For smaller firms in particular, a sizeable operational challenge lies ahead.Complying with stringent pre and post-trade requirements (many of which are time-sensitive) might be achievable in the day-to-day, but MiFID II’s changes to OTC derivatives reporting risks create an avalanche of work. The updated Markets in Financial Instruments Directive, which contains over 1.4 million paragraphs of rules and regulations for the financial sector, has changed how firms do business on a daily basis. Since derivatives are now regulated, they’re likely to be viewed as a less risky option – increasing the overall use of derivatives, and therefore the volume of trades. We also use third-party cookies that help us analyze and understand how you use this website. With data quality in OTC typically much lower, MiFID II marks the start of a concentrated effort to ensure OTC derivatives reporting data is more consistent and reliable for the future of finance.The introduction of OTC derivatives reporting sounds daunting, but it’s a great opportunity to make improvements to out-of-date processes and legacy technology at your firm. These cookies will be stored in your browser only with your consent. OTC derivatives regulatory regime. Though it’s likely to take the sector years to fully realise the changes of MiFID II, firms who do not make a dedicated move towards compliance face a real risk of falling behind.With MiFID II impacting everything from market structure to investor behaviour, there’s an incredible opportunity available for firms who can achieve compliance quickly.
Specifically, the SEC has:In addition, the policy statement discusses the timing of the expiration of the temporary relief the SEC previously granted to securities-based swaps market participants under the interim actions described above. The Federal Reserve System relies on the timely and accurate filing of report data by domestic and foreign financial institutions. Hands-on experience in derivatives reporting utilizing GTR preferred. By optimising your analytical capabilities, you can make the most of a market with higher quality and more consistent data, and refine your client service. The SEC has regulatory authority over “security-based swaps,” which are defined as swaps based on a single security or loan or a narrow-based group or index of securities (including any interest therein or the value thereof), or events relating to a single issuer or issuers of securities in a narrow-based security index. To complicate OTC derivatives reporting, however, it might not always be clear whether the instrument has been TOTV. This will bring transparency to OTC trading, which has traditionally been conducted by two parties without any supervision. One regulator Under MiFID II, there’s a focus specifically on trading derivatives on venue. The introduction of OTC derivatives reporting sounds daunting, but it’s a great opportunity to make improvements to out-of-date processes and legacy technology at your firm. You also have the option to opt-out of these cookies. OTC derivatives reporting market perspective Since 2012, global regulatory reform within the OTC derivatives markets has required the financial services firm to report OTC derivatives transactions to multiple regulators in order to improve transparency and enable regulators to monitor systemic risk in the derivatives market. The CFMA explicitly prohibited the SEC and CFTC from regulating the over-the-counter (OTC) swaps markets, but provided the SEC with antifraud authority over “security-based swap agreements,” such as credit default swaps. The code will primarily feature the country the company is based in and a random computer-generated complex formula, which prevents counterfeiting and forgery – another key part in regulators’ fight against market abuse.To be compliant with reporting measures, firms are now required to publish the details of their trades to an Approved Publication Arrangement (APA).
The Amendment Ordinance provides a regulatory framework for the OTC derivatives market in Hong Kong. Applies to: OTC Counterparties , Dealing in Capital Markets Products , Product Financing , Providing Custodial Services , Corporate Finance Advisory , Licensed Fund Management Company , REIT Management , Approved CIS Trustee.
The agreement has also been drafted with a view to ensuring these terms remain effective post-Brexit. This category only includes cookies that ensures basic functionalities and security features of the website.
For example, it’s hard to know whether than OTC derivative is TOTV when it doesn’t have an issuer and it’s less standardised.There are several challenges that financial firms face under new OTC derivatives reporting measures.The greatest issue is the enormous amount of documentation required under MiFID II.