January 11, 2018 / 12:36 PM / 10 days ago

EU watchdog says pricing at derivatives reporting firms too opaque

LONDON, Jan 11 (Reuters) - Trade repositories in the European Union must do more to show that their fees are driven by actual costs to help customers decide which one to use, the bloc’s markets watchdog said on Thursday.

The European Securities and Markets Authority authorises eight repositories that banks and other market participants are required to use to record derivatives trades.

TRs can be accessed by regulators to see who is behind each trade. The aim is to apply lessons from the financial crisis when Lehman Brothers collapsed but it took time to find out who was exposed to the bank’s derivatives trades.

ESMA reviewed fees charged by the TRs and in its report published on Thursday said it was unclear whether they comply with EU rules that cost must be the key pricing factor.

“It is important to ensure that TRs’ decisions on price setting are based not only on strategic and/or practical considerations,” the report said.

“ESMA expects that TRs are able to demonstrate that their fees, including fee caps, are driven by costs.” (Reporting by Huw Jones, editing by Carolyn Cohn)

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