Reconciliation rates for derivatives trade reporting under EMIR, the European market infrastructure regulation, are “very, very low” where the two sides to a transaction report to different trade repositories, DTCC said at the recent annual conference of the Association of Corporate Treasurers.
“We’ve gone off and built trade repositories as best we can but there are a lot of differences because we’ve done it in silos with limited structure,” said Andrew Green, global head of Deriv/Serv account management at trade repository DTCC.
While problems can arise because of differences in any of the 85 or so data fields that must be completed for each OTC derivatives trade, there appears to be particular problems with regard to getting matching unique trade identifiers (UTIs). “Having different UTIs is a bit of a non-starter. That‘s something that people need to get over,” Green said.
“There are a lot of working groups going on at the moment, to some extent chaired or helped by ESMA [the European Securities and Markets Authority] to try to bring standardisation and clarity. The inter-TR reconciliations are very, very low and there are some significant challenges that we have to overcome. You could have five men in a room but if you don't have a conductor they're never going to play in unison.”
Green added that it was a concern that UTI dissemination “is not working as efficiently as it should be and that is obviously a bigger challenge about how people start sharing UTIs”.
ISDA, the International Swaps and Derivatives Association, and other trade bodies are said to be preparing guides on how UTIs should work. “But we need some acceptance from ESMA that that’s an appropriate solution. If we can get that, that’s a big step,” Green said. “ESMA have got an awful lot to do in giving that guidance.”