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Associations Publish Best Practice for Trade Reporting

The International Swaps and Derivatives Association, (ISDA), the European Fund and Asset Management Association (EFAMA), the European Venues and Intermediaries Association (EVIA), the Futures Industry Association (FIA) and the Global Foreign Exchange Division (GFXD) of the Global Financial Markets Association (GFMA) have jointly published a set of best practices for derivatives trade reporting under the European Market Infrastructure Regulation (EMIR).

The EMIR Reporting Best Practices cover 87 data points across 61 reporting fields, including both OTC and exchange-traded derivatives, and were developed, the associations say, to improve the accuracy and efficiency of trade reporting and to reduce compliance costs. The best practices are available to all market participants to access and implement.

Mandatory trade reporting under EMIR came into force in 2014, requiring all covered derivatives to be reported to trade repositories separately by both parties. Differences in how each counterparty completes the data fields, however, can lead to matching errors on individual trades, placing a compliance burden on industry participants and resulting in an unclear picture of trading activity and risk. In February 2019, the European Securities and Markets Authority estimated the matching rate to be just 40%.

The associations say the new best practices aim to facilitate greater standardisation in how firms complete certain data fields when reporting under EMIR. The document sets out best practice standards for those reporting fields that are most commonly mismatched, based on feedback from trade repositories, but other fields may be added over time if required.

The release was welcomed by DTCC, which says its Global Trade Repository service provided “significant input” into the development of the final recommendations. “The guidelines around how firms should complete certain data fields will create higher rates of pairing and matching, therefore increasing the accuracy of trade reporting,” DTCC says in a statement. “This improvement will provide regulators with a better view of derivatives transactions and hence highlight more accurately risk in the financial system generated by this trading activity, which was the original intention of the policymakers at the 2009 G20 Pittsburgh summit.”

Colin Lambert

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