You have a clearing and custody background. How does this compare to the new challenges in the trade depository environment?
Before I joined REGIS-TR I was with the Spanish Central Securities Depository, Iberclear, executing strategic projects in domestic and cross-border post-trade securities services. Before that, I worked for more than 20 years in the custody business at Deutsche Bank SAE in Madrid, where I was responsible for securities clearing, custody and depository bank services for all our institutional clients. So, having spent a good part of my career on the client side of the desk, as it were, I’m now seeing the familiar trade depository/repository world from this new perspective. This is incredibly helpful because it means that, although I’m relatively new in the role, I truly understand the needs of our clients. Being on the trade repository side of the business is very gratifying because I’m working in a highly professional and respected environment, and have the opportunity of adding the value of my past experiences to the goals I and my colleagues have set ourselves and which, ultimately, are for the benefit of our clients.
How are you getting ready for Brexit?
The sword of Damocles, dangling over all our heads! I must say, that we truly live in exciting times. Like a lot of affected firms, we see it as a case of having to expect the unexpected and brace for the worst outcome. In that vein, it’s reassuring to know that REGIS-TR has been preparing for this event for a long time; we launched our new UK trade repository in London back in April. It’s worth mentioning that we are the only TR which is domiciled in the EU and has set up shop in the UK; other TRs are located in the UK and are establishing operations in the EU now. REGIS-TR will need to provide full UK regulatory reporting services under the European Market Infrastructure Regulation (EMIR) from Brexit+1, no matter when exactly Brexit takes place, and irrespective of whether it is hard, soft, or even somewhere in between. Seriously, though, it’s a given that the UK will continue to be a major player in European and global finance. Naturally, our aim is that our UK clients receive seamless continuity of service when supervision is transferred to the UK. To that end, the UK’s Financial Conduct Authority has been very supportive and helpful throughout the registration process, and this makes things a whole lot easier – we’re looking forward to this new collaboration with them.
What’s the next big thing on your agenda?
Naturally, the Securities Financing Transactions Regulation (SFTR) is one of the biggest topics for our clients and for the industry right now. At the moment, we’re fully engaged with the regulator, working to complete our SFTR trade repository application and responding to consultation papers and other regulatory outreach. We are also planning to apply to be an SFTR trade repository in the UK in due course.
Following on from EMIR and the second Markets in Financial Instruments Directive/Regulation (MiFID II/MiFIR), SFTR is really the last piece in the EU regulatory reporting jigsaw. Its high-level aim is to increase the levels of transparency and better equip regulatory bodies with greater levels of data to monitor systemic risk.
From talking to clients, we know that the sheer amount of data required is one of the biggest challenges with, in some cases, up to 153 fields being required to be reported per trade.
Getting your data to the repository is really only the first part of the challenge. Once it’s there, it needs to pass various levels of format, content and logical validations and even then your transaction is required to match with your counterparty’s report. This is really something unprecedented in the SFT world.
Trade repositories have to receive a fully formed set of data and in a pre-defined format, but SFT data is highly fragmented, so firms will have to either pull data together in an ‘internal repository’ or use a service provider that can do that for them.
Thinking about our own pedigree in this space, REGIS-TR is a joint-venture between Clearstream, a subsidiary of Deutsche Boerse Group, and Iberclear, part of BME Group. Within Deutsche Boerse Group we have a broad range of expertise in the SFT space, which helps us to understand the clients’ challenges throughout the process.
Are you expecting an 11th-hour dash for SFTR, as happened with the start of EMIR?
What we saw with EMIR was a very last-minute rush, whereby we’ve got 1,500 accounts today but the vast majority of those had to be opened in the last couple of weeks before EMIR went live because the market was so late in getting itself organised. We expect that the SFTR go-live will be quite different. Whenever I or a member of my team meets with clients and prospects, we always encourage engagement with both ourselves and our partners in order to firstly understand the requirements and, secondly, gain early sign-up to our test environment. This is so that firms can really start working with their data. It’s a complex reporting requirement and opening accounts is really only one aspect of regulatory readiness. We certainly see a good level of engagement and increasing readiness among the tier-one firms and we’re keen to see that spread to all sizes of firms and all actors participating in SFT trading.
You have recently chosen several new partners. Is this key to your strategy going forward?
Yes, it is. We are constantly improving our client services and in that sense partnerships make a lot of sense. I’ll give you a couple of examples which are helping us achieve our aim of providing an end-to-end reporting solution for SFTR requirements.
We can achieve this by collaborating with EquiLend, one of the leading providers of trading and post-trade services, and Trax, a leading provider of data and regulatory reporting services to the global securities market. These two partners offer a joint solution that helps firms meet their SFTR requirements. When clients book a trade on EquiLend’s Next Generation Trading platform, EquiLend and Trax will derive additional SFTR-required data. Trax will match the information in a centralised booking process and then route the required information to the trade repository.
We are also collaborating with IHS Markit and Pirum. Together, they are working with industry leaders to design an SFTR reporting solution that can ease the complexity of routing data to trade repositories. Their data management and augmentation service, plus pre-matching, together with our flexible account model and cost-effective solution, provide market participants with a robust framework for SFTR compliance.
By leveraging these joint solutions, our aim is to ensure our clients can benefit from both a rapid reporting submission process, and REGIS-TR’s intraday reconciliation capability, which will, within minutes of trade reporting, assist with SFTR compliance.
All-in-all, excellent partners help us to better serve our clients and this will always be our highest aspiration going forward. I am very excited about what the future in the trade repository space will look like. We will definitely take an active role and shape this future.
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