There is ambiguity, and there is ambiguity within ambiguity.
Whilst the US Commodity Futures Trading Commission has decreed its final ruling on trade reporting rules set out under the Dodd-Frank Act, the European Securities and Markets Authority (ESMA), which is responsible for the instigation of trade repositories (TRs) across the pond, today published an updated version of its EMIR implementation timetable.
The key change in the implementation timeline relates to the registration of the first TRs, which was not expected to occur until at least September 24 this year.
European Deadline Languishes In Early 2014
ESMA expects to make those first registration decisions not before November 7. Consequently, counter-party reporting to trade repositories is not expected to commence before February 2014.
Whilst this represents a delay in the implementation of TRs, there are industry participants to whom this may not come as a surprise, and expect European regulators to lag slightly behind their American counterparts in completing the procedure.
An example of this came to light in June this year, when Jaqueline Liau, FX Prime & Global Head of Product and Service at HSBC, spoke at a panel discussion concerning pre and post trade reporting, which included senior industry figures, and the attendance of Forex Magnates.
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The discussion highlighted that as well as TRs, firms would also be required to register as Swap Execution Facilities (SEFs), and that the proposed implementation date may well be delayed. Ms. Liau explained: “The full implementation in the US of permanent SEFs is likely to be during 2014, and a bit later in Europe.”
“Hong Kong and Singapore have put it back, and I expect it to be probably effective in those regions at the end of 2014. On this basis, we are unlikely to see much SEF activity in FX for some time” she said.
SEF Approvals In Full Swing, TRs Taking Longer
Since that discussion, many North American firms have had their SEF applications approved, including three just yesterday, showing that this is taking shape in America. However, with regard to TR rulings, the CFTC removed the FX class from IntercontinentalExchange’s Trade Vault, indicating that the market is still deliberating over this matter.
In the run-up to the then proposed Dodd-Frank Act rulings on trade reporting, the CFTC had originally granted provisional registration to ICE Trade Vault, LLC as a swap data repository on June 27, 2012, to accept swap data for the interest rate, credit, foreign exchange, and other commodity asset classes.
Although, not the first time the CFTC has granted an order to remove an asset class from this particular repository – the interest rate asset class having been removed on December 3, 2012 – it could be regarded as perhaps more than a coincidence, that the regulator has taken this particular action at this point in time.
ICE Trade Vault had originally applied to ESMA in March this year, in order to register ICE Trade Vault Europe Limited as a TR for the reporting of swaps and futures trade data, according to ESMA’s proposed requirements.
At the outset, ICE Trade Vault Europe’s application was to serve the commodities, credit, interest rate and foreign exchange asset classes. The launch of ICE Trade Vault Europe is still subject to approval by ESMA.
According to ESMA, the change in the timetable is related to a combination of factors, including issues faced by the applicants in ensuring the completeness of their applications.