regis-tr – the trade repository for otc derivatives oct 2011 – ameda meeting
TRANSCRIPT
REGIS-TR – the Trade Repository for OTC Derivatives
Oct 2011 – AMEDA Meeting
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REGIS-TR
Oct 2011
1. Regulation in the making – European Perspective
2. Regulation driving structural changes in the industry
3. Trade Repository Offering – REGIS-TR
Agenda
3
REGIS-TR
Oct 2011European Market Infrastructure Regulation – Draft Proposal
Proposed European Regulation
Key components in respect to trade repositories are: The risk mitigation goals impact financial and non-financial (i.e.
corporate) market participants
Clearing: Clearing to be mandatory also for non-financial market participants beyond a certain activity threshold
Reporting: non-standardised, non-clearable contracts should be electronically confirmed with an auditable monitoring process for all participants – no threshold applies
Timing: A reporting obligation for OTC derivatives positions no later than trade date plus 1 to record and report contracts with ESMA-registered trade repositories
Live contracts are to be “backloaded” into trade repositories before regulation materialises
ESMA to define the technical standards for reporting by June 2012
The new regulations apply from end-2012
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REGIS-TR
Oct 2011
1. Regulation in the making – European Perspective
2. Regulation driving structural changes in the industry
3. Trade Repository Offering – REGIS-TR
Agenda
5
REGIS-TR
Oct 2011
Trades
Mandatory reporting trades of market participants with legal HQ in the EU/Eurozone
All market participants’ report details (e.g. volume, name of counterparty) of OTC derivatives trades to TRs or CCPs via an identification/reference number concept
Improving transparency in the OTC derivatives market
Trade repository A
Trades
Regulators/
authorities
Function of
trade repository
Market participants / User of OTC derivatives
CCP NTrade repository
BCCP M
Market participant A
ESMA collects data via TRs and CCPs
ESMA to define standards with TRs/CCPs and market participants
ESMA coordinates with third country authorities exchange of data or reports to an international institution
Levels of involved parties
ESMA
All TRs and CCPs active in EU/Eurozone need to be registered with ESMA
Information flows Regulatory requirements
Third country authority
e.g. IOSCO, IMF, BISGlobal institutions
Market participant B
Market participant C
Market participant D
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REGIS-TR
Oct 2011
SWAP USERS/TRADERS
SWAP USERS/TRADERS
Hundreds of new electronic connections between dealers and
clients
SWAP EXEC FACILITY
CLEARING HOUSE
TRADE REPOSITORY
Connection to between 20 – 30
execution facilities
Over 15 CCPS looking to capture OTC derivatives
Between 3 and max. 6 TRs will exist globally
Key issues for the market participants: Timely processing of electronically available position data Selection of provider(s) of choice Selection of reliable partners and establishment of reliable connectivity
Connectivity Environment
Post-implementation of global OTC Derivative Regulation
Source: Own research, TABB Group Research August 2011
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REGIS-TR
Oct 2011Participants choice in a changing environment
Primary questions to
be addressed
Direct vs. indirect interaction with Execution Facilities, Clearing Houses and/or Trade Repositories
One partner vs. divers network (multiple Facilities, CCPs and TRs)
Service Scope of provider - flexible offering and value-added services
What jurisdictions are involved when entering into new agreements/where is my data held
Can the regulatory change help increase internal operational efficiency and/or reduce existing legal risks
Project launch and project budgeting
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REGIS-TR
Oct 2011
1. Regulation in the making – European Perspective
2. Regulation driving structural changes in the industry
3. Trade Repository Offering – REGIS-TR
Agenda
9
REGIS-TR
Oct 2011
50% 50%
Two European market infrastructures cooperate to provide a sophisticated trade repository responding to regulatory requirements
Shareholders: Well known European Market Infrastructures – reputation is top priority Providing exchange trading, clearing, settlement and custody services – demonstrating reliability and
security Allowing for added-value services well beyond regulatory compliance – collateral management,
matching, third-country domestic solutions…
European based (Luxembourg) entity with global reach Open governance structure
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REGIS-TR
Oct 2011
Full Registry Stamp Informative Stamp
Registration
Communication Matching Affirmation Reconciliation Consolidation
Administration
Regulators Participants Markets
Reporting
Core service offering for all OTC derivative classes
Any marketAny asset class
Interest rates and fixed-
income
Equities
Foreign exchange
Credit defaultswaps
Commodities
Bespokeproducts
Thanks to its «flexible option» registration, REGIS-
TR allows reporting of bespoke products
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REGIS-TR
Oct 2011Future developmentsParallel development of optional value-added services for the industry
Value-added Services
Exposure Management:
Existing international or domestic collateral pools for collateralisation of exposures in OTC derivatives
Exposure valuation:
Inclusion of pricing and valuation data: Directly by the participant – bilateral exposure
agreements
Independent third-party exposure valuation
White-labelled Trade Repository services:
Provision of REGIS-TR expertise to domestic repository solutions – discussions ongoing in Americas, Africa and Asia/Pacific
Benefits
Increased efficiency of available collateral, freeing cash for other activities
Flexibility and means of validation of provided exposure calculation (particularly for buy-side clients)
Increased coverage of global positions without costly interoperability with external providers
*Authorised Reporting Mechanism
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REGIS-TR
Oct 2011
Customer of REGIS-TR
(Domestic Trade Repository)
BME HARDWARE INFRASTRUCTURE
EUROPEAN TRADE REPOSITORY
Domestic TRADE REPOSITORY
Customer of REGIS-TR
(European Trade Repository)
Supervisor of REGIS-TR
(Domestic Trade Repository)
Supervisor of REGIS-TR
(European Trade Repository)
OperationsHelpdesk
Global response - based on our White-labelling Concept
Solution for a global architecture – REGIS-TR technical solution
OperationsHelpdesk
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REGIS-TR
Timing of delivery and roll-out Continues evolution of the service under the involvement of the customer base
Dedicated FTE resources serving customers and developing the service offering:
4 project managers and 7 IT specialists dedicated full-time to the development and enhancement of the product and service portfolio
4 full-time client relations managers (RM) dedicated to customer support, additional leveraging of the Clearstream UK Office and its relationship managers (team of 8) dedicated to supporting UK based participants as well as the remaining sales forces of Clearstream and Iberclear in Luxembourg, Frankfurt and Madrid (further 25 RMs)
Helpdesk of 7 customer service employees fully-dedicated to the operations and helpdesk activities
Further resources can be leveraged, if needed, from the shareholders to support during peak times
Product roll-out*
Nov 2011 Dec 2011 June 2012
ongoingCustomer Consult.
July 2011 Mar 2012
Functional
Enhance.
ongoing
Equities/Commodities CDS**FX & White-labeling
Nov 2012
Exposure Mgmt.
* Transaction reporting foreseen for 2013 – depending on MiFID Reviw developments
** CDS repository services possibly earlier, latest in November 2012
Oct 2011
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REGIS-TR
Contact Details
REGIS-TR
42, Avenue J.F. KennedyL - 1855 LuxembourgTel: +352 243 36481
Email: [email protected]