CME Group has revealed to Finance Magnates that it will be winding down its Abide Financial and NEX Regulatory Reporting businesses, as well as its European and Australian Trade Repositories by the 30th of November, 2020.
In a statement provided to Finance Magnates, CME Group said that having evaluated its business portfolio following the acquisition of NEX Group in November of 2018, it has decided to close down the operations of part of its regulatory services.
Although the CME Group will be closing down its European and Australian Trade Repositories, it will retain its United States (CFTC) Swap Data Repository and its Canadian Trade Repository services.
“During the coming months, CME Group will work closely with all clients and regulators to ensure a smooth transition and an orderly wind down of the impacted services,” the statement from CME Group said.
The Australian CME Trade Repository is licensed by the Australian Securities and Investments Commission (ASIC) to operate as a Trade Repository for foreign exchange, commodities, credit, equity and interest rate asset classes. The European Repository is regulated by the European Securities and Markets Authority (ESMA) and covers all asset classes.
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CME Repositories have been a key industry player
In response to the news that CME Group will be closing down certain repositories, Sophie Gerber, principal of legal firm Sophie Grace and the co-CEO of TRAction Fintech said to Finance Magnates: “It’s disappointing that the market is losing a piece of key regulatory infrastructure at a time of such global turmoil.
“TRAction have been in the market since early 2015 and the participation of CME repository along with its regulatory reporting arm known as Abide and then NEX have been a key industry player that we have learnt from.
“As regulatory reporting is becoming so heavily scrutinised by ASIC and ESMA now, TRAction will ensure any clients seeking transition will be well supported by our offices in London, Sydney and Cyprus along with our client base that already includes over 80 firms.
“We hope not to see any further casualties of firms that provide support to so many brokers for this key compliance obligation.”
“Clients will be worried about consistency of trade reporting in the transfer process, especially during Covid. Key challenges to sourcing alternative reg reporting solutions including needing to figure out if they can use existing data format alongside whatever additional services are in place (validation etc), personal data management etc.,” RegTech vendor Cappitech told Finance Magnates.
“There’s a procurement and commercial challenge alongside the technical challenge. There will be nuances for different regimes eg EMIR where they’ll need to port all positions, not just open ones. Obviously, a vendor that already has connections and relationships with both CME and other TRs will be important/easier. Also, the less the data has to be manipulated on the client side (because a vendor can take existing data and transform it) the better,” a Cappitech partner added.