Cost of reg reporting set to rise after CME departure
20 August 2020 Chicago
Image: Ivanko80 / Shutterstock.com
The cost of delegated reporting services is expected to increase following the closure of US derivatives exchange CME Group’s reporting suite, says Ronen Kertis, founder and CEO of Cappitech.
Earlier this year, the US derivatives exchange CME Group was forced to begin winding down its NEX’s Abide regulatory reporting and trade repository (TR) product suite after failing to offload the businesses.
CME’s European and Australian trade repositories will also close by 30 November.
The departure was a shock for much of the market and it now looks clients face the fall out that
comes with its exit.
“CME’s departure strongly suggests that the lower price was unsustainable,” Kertis explains. “Historically CME has been the most competitive on pricing, so the average price of trade reporting will immediately increase”.
Costs are generally impacted by the huge volume of data involved in reporting, the need for quality technology and services and the cost of complying with evolving regulatory requirements.
However, “vendor pricing will remain lower than total cost of ownership for a firm developing its own solution,” says Kertis, adding: “It is said that vendor solutions will benefit from being able to share the build cost among clients while simultaneously ensuring a better product, partly as a result of collaboration.”
Kertis adds: “If price becomes the key factor, service is likely to be negatively impacted as firms reduce investment to meet lower cost demands.
“We are optimistic that if a fair market price can be established, clients will focus decision making based on the quality of service and products on offer, driving the development of high quality service and the introduction of improved products that meet client requirements.”
Elsewhere, firms that had signed up to use CME’s reporting hub to meet their requirements under Securities Financing Transactions Regulation (SFTR), which went live in July, must now scramble to align themselves with a new service provider.
CME is encouraging its clients to “find alternative solutions as soon as possible” and confirms it will not charge for its SFTR-related services while also assisting firms where it can with their transition to another provider.
The read full conversation between Cappitech’s Ronen Kertis and SLT.
Earlier this year, the US derivatives exchange CME Group was forced to begin winding down its NEX’s Abide regulatory reporting and trade repository (TR) product suite after failing to offload the businesses.
CME’s European and Australian trade repositories will also close by 30 November.
The departure was a shock for much of the market and it now looks clients face the fall out that
comes with its exit.
“CME’s departure strongly suggests that the lower price was unsustainable,” Kertis explains. “Historically CME has been the most competitive on pricing, so the average price of trade reporting will immediately increase”.
Costs are generally impacted by the huge volume of data involved in reporting, the need for quality technology and services and the cost of complying with evolving regulatory requirements.
However, “vendor pricing will remain lower than total cost of ownership for a firm developing its own solution,” says Kertis, adding: “It is said that vendor solutions will benefit from being able to share the build cost among clients while simultaneously ensuring a better product, partly as a result of collaboration.”
Kertis adds: “If price becomes the key factor, service is likely to be negatively impacted as firms reduce investment to meet lower cost demands.
“We are optimistic that if a fair market price can be established, clients will focus decision making based on the quality of service and products on offer, driving the development of high quality service and the introduction of improved products that meet client requirements.”
Elsewhere, firms that had signed up to use CME’s reporting hub to meet their requirements under Securities Financing Transactions Regulation (SFTR), which went live in July, must now scramble to align themselves with a new service provider.
CME is encouraging its clients to “find alternative solutions as soon as possible” and confirms it will not charge for its SFTR-related services while also assisting firms where it can with their transition to another provider.
The read full conversation between Cappitech’s Ronen Kertis and SLT.
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