EMIR TR Approvals - Two Big Omissions

In case you did not already know, last week the European regulatory authority ESMA (European Securities and Markets Authority) approved 4 of the 6 applicants as official Trade Repositories (TR’s) for derivatives trade reporting under EMIR regulations. We do expect the remaining two to be approved shortly…more on that below. This means the deadline of Feb 12, 2014 for Trade Reporting is official…get ready for a fun 3 months. The 4 TR’s they approved?

• DTCC Derivatives Repository Ltd. (DDRL), based in the United Kingdom
• Krajowy Depozyt Papierów Wartosciowych S.A. (KDPW), based in Poland
• Regis-TR S.A., based in Luxembourg
• UnaVista Ltd, based in the United Kingdom

The two they have yet to approve:

• ICE Trade Vault, based in the USA
• CME European Trade Repository, based in the USA

I’m not saying there is any bias, but it is interesting that the two outstanding are in the US. This does not mean that the two remaining will not be approved altogether. They have completed the application process and are awaiting final approval from ESMA any day now. The board has granted management authority to approve them, so stay tuned for updates. Consequences for participants? The two outstanding have the greatest understanding of commodities markets. While the other asset classes that need to be reported may be higher in volume, the complexity of reporting is significantly higher in commodities. The lack of an approved TR with good commodities understanding is a serious issue for market participants who already have enough challenges being compliant under EMIR. Unlike the decisions around exchange traded derivatives being reportable and dual-sided reporting, let’s hope ESMA gets this one right.