On 31 January 2017, ESMA published a consultation paper seeking feedback by the end of Q1 on its draft guidelines regarding the transfer of data between trade repositories (TRs) and it is expected to publish the final report on these guidelines by the end of Q2/beginning of Q3 of 2017.
The three main reasons for the proposed guidelines are:
- To ensure a competitive multiple-TR environment
- To ensure the quality of data available to authorities
- To ensure the transfer of records between TRs is carried out in a consistent and harmonised way.
TRs centrally collect and maintain records of derivatives. There are currently six TRs registered under ESMA, in accordance with EMIR. The guidelines ESMA is proposing promise to provide further clarification to the following EMIR provisions:
- TRs are required to record information and maintain it for at least 10 years following the termination of the relevant contracts
- Details of derivative contracts are reported without duplication
- Orderly substitution if a registration is withdrawn from a TR regarding redirection of reporting flows
- Uniform and consistent application of the regulation.
The need to transfer data to another TR may happen for several different reasons but ESMA focuses on two particular situations in which it may occur: (1) transfer of data requested by a TR participant and (2) the transfer of data in the case of withdrawal of registration. ESMA highlights – the initiation of the process, what should be communicated to authorities, when it should be carried out, record keeping of the transferred data and the associated fees as the incentives and motivations for the relevant parties involved would be different for each situation.
- Transfer of data requested by a TR participant
- A request should be made to the new TR to initiate the transfer of its reporting and the old TR should also be notified
- The new TR should communicate to the TR participant, the old TR and to relevant authorities once outstanding trades are transferred
- Data transfer should be carried out on a non-working day, i.e., a weekend, but this is dependent on the volume of records to be transferred
- After the transfer of data, the old TR should keep all transferred files together with their cryptographic checksums for at least 3 months
- Fees should be cost-related and made public. They should not be too high or discourage TR participants from transferring data to another TR.
- Transfer of data in the case of withdrawal of registration
- Withdrawal of registration requested by the TR: ESMA and all the TR participants should be notified of the intention to withdraw registration at least 6 months in advance
- Withdrawal of registration not requested by the TR: TR will be required to present a wind-down plan to ESMA including a migration plan and to prove that all of the transfers have been successful. The new TR(s) need to notify the old TR about their appointment and prepare relevant migration plans
- Once transfer is completed, the new TR should confirm this to the relevant NCAs
- Old TRs should keep the transferred data available until the date of cessation of operations. At this date, a secure data destruction/deletion will be carried out
- None of the TRs should charge fees for the transfer of data.
ESMA will take this feedback into consideration in its final report. There may be further changes to EMIR as the Commission have recently published amended RTS and ITS under Article 9 (as discussed in a previous article). In addition, ESMA has recently written a letter to the EC advising them to consider strengthening ESMA’s sanctioning powers.
We will closely be following any updates regarding EMIR, especially if it affects the trade and transaction reporting landscape. We will also be launching our Reporting and Reference Data SIG (RRDS) in March, and this will look at the details of reporting formats, standards and collection mechanisms as well as data models and gap analysis across comparable regimes. If you would like to find out more about this Special Interest Group, please contact email@example.com.
Also, stay tuned as we continue to delve into what the thought leaders are saying in the run-up to our 28 February 2017 conference. With over 300 registered attendees and keynotes from the European Commission and the European Central Bank, JWG’s RegTech Capital Markets Conference on 28 February features in Business Insider’s list of the World’s Best RegTech Conferences to attend in 2017. With just 10 days left to register, join us for a bigger and better year in RegTech, by signing up here.
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