Following the 2008/09 global financial crisis, one of the results was the initiation of more rules surrounding over the counter (OTC) derivative trades. In relation to the forex and CFD market, this has meant the rollout of reporting requirements across several jurisdictions.
The most notable of these reporting rules are those that have been set forth in the EU through the European Markets Infrastructure Regulation (EMIR) that was initiated by the European Securities and Market Authority (ESMA). With the new EMIR reporting laws, it has led to any institution (even non-financial firms) in the EU that is involved with certain types of derivatives to report their trades to a trade repository such as the Depository Trust & Clearing Corporation (DTCC).
Following the initiation of reporting requirements for retail brokers in the EU, among the next jurisdictions set to rollout new rules for margin forex and CFD trading is in Australia. Supervised by the Australian Securities and Investments Commission (ASIC), brokers will be required to report their forex and CFD trades starting on October 12th. Similar to other jurisdictions, the DTCC has been designated by the ASIC as the trade repository for brokers to report to.
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With the initiation of reporting rules taking place around the globe, initial feedback has been the difficulties of matching reports from trading platforms to trade repository formats. As a solution, several products in the EU have sprung up to assist firms with converting their trading reports to satisfy EMIR requirements. With the requirements for forex and CFD brokers coming in Australia, a new firm, TRAction Fintech has recently launched to provide reporting services.
Headed by Quinn Perrot, former executive at AxiTrader and Sophie Gerber who also operates a compliance legal consultancy firm for brokers, TRAction Fintech will be offering an automated solution for Australian brokers to report their trades to the DTCC. Speaking about the new venture with Finance Magnates, Gerber explained that TRAction Fintech has “custom built a software suite to connect to MetaTrader.” The product then “extract, covert, reconcile and submit the relevant trades and positions required under the OTC Derivatives reporting rules.” Gerber added that for brokers using platforms other than MT4, TRAction Fintech will work with them to customize the extraction and conversion of data. .
Explaining the friction involved with reporting, Gerber stated, “If a broker works on their own, they need to extract data from MT4 or other platforms and covert into the DTCC format.” She added that the difficulty is due to a “mismatch between MT4 and DTCC requirements.”
As the October 12th date approaches, Gerber stated that there are currently around 35 ASIC regulated retail brokers that will begin to fall under the new reporting requirements. In terms of TRAction Fintech, Gerber cited that the product will be available as a volume-based offering with prices similar to those being charged by the DTCC.