on

triResolve in a manner that complies with the ISDA standard for electronic margin calls.

By identifying trade mismatches with counterparties, CCPs, DTCC, and/or custodians through

an automated reconciliation of OTC derivatives and securities financing portfolios, this daily

independent verification of books and records ensures that users can:

• Identify discrepancies in trade valuations by trade, portfolio, or underlier

• Increase transparency of operational issues by identifying systemic booking and

valuation issues

• Resolve identified issues by communicating with internal departments or with

counterparties through triResolve’s centralized web service

triResolve is a web-based solution into which users upload their portfolios. Currently the

service has over 7 million trades being reconciled regularly through triResolve. A web-based

community network with around 300 institutions is using the service. triResolve performs

over 24,000 group reconciliations (or 106,000 legal entity level reconciliations) per week.

Vendor: TriOptima

http://www.trioptima.com



Portfolio Compression

For portfolio compression, we are only aware of one multilateral service at this time although other

solutions are being discussed, such as EFET, for example.

TriOptima triReduce

Multilateral termination removes transactions and consequently reduces the need for

collateral requirements by keeping portfolios trimmed down. Participating in triReduce

cycles reduces both the regulatory and economic capital costs associated with OTC

derivatives, especially for capital-intensive emerging market transactions. Periodic

compression will eliminate capital charges for risk-weighted assets appearing on the balance

sheet. With fewer outstanding OTC derivative trades, a firm can manage its current

exposures more effectively by reducing collateral management costs and minimizing balance

sheet growth. Compression will also facilitate managing potential future exposure for

transactions that cannot be collateralized. When trades are eliminated, they no longer

require periodic payments to be calculated and settled, reducing operational costs. In

addition, potential errors and the costs associated with resolving errors, including

operational risk capital charges, are eliminated.

Using a multilateral system offers a great advantage over bilateral compression since the

amount compressed can be a lot higher. A multilateral system is only useful if it has critical

mass, which is an advantage of TriReduce.

By August 2013, TriOptima’s 230 triReduce participants (including major energy houses and

dealer banks), have eliminated $354 trillion in notional principal outstanding in IRS, CDS and

Commodities.. The impact on the interdealer notional outstandings as reported in the DTCC

Trade Information Warehouse and the BIS statistical surveys has been significant.

triReduce is a web-based service that does not require any software installation or elaborate

preparation. The service is accessible to institutions with a qualifying portfolio.



Vendor: TriOptima

http://www.trioptima.com

Trade Surveillance

We are aware of three trade surveillance solutions for commodities but there are many more for

other asset classes that most likely will be made available for commodity market players use in time.

SunGard Protegent

Protegent Surveillance helps market participants mitigate reputational, internal and

regulatory risks. With Protegent Surveillance, firms can detect suspicious trading activity and

address supervision and suitability requirements. The solution helps firms identify

questionable transactions and high-risk positions, streamline review processes, support

audits and respond quickly to regulatory and legal inquires. Protegent Surveillance helps

firms detect a broad range of issues including commissions, concentration, suitability,

licensing, breakpoints, market manipulation, AML, restricted holdings and insider trading

activity. Deployment options include a full in-house implementation or a SunGard hosted

ASP service module.

Features

• Identifies questionable transactions and positions

• Provides alert scoring with justification and auto escalation

• Supports issue resolution workflow using a robust alert management functionality

• Easily accessible web-based user interface

• Allows personal and shared watch lists

• Provides historical data snapshots and statistical reporting

Vendor: SunGard

http://sungard.com/campaigns/fs/globaltrading/360trading/solutions/compliance/proteg

entsurveillance.aspx



Oracle Financial Services Energy and Commodity Trading Compliance

Oracle Financial Services Energy and Commodity Trading Compliance (ECTC) applies

sophisticated pattern recognition techniques to monitor trading and market-making

activities regarding regulatory compliance and quality of execution.

The solution provides trade-by-trade visibility into interactions between traders and other

market participants to identify potentially problematic practices or inferior order handling.

Oracle Financial Services Energy and Commodity Trading Compliance covers multiple

instruments, market segments, jurisdictions, time zones, currencies, and market structures

through the use of behavior detection scenarios to identify trading anomalies.

Additionally when deployed in combination with Oracle Financial Services ECTC Analytics the

solution enables compliance and supervisory users to further explore their trading data for

unusual trends, patterns, or other behaviors of interest thus providing a powerful alert and

investigation solution.

• Flexibility and Configurability – users can readily tailor the application to meet any

specific needs of the firm

• Expedited Implementation Processes – provides multiple approaches to data

acquisition that can get you up and running quickly and efficiently

• Automated Alert Correlation – automatically searches across all alerts to identify

potentially undiscovered relationships

• Integrated Case Management – users can generate new cases or promote existing

alerts to cases enabling a more holistic and enterprise approach to compliance risk

management

• Highly Configurable Scenarios

• Comprehensive Instrument Coverage

Vendor – Oracle

http://www.oracle.com/us/industries/financial-services/energy-commodity-trading-

compliance-170563.html

NICE ACTIMIZE

The Actimize Energy Trading Compliance solution provides automated trade surveillance and

detection capabilities targeted specifically for institutions that must comply with regulatory

requirements associated with energy trading standards set by the CFTC, FERC, FTC, European

Commission, and ACER.

Automated surveillance of internal policies/risk limits and external regulatory issues, with

capabilities to correlate business communication, market news, and trading activity

Multi-dimensional coverage for compliance oversight across affiliates, markets, products, and

instrument types



Established out-of-the-box detection scenarios to support business and regulatory needs

unique to energy trading markets

Built upon a proven core risk platform, enabling end-to-end case and workflow management,

investigation, audit, and reporting capabilities

New regulatory standards associated with energy trading set by the CFTC, FERC, FTC,

and ACER are placing increased pressure on energy trading firms to demonstrate

adequate procedures, processes, and controls to detect and prevent prohibited

activities. Actimize helps firms efficiently meet the needs of regulators, avoid fines,

disgorgement, and civil penalties

Vendor – NICE Systems

http://www.niceactimize.com



About The Authors This report has been compiled and issued by ComTech Advisory in association with ETR Advisory and

sponsored by TriOptima.

Aviv Handler Mr. Handler is the Managing Director of ETR Advisory, a specialist consulting company focused

entirely on Energy Trading regulation. He specializes in energy regulation and the IT systems and

platforms required for compliance. He gained this after spending several years in the field, setting up

the European Compliance Centre of Excellence at SunGard prior to founding ETR. He has also been

involved in banking regulation.

He has 20 years of experience in energy trading, credit, risk and financial technology. He has

delivered a series of trading, credit and risk solutions to a wide variety of oil majors, power and gas

companies and investment banks.

The last 12 years have been focused on the commodity trading markets, the majority of which was

spent running Coherence Consulting, which specialized in credit risk within the energy markets as

well as CTRM systems and implementations and compliance. Coherence’s team delivered a number

of solutions to a variety of global and local clients under his leadership, spanning oil majors, gas and

power trading companies and CTRM software houses. Coherence was ultimately absorbed by Sirius

Solutions, where he ran the European region.

Prior to forming his business, Mr. Handler led product strategy for KWI, an ETRM vendor whose

system, KW 3000, was widely used in Europe and North America.

Mr. Handler also spent several years in capital markets technology, specializing in compliance, risk

and financial messaging. He was one of the original members of the FpML initiative, a standard that

is now in scope for Energy regulation alongside others such as CpML.

Mr. Handler speaks regularly at conferences, and has written a large number of articles on

regulation, credit and commodity trading, as well as financial messaging. His blog at

http://www.energytradingregulation.com is being increasingly used as a primary resource for

information about the state of the regulation space.

Mr. Handler holds a degree in computer science from Imperial College, University of London.

Dr. Gary M. Vasey

Dr. Vasey is an industry expert noted for his analysis, consulting, marketing, and branding skills. With

over 29-years’ experience in the energy and commodities trading industry, Gary has experienced the

industry’s volatility as an executive of a trading firm, geologist, consultant, software developer,

analyst, and marketing practitioner, providing him with unique insights, not just into the entire value

chain, but also into how to position, brand, and deliver products and services to the industry.

He is a noted expert on the commodity trading, transaction and risk management software industry

and an accomplished industry analyst and thought leader.

Gary has published more than 200 articles on energy and commodities industry trends in a variety of

publications, is a regular speaker at industry conferences, and is the co-author of the books Trends in



Energy Trading, Transaction and Risk Management Software – A Primer and Selecting and

Implementing ETRM Software – A Primer (with Patrick Reames). He also contributed two chapters to

The Professional Risk Managers‘ Guide to Energy and Environmental Markets published by PRMIA

and two chapters, co-written with Peter C. Fusaro, to Weather, Energy and Environmental Hedging –

An Introduction (ICFAI University Press, 2007) edited by Amando F C Da Silva.

Gary is also the co-author of Energy & Environmental Hedge Funds – The New Investment Paradigm

(Wiley, 2006) with Peter C. Fusaro, and of many trade press articles on hedge funds in the energy,

commodities and environmental industry.

Gary holds a B.Sc. (Hons.) degree in Geological Sciences from the University of Aston in Birmingham,

England and a Ph.D. in Geology from the University of Strathclyde, Scotland.

ComTech Advisory

Commodity Technology Advisory is the leading analyst organization covering the ETRM and CTRM

markets. We provide the invaluable insights into the issues and trends affecting the users and

providers of the technologies that are crucial for success in the constantly evolving global

commodities markets.

Patrick Reames and Gary Vasey head our team, who’s combined 60-plus years in the energy and

commodities markets, provides depth of understanding of the market and its issues that is

unmatched and unrivaled by any analyst group. For more information, please visit

http://www.comtechadvisory.com.

ComTech Advisory also hosts the CTRMCenter, your online portal with news and views about

commodity markets and technology as well as a comprehensive online directory of software and

services. Please visit the CTRMCenter at http://www.ctrmcenter.com.

ETR Advisory

ETR (Energy Trading Regulation) Advisory Ltd is a specialized, expert resource, which explains, and

helps apply the complex labyrinth of European Energy and Commodity Market regulations, including

EMIR, REMIT and MiFID II. Our detailed knowledge of the rules and the technology platforms and

solutions around them permits us to help our clients navigate and implement the best solutions

while being ready for future rules.

Since being founded in May 2013, ETR has already advised several Market Participants, ETRM

companies and trading platforms. ETR has also provided training to several companies.

ETR also runs the blog at www.energytradingregulation.com, which provides news and thoughts

about developments in the regulatory field in one place.



About the Sponsor

TriOptima TriOptima is the award-winning provider of post trade risk management services and infrastructure

for OTC derivatives. Focused on reducing costs, eliminating operational and credit risk, improving

counterparty exposure management, and reducing systemic risk, TriOptima offers a range of

services: triReduce to reduce swap inventory and counterparty risk; triResolve to reconcile OTC

derivative portfolios and manage disputes; triBalance to manage cleared and bilateral counterparty

risk; and triQuantify to measure and analyze counterparty risk. Currently triBalance and triQuantify

are in the piloting phase and are targeted for launch by early 2014.

triReduce, TriOptima’s portfolio compression service, eliminates credit risk and reduces operational

and capital costs. Eliminating derivatives exposures and shrinking the balance sheet is critically

important in anticipation of Basel III gross leverage ratio guidelines. Derivatives are measured on a

gross, not net basis, inflating balance sheets significantly. Moreover, compression eliminates gross

notional value, and with the EUR 3 billion clearing threshold in EMIR, it has become extremely

important for commodity trading companies to proactively manage their gross notional exposure.

Serving over 150 institutions worldwide including major energy houses and dealer banks, triReduce

offers compression cycles in a range of commodity derivatives, interest rate swaps and credit default

swaps. triReduce has terminated $354 trillion in notional principal outstanding across product

classes since its introduction in 2003 through August 2013.

TriOptima has gone from a pilot phase in 2011 to running 6 live cycles in the commodity space in the

past year, including natural gas, power, oil, coal and precious metals. Over 24 commodities houses

and dealer banks have participated with several more completing documentation in preparation of

the upcoming cycles. More than $14 Billion in notional principal has been eliminated for

commodities transactions.

triResolve, TriOptima’s portfolio reconciliation and counterparty exposure management service, is

used by over 450 institutions to reconcile their OTC derivative portfolios, the majority on a daily

basis. With over 8 million transactions on triResolve (90% of collateralized OTC derivative

transactions plus uncollateralized OTC derivatives, cleared trades and other types of trades), most

reconciliations are done daily in order to comply with the new portfolio reconciliation standards that

will be effective under the CFTC (August 23) and ESMA (September 15) rules in 2013.

New institutions are joining triResolve daily around the world, over the past 12 months over 250

new firms have started to use triResolve, an increase of more than 100% over the previous 12

months. The number of reconciliations grew to 116,000 a month in July 2013. Energy firms, Asian

financial institutions and mid-tier European firms are among the growing number using triResolve.

Enhancements to the basic triResolve platform incorporated and standardized data categories

critical to commodity participants. Currently over 450,000 commodity trades are being reconciled on

triResolve. Adoption of the triResolve service accelerated dramatically in the past year in order to

meet the regulatory deadlines for portfolio reconciliation in the US (August 23) and Europe

(September 15). During the past year, triResolve has been adopted by the commodity trading

community as the industry-wide solution for portfolio reconciliation. As of end of August 2013, over

70 leading energy houses and financial institutions use the triResolve service for reconciliation of

commodity trades.



triResolve is a network service that does not involve any software installation or updates. In fact,

triResolve revolutionized reconciliation practice from a reactive, spreadsheet-based internal

operation to a proactive, secure web service. Clients upload their data against their counterparties

onto the triResolve website, and the results of the reconciliation are available on the website.

All types of OTC derivative transactions (IRS, equity, CDS, FX, Commodities, etc.) and all product

structures (plain vanilla to bespoke) are accommodated in triResolve. There are no data format

requirements; triResolve normalizes the data that each institution submits. Matching information is

available to users at the portfolio level or at the individual transaction level. Users can communicate

on the triResolve platform both internally with other departments in their institution or externally

with their counterparties to investigate differences. triResolve’s advanced analytics and reporting

functionality allow users to drill down to any level of the data in multiple dimensions and produce

reports targeted to the needs of any audience from the most senior credit officer to the head of

collateral management.

During the last year, triResolve users have expanded the application of triResolve’s reconciliation

functionality to trades beyond the collateralized OTC derivative transactions initially

included. Uncollateralized OTC trades, cleared transactions, exchange-traded transactions,

securities lending trades and repo trades are also reconciled on triResolve in response to the need

for greater precision in counterparty credit risk management. Emphasizing the versatility and

adaptability of the service, triResolve clients also reconcile their collateral positions.

Most recently (June 2013), TriOptima and DTCC announced the DTCC trade repository will make

client data available to TriOptima to support data verification and portfolio reconciliation of trade

repository data. TriOptima will be the first service provider to directly receive DTCC repository data

for this purpose underscoring TriOptima’s commitment to interoperability and innovation in a

changing marketplace. Interested in establishing connectivity to additional repositories, TriOptima

also announced that it will connect to REGIS-TR when it goes live in January 2014 under EMIR rules

for transaction reporting.

TriOptima, an ICAP Group company, maintains offices in London, New York, Singapore, Stockholm,

and Tokyo.