For three weeks commodities participants were left in the cold (see previous post). Today, ESMA has closed that gap and officially approved the remaining two applicants, ICE Trade Vault and CME.
With everyone running to hit the February 12th deadline, Commodities participants were left in a holding pattern, as most were looking for a TR who understood their trading business.
So with the TR ambiguity clarified, the focus for firms will shift towards developing technology solutions and processes to enable reporting. In the face of a deadline and not wanting to go through a vendor selection process, it’s easy to fall back to developing a custom code solution for reporting. I strongly caution firms to think long-term…think about developing solutions that don’t bog down precious developer time with maintenance activities and instead make it easy to flex with changes. One ambiguity has been clarified but there are many more in play. Will the exchanges report exchange-traded derivatives for you? Will your FCM reporting OTC Cleared deals on your behalf? Will ESMA enforce data standards on the TR’s? Will your Swiss entity eventually have to report OTC trades? Decisions around these issues have major implications on the data sent to the TR’s. The choices you make now will either make it easy or difficult to answer oncoming challenges.
Feel free to contact us for some insight based on our experience.