REGIS-TR The trade repository for OTC derivatives 7th Summit for - - PowerPoint PPT Presentation

REGIS-TR – The trade repository for OTC derivatives

7th Summit for an Enlarged Europe Split – Croatia 12-13 May 2011

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1. REGIS-TR – responding to regulatory demand

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Market environment and changing regulatory framework

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Introduction to REGIS-TR – The European Trade Repository for OTC derivatives

2. High-level product scope and functional offering 3. Product developments

Agenda

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European Market Infrastructure Regulation (EMIR) – Draft proposal

Proposed European Regulation

Key components in respect to trade repositories are:

n Risk: The risk mitigation goals impact financial and non-financial

(i.e. corporate) market participants

n Clearing: Clearing to be mandatory also for non-financial market

participants beyond a certain activity threshold

n Reporting: non-standardised, non-clearable contracts should be

electronically confirmed with an auditable monitoring process for all participants – no threshold applies

n Timing: A reporting obligation for OTC derivatives positions no later than

trade date +1 to record and report contracts with ESMA-registered trade repositories

n ESMA is to define the technical standards for reporting by June 2012 n The new regulations are to apply from end-2012

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Trades

n Mandatory reporting trades of

market participants with legal HQ in the EU/Eurozone

n 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 N Trade repository B CCP M Market participant A

n ESMA collects data via TRs and

CCPs

n ESMA to define standards with

TRs/CCPs and market participants

n ESMA coordinates with third

country authorities exchange of data or reports to an international institution

Levels of involved parties

ESMA

n 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, BIS Global institutions Market participant B Market participant C Market participant D

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50% 50%

n To be ESMA regulated and looking for compliance with non-European regulators across the globe n Service covering all OTC derivative products (one-stop-shop) before regulation materialises n Servicing all types of market participants and respective activity profiles in the OTC derivative space n Shareholders:

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Two well known European Market Infrastructures

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Providing exchange trading, clearing, settlement and custody services

n European based (Luxembourg) entity with global reach n Open governance structure

Two European market infrastructures cooperate to provide a sophisticated trade repository responding to regulatory requirements

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1. REGIS-TR – responding to regulatory demand 2. High-level product scope and functional offering

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Core service offering

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Participation and account structure

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Access and connectivity

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Fee structure

3. Product developments

Agenda

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All markets & all contracts

Interest rates and fixed- income Equities Foreign exchange Credit default swaps Commodities

n Full Registry Stamp n Informative Stamp

Registration

n Communication n Matching n Affirmation n Reconciliation n Consolidation

Administration

n Regulators n Participants n Markets

Reporting

Core service offering for all OTC derivative classes

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Technical architecture:

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Developed on BME’s mainframe IBM platform with a central database server using DB2

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Efficiency, high security and scalability

Contingency measures:

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Use of existing BME’s mainframe also used for CSD function:

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Maximum back-up quality standards

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Availability of two redundant locations with data centres and offices, with synchronous data replication:

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Integrity of back-up data

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Internet access = BME Internet infrastructure with high capacity bandwidth and complete redundancy: connection with two different ISPs through two independent

• nodes. All components duplicated

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Tested every 6 months

System architecture and contingency measures

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Flexible approach to access, participation and communication

Flexible participation possibilities:

§ Direct participation, legally as well as technically & functionally § Direct participation, legally, but outsourcing the reporting activity to another participant § Indirect use of REGIS-TR via and existing participation

Flexible communication with REGIS-TR:

§ Manual input/queries with secured Internet access. Web access, exportable to CSV files § Mass upload/download of XML files through secured Internet access § Automatic transfer of XML files through a SWIFTNet FileAct

Flexible access/information exchange

§ XML reporting provided by “push” to respective supervisory authority § Web based access with “supervisor” profile defined for each supervisory authority providing:

§ Immediate full view of relevant entities’ positions exportable to CSV files § Pre-defined queries exportable to CSV files

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Flexible fee structure allowing full fee predictability

Fee model structure (direct participants):

§ Flexible fee structure to suit the needs of all types of participants § Three different fee models established, for small, medium and large

volume participants

§ Full cost transparency and fee predictability before the introduction of a

transaction

§ Fee caps limiting maximum costs to participants § Family groups can benefit of increasing discounts and adapted fee caps

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Agenda

1. REGIS-TR – responding to regulatory demand 2. High-level product scope and functional offering 3. Product developments

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Near-future product and service enhancements

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Q4/ 2010 Q1/ 2011 Q2/ 2011 Q3/ 2011 Q4/ 2011 Q1/ 2012 Q2/ 2012 Q3/ 2012 Launch – Interest rate derivatives Release 2 – Forex derivatives Release 3 – Equities and commodity derivatives Release 4 – Credit derivatives

Future developments Committed product release roadmap

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Leveraging of BME IT department, with more than 200 professionals, specialised in development, systems and communications and security in the business of market infrastructures and financial services

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Developments jointly agreed with customer committee participants

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Development costs borne by REGIS-TR and recovered by usage fees

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No up-front investment risk for the industry – usage commitment necessary

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Future developments Parallel development of optional value-added services for the industry

Value-added services Transaction reporting:

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Application as ARM under MiFiD

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Offering of transaction reporting for OTC derivatives in accordance with MiFiD II

Collateral management:

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Existing international or domestic collateral pools for collateralisation of exposures in OTC derivatives

Exposure valuation:

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Inclusion of pricing and valuation data:

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Directly by the participant – bilateral exposure agreements

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Independent third-party exposure valuation

White-labelled trade repository services:

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Provision of REGIS-TR expertise to domestic repository solutions – discussions ongoing in Americas, Africa and Asia/Pacific

Benefits

Increased quality and consistency of data consolidated in one reporting channel to regulators 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

Contact details

REGIS-TR Thilo Derenbach Deputy Managing Director 42, Avenue J.F. Kennedy L - 1855 Luxembourg Tel:+352 243 36481 Email: commercial@regis-tr.com