Frances Maguire
Frances Maguire

Re-engineering OTC FX Derivative workflows to meet new regulatory reporting obligations

Whilst there is still uncertainty as to whether Europe will follow the US in exempting swaps and forwards from mandatory clearing requirements, it has been clearly stated by the G-20 leaders that all OTC derivatives contracts should be reported to Trade Repositories (TR). This was reaffirmed in June 2010 when the leaders met again and pledged to speed up the implementation of measures that will “improve the transparency and regulatory oversight of OTC derivatives in an internationally consistent and non-discriminatory way.”

Until the final Dodd Frank rules are released by the US Commodity Futures Trading Commission (CFTC) in July, it is still not known what kind of implementation time the industry will be given, although G20 has indicated the end of 2012 as a deadline. EMIR The European Commission has adopted the European Market Infrastructure Regulation (EMIR) to address issues relating to OTC derivatives, central counterparties and Trade Repositories, which will work with the new MiFID (II), which focuses on execution and will specify the products to be covered by both sets of regulations, expected to take effect at the end of 2012, under the newly created European Securities and Markets Authority (ESMA). However, EMIR is still a draft and not expected to be finalised until later this year, and then passed on to ESMA to make the final rules. Other G20 countries are also pushing forward, with the Hong Kong Monetary Authority into consulting on Trade Repositories. How these all interact with each other is an area that will...continued

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