Market participants are still struggling to understand and comply with the EMIR (European market infrastructure regulation) derivative trades reporting requirements, industry experts say.
A report in Banking Technology on the recent Swift Business Forum says that the regulator, the European Securities and Markets Authority (ESMA), bears some of the blame. It issued a Q&A with technical details on 11 February, the day before the new rules were to take effect.
“This has caught people by surprise,” said Allan Yip (pictured), partner, derivatives practice at Simmons & Simmons. “One of the biggest problems was it just wasn’t clear what needed to be reported until the day before the obligation came in. That uncertainty is still out there.”
Banking Technology says that there is also confusion surrounding FX transactions, as a spot contract is defined as not a derivative, but there is no information as to when a spot contract becomes a forward, which is classified as a derivative and therefore within scope.
The article also reports on problems relating to the issue of legal entity identifiers (LEIs) as well as delegated reporting, which some players are said to be trying to use as a ‘get out of jail free’ card.
Read the Banking Technology article by clicking here.