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EMIR: What is a Trade Repository (TR) & How to Choose One
A fundamental part of the European Market Infrastructure Regulation (EMIR) framework includes the obligatory reporting of all applicable derivative transactions to registered trade repositories (TR). This measure is intended to mitigate risk and instability in the derivate market, and to improve transparency regarding the data on each party to a transaction and the transaction itself (Respectively, “counterparty data” and “common data”). The TRs are all registered by ESMA, the European Union body in charge of EMIR. There are currently 6 TRs, which derivative users (Both non-financial and financial parties) can choose from to report their derivative transactions. Each TR has to go undergo a comprehensive evaluation process of its proposed operations model, business model, technical documentation and pricing model.What is a Trade Repository?It is an entity that compiles and stores derivative transaction data in a continually updated database. Their increasing importance in European and global financial regulation is attributed to a collectively recognised need to improve transparency, reduce financial systemic risk and maximise best practices in all applicable derivative transactions. In the case of EMIR, the registered TRs are subject to a strict set of standards that they must continually comply with, supervised by ESMA.TR list (Including asset type handled)
- DTCC Derivatives Repository Ltd. (DDRL) - All asset classes
- Krajowy Depozyt Papierów Wartosciowych S.A. (KDPW) - All asset classes
- Regis-TR S.A. - All asset classes
- UnaVista Limited - All asset classes
- CME Trade Repository Ltd. (CME TR) - All asset classes
- ICE Trade Vault Europe Ltd. (ICE TVEL) - Commodities, credit, equities, interest rates
Choosing a TRAfter deciding whether to conduct reporting internally or to outsource reporting to a third-party middleman, each transaction must be reported to an ESMA-registered trade repository. It is important to note that each party is ultimately responsible for the timely and correct reporting of each transaction, whether internally reporting or delegating reporting to a third party. Some TRs will be more suitable to your reporting needs than others.When choosing a TR from the 6 available, each derivative user should consider the following:
- Differences between each TR and the services they offer
- TR operations infrastructure and which may be more in line with the operations of your company, in order to ensure maximised efficiency
- Level of experience with each derivative asset class and with related financial regulation and directives such as the Markets in Financial Instruments Directive (MiFID) and U.S Swap Data Repositories
- Value-added services (platform management, reporting facilities)
- Advice and assistance service, and the awareness that for many derivative users, the reporting component is highly complicated. Some TRs have confirmed that this is part of their service
- Short and long-term objectives of each trade repository
Kantox & CME Trade Repository LtdAt Kantox, we chose CME as our partner to report all our clients’ FX transactions. We chose CME for the following reasons:
- Regulated in the UK by the Financial Conduct Authority
- World’s leading and most diverse derivatives marketplace, handling 3 billion contracts worth approximately $1 Quadrillion annually (on average)
- Worldwide presence
- Highly responsive trade repository, allowing Kantox to set up EMIR in less than 2 weeks. We value efficiency very highly
- Full connectivity with our systems
Do you want to know more about the EMIR?Download our Practical Guide to the European Market Infrastructure Regulation (EMIR)
