Since the February launch of derivatives trade reporting under EMIR, the European market infrastructure regulation, there have been significant problems with the reconciliation of reports filed by each side to the transactions.
For example, DTCC, which has three-quarters of the European trade repository (TR) market share by volume, recently admitted it can only match 30% of over-the-counter (OTC) derivatives transactions and 3% of exchange-traded derivatives (ETD) transactions that have been sent by market participants to different trade repositories. The problem arises predominantly because of problems with UTIs, unique trade identifier numbers.
A National Law Review article by lawyers from Washington DC-based Covington & Burling says that ESMA plans to direct TRs to send back incomplete transaction reports to counterparties for correction, rather than trying to reconcile them. “This may have significant cost and operational implications for counterparties,” the lawyers say. “The rectified reports will need to be resubmitted within the reporting deadline, ie, by the end of the day following confirmation of the trade.”