HOPE FADES FOR DELAY TO REPORTING DEADLINE AMID EU TUSSLE.

Hope that the deadline for meeting the new requirements on reporting exchange-traded derivatives will be extended by a year appear to have faded amid an apparent tussle between two key EC regulators.

In August, the European Securities and Markets Authority (ESMA) threw a lifeline to the derivatives industry, struggling to comply with new reporting regulations, when it announced that the timetable for registering the first trade repositories for Europe had moved from late September to early November and that the mandatory reporting of derivatives, due to begin in February 1 2014, was therefore unlikely to start before February 2015.  Part of the problem, said ESMA, was the difficulty of identifying the reporting counterparty to a trade because a single trade might involve many participants including clients, market-makers, executing brokers and clearing brokers as well as an exchange and clearing house.

But commenting in an open session at a conference in London just over a month later, Patrick Pearson, the head of financial markets infrastructure at the European Commission, surprised delegates when he indicated that the Commission was unlikely to follow ESMA’s advice on a delay, arguing that a decision on who is going to act as the reporting counterparty to a trade had to be taken sooner rather than later to remove continuing uncertainty from the market.

Although an official announcement has yet to be made on the issue – the Commission has until early November to either accept or reject ESMA’s advice – the chances of a delay now look poor and Steven Maijoor, chair of ESMA, appears to have written off the chances of a deadline extension.

In a recent speech in Frankfurt, Maijoor reiterated that ESMA wanted extra time to develop clarity around the reporting of listed derivatives but then said: “However, the European Commission signalled last week that it does not intend to support such a delay. While far from ideal, if the delay is not endorsed by the European Commission, ESMA intends to provide some Questions and Answers on ETD (Exchange-Traded Derivatives) reporting before the start of the reporting obligation.”

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