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The trade and transaction reporting horizon: 10 key initiatives for 2018 and beyond

With MiFID II now (mostly) implemented, what trade and transaction reporting initiatives will firms have on the agenda for 2018 and beyond? We list some of the key items below:

1. It is estimated that the final revised text of the European Market Infrastructure Regulation (EMIR) under the REFIT programme will be published at end of Q3 2018, and implemented sometime during Q2/Q3 2019. Among the legislative modifications envisioned in the REFIT programme is the removal of the backloading requirement (i.e. the reporting on historic transaction would no longer be required). Other key changes to trade reporting will include the introduction of single-sided reporting by the central counterparties for exchange-traded derivatives transactions (ETDs). According to the REFIT Scorecard, these simpler and more proportionate derivates rules under the new framework will save €2.6 billion in operational costs and up to € 6.9 billion in one–off costs to market participants.
2. The Securitisation Regulation sets out common rules on securitisation and looks to create a uniform regulatory European framework for simple, transparent and standardised securitization. Under the new transparency requirements, the originator, sponsor and the Securitisation Special Purpose Entity (SSPE), will be required to disclose information relating to the securitisation, both before pricing and in some cases on an on-going basis during the life of the transaction, to potential investors and the relevant competent authorities. The new rules will take effect on January 1, 2019.
3. Estimated phased go-live of the SFTR Transaction Reporting obligation to begin (12 months following anticipated endorsement by the EC) during Q4 2019, with the new Regulatory Technical Standards (RTSs) due to be published by ESMA at the end of 2018. With an impact on virtually every aspect of the trade lifecycle, and several new reporting obligations for securities financing transactions (SFTs), the operational and data challenge for firms will be onerous.
4. During November 2017, the FCA held a two-week TechSprint with the Bank of England (BoE) and several other firms to understand how technology could be used to make their reporting rules less reliant on human interpretation, and how firms could implement changes to the rules more quickly. During Q3 2018, the FCA is expected to issue a feedback statement following its Call for Input: Using technology to achieve smarter regulatory reporting. The FCA’s feedback statement will also bring together the results of various ‘Roundtable’ events and further industry discussions, as well as the feedback from its Call for Input which runs until 20 June 2018.
5. ISDA has selected one of JWG’s reporting working group members, REGnosys, to create a digital version of the ISDA Common Domain Model (CDM) framework, initially focusing on interest rates and credit asset classes. ISDA’s intention is to create a standard blueprint for events and actions that occur throughout the lifecycle of a trade, bringing order and commonality to the execution and post-trade management of derivatives transactions, a process which is currently a complex and costly for several financial institutions. In addition to building a digital version of the CDM, REGnosys will assist ISDA in analysing product data found in Financial products Markup Language (FpML). The CDM was a hot topic during ISDA’s AGM at the end of April 2018, and looks like it will continue to be a priority for the regulator throughout the rest of this year.
6. The anticipated deadline for Consolidated Audit Trail (CAT) reporting in the US, by large industry members is due to move to 2020. CAT will look to collect data on every order, cancellation, modification and trade execution for all exchange-listed equities and options throughout the US National Market System (NMS). For more details on the implementation process for CAT, as well as updates on the latest developments for this regulation, please click The presentation from the latest CAT Operating Committee (24 March, 2018) can be found here.
7. On April 26 2018, the Commodity Futures Trading Commission (CFTC), published its whitepaper on Swaps Regulation Version 2.0: An Assessment of the Current Implementation of Reform and Proposals for Next Steps. The CFTC looks to continue the dialogue it initiated with industry participants through the ‘Roadmap to Achieve High Quality Swaps Data (Roadmap)’ and, also means to examine opportunities to utilise emerging digital technologies, such as cloud computing, automated “big data” analysis and, ultimately, distributed ledger technology, to make trade data reporting more accurate, reliable and automated.
8. On 28 March 2018, The Monetary Authority of Singapore (MAS) published its feedback on the proposed amendments to the OTC derivates contract reporting regime outlined in MAS’ previous ‘Proposed Amendments to the Securities & Futures (Reporting of Derivatives Contracts) Regulations’ dated 18 January 2016. The reporting obligations for OTC commodity and equity derivative contracts will commence from 1 October 2018 (starting with banks and merchant banks).
9. On 9 April 2018, the Committee on Payments and Market Infrastructures and Board of the International Organization of Securities Commissions (CPMI-IOSCO) published technical guidance on the ‘Harmonisation of critical OTC derivatives data elements (other than UTI and UPI)’. The guidance was said to be an opportunity to narrow down the Critical Data Elements (CDEs) and pin down what data would be required for each. In theory, future revisions of existing regulation/new regulation would then use the CDEs to simplify and streamline reporting, improve its quality and thereby make it useful to the regulators for its originally intended purpose. It seems, however, that the definitions of certain data points still lack considerable clarity (e.g the reporting does very little to distinguish between transaction and position reporting), negating its application in practical terms. Further revisions are expected later in 2018.
10. The Legal Entity Identifier Regulatory Oversight Committee (LEI ROC) has published a progress report on the Global Legal Entity Identifier (GLEI) system and the regulatory uses of the LEI. In the report, LEI ROC notes the rapid growth of LEIs in 2017 which now exceeds 1 million and that authorities in jurisdictions represented by LEI ROC have adopted at least 91 regulatory actions using the LEI. In relation to GLEIF’s five-year review strategy, there are initiatives currently underway which will look to globalise the LEI and achieve strong linkages between natural persons and business processes. Final proposals are due to be published to the public during Q4 2018.