REGIS-TR – The trade repository for OTC derivatives 7th Summit for an Enlarged Europe Split – Croatia 12-13 May 2011
Agenda REGIS-TR 12-13 May 2011 1. REGIS-TR – responding to regulatory demand Market environment and changing regulatory framework n Introduction to REGIS-TR – The European Trade Repository for n OTC derivatives 2. High-level product scope and functional offering 3. Product developments 2
REGIS-TR European Market Infrastructure Regulation (EMIR) – Draft proposal 12-13 May 2011 Key components in respect to trade repositories are: Proposed European n Risk: The risk mitigation goals impact financial and non-financial Regulation (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 3
REGIS-TR Improving transparency in the OTC derivatives market 12-13 May 2011 Levels of involved parties Information flows Regulatory requirements n ESMA collects data via TRs and e.g. IOSCO, IMF, BIS Global institutions CCPs n ESMA to define standards with TRs/CCPs and market participants n ESMA coordinates with third Regulators/ Third country ESMA country authorities exchange of authority authorities data or reports to an international institution n All TRs and CCPs active in EU/Eurozone need to be registered Trade Trade Function of CCP M CCP N with ESMA repository A repository B trade repository n Mandatory reporting trades of market participants with legal HQ in the EU/Eurozone Market Market Market Market n All market participants’ report Market participants / participant A participant B participant C participant D details (e.g. volume, name of User of OTC derivatives counterparty) of OTC derivatives trades to TRs or CCPs via an Trades Trades identification/reference number concept 4
REGIS-TR Two European market infrastructures cooperate to provide a sophisticated trade repository responding to regulatory requirements 12-13 May 2011 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: Two well known European Market Infrastructures n Providing exchange trading, clearing, settlement and custody services n n European based (Luxembourg) entity with global reach n Open governance structure 5
Agenda REGIS-TR 12-13 May 2011 1. REGIS-TR – responding to regulatory demand 2. High-level product scope and functional offering Core service offering n Participation and account structure n Access and connectivity n Fee structure n 3. Product developments 6
REGIS-TR Core service offering for all OTC derivative classes 12-13 May 2011 n Full Registry Stamp Registration n Informative Stamp Interest rates and fixed- income n Communication Administration n Matching Credit default Equities swaps n Affirmation All markets & n Reconciliation all contracts n Consolidation Foreign Reporting n Regulators Commodities exchange n Participants n Markets 7
REGIS-TR System architecture and contingency measures 12-13 May 2011 Technical architecture: § Developed on BME’s mainframe IBM platform with a central database server using DB2 § Efficiency, high security and scalability Contingency measures: § Use of existing BME’s mainframe also used for CSD function: Maximum back-up quality standards n § Availability of two redundant locations with data centres and offices, with synchronous data replication: Integrity of back-up data n § Internet access = BME Internet infrastructure with high capacity bandwidth and complete redundancy: connection with two different ISPs through two independent nodes. All components duplicated § Tested every 6 months 8
REGIS-TR Flexible approach to access, participation and communication 12-13 May 2011 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 9
REGIS-TR 12-13 May 2011 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 10
Agenda REGIS-TR 12-13 May 2011 1. REGIS-TR – responding to regulatory demand 2. High-level product scope and functional offering 3. Product developments Near-future product and service enhancements n 11
REGIS-TR Future developments Committed product release roadmap 12-13 May 2011 Leveraging of BME IT department, with more than 200 professionals, specialised in n development, systems and communications and security in the business of market infrastructures and financial services Developments jointly agreed with customer committee participants n Development costs borne by REGIS-TR and recovered by usage fees n No up-front investment risk for the industry – usage commitment necessary n Q4/ Q1/ Q2/ Q3/ Q4/ Q1/ Q2/ Q3/ 2010 2011 2011 2011 2011 2012 2012 2012 Launch – Interest rate � derivatives Release 2 – Forex derivatives Release 3 – Equities and commodity derivatives Release 4 – Credit derivatives 12
REGIS-TR Future developments Parallel development of optional value-added services for the industry 12-13 May 2011 Value-added services Transaction reporting: Benefits § Application as ARM under MiFiD Increased quality and consistency of § data consolidated in one reporting Offering of transaction reporting for OTC derivatives in channel to regulators accordance with MiFiD II Collateral management: § Increased efficiency of available Existing international or domestic collateral pools for collateral, freeing cash for other collateralisation of exposures in OTC derivatives activities Exposure valuation: § Inclusion of pricing and valuation data: Flexibility and means of validation of § Directly by the participant – bilateral exposure agreements provided exposure calculation § Independent third-party exposure valuation (particularly for buy-side clients) White-labelled trade repository services: Increased coverage of global positions § Provision of REGIS-TR expertise to domestic repository without costly interoperability with solutions – discussions ongoing in Americas, Africa and external providers Asia/Pacific 13
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
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