LONDON, Oct 24 (IFR) - Depository Trust & Clearing Corporation is expanding the European arm of its Global Trade Repository to handle reporting of repurchase agreements, stock lending and margin lending under Europe’s forthcoming Securities Financing Transactions Regulation.
DTCC operates the largest repository for derivatives reporting under the European Market Infrastructures Regulation and Dodd-Frank in the US. It has already started talking to potential clients and industry associations about the best way to ensure they remain compliant with the EU’s new set of transparency requirements that will become effective in 2019.
“It completes the set of instruments that regulators are interested in from a risk mitigation perspective and we view it as the extension of EMIR-like reporting into different asset classes as the reporting mechanisms are very similar,” said Andrew Douglas, CEO of the DTCC’s European GTR and managing director of government relations for EMEA/Asia.
“There are some complexities, but with the flexibility we have built into the system it’s not as challenging as building a new trade repository.”
Market participants are still waiting for final details of the reporting requirements, with the European Commission expected to publish regulatory technical standards in the first half of next year.
DTCC will have to re-apply to the European Securities & Markets Authority to operate its trade repository under SFTR, but a fast-track process will be available for those entities that have already been registered for derivatives reporting under EMIR.
The EU has already called for operational separation between the two types of repositories - something that could be crucial in the final structure of DTCC’s platform.
DTCC initially opted for a tailored approach to each derivatives asset class but the firm is set to merge those into a single process for all derivatives reporting once revised technical standards for EMIR reporting go live on November 1.
“Three-and-a-half years of learning from EMIR have shown us that it is much simpler to operate a single solution across asset classes,” said Douglas. “We would expect to take that approach to SFTR so that even though the templates will be specific for those asset classes, it would look and feel like derivatives reporting.”
SFTR is likely to drive a significant increase in the amount of data that market participants must report to regulators via registered repositories. European repo activity stood at €6.4trn as of June 2017, according to the International Capital Markets Association, while Markit’s Securities Finance Database tracked more than US$15trn of assets in securities lending programmes as of the end of 2016.
DTCC’s GTR covers 60% of clients that report derivatives under EMIR, according to ESMA data. Globally, it processes 40m open positions each week on behalf of more than 100,000 entities. (Reporting by Helen Bartholomew)