What are the real impacts of CME closing down the TR business?


The surprise news that CME has closed its own trade repository activity in Europe and Australia as well as the activity of NEX Regulatory Reporting services, itself acquired little more than one year ago, creates a very difficult situation for many market participants which are currently heavily involved in the finalisation of their SFTR reporting requirements.

However, is this news really such a surprise? More than twelve months ago, we were still seeing white papers about SFTR from NEX Regulatory Reporting services. CME itself never really announced any such plans. Since that time, CME became very quiet about the plans of both entities. Almost no sales activity or any public statements have been seen since then. After ICE Trade Vault and Bloomberg stepped out of the TR business, there were only three players actively promoting their services in the Market: DTCC, REGIS-TR and UnaVista. The only other TR still in the game apart from the “Three Kings”, (themselves all part of globally active financial groups), is KDPW.

Although KDPW deserves our biggest respect for operating a TR with limited market share, it must be considered as niche TR for a very specific sector of the market, which was looking for a local solution.

However, what are the real effects of CME closing the TR chapter?

What is absolutely clear is that the market participants need to look for a new TR and a new reporting services solution vendor very quickly. To avoid the risk of a repeat situation in the future, this vendor should offer them multiple connections to TRs.

With wise foresight, about a year ago ESMA forced the TRs to establish an “Inter-TR portability protocol” which required the TRs to establish a common protocol to migrate data from one TR to another. For those TRs withdrawing their license, all historical as well as outstanding data must be migrated to a new TR. So, migration is not the “real” problem of this withdrawal of the activity although certainly an headache for the TRs. Nevertheless, the process will be quite complicated as the CME and NEX users will have to adapt their reporting formats and connectivity and it will not be the last time they have to go through this exercise. In 2022 at the latest, the EMIR format will be significantly changed again into an ISO 20022 XML format, which will again require massive efforts from the market participants.

An adapter to enable CME ETR and NRR clients to report in the same format they were used to will be available soon, with deltaconX doing the mapping into the target TR format. This specific adapter will be completed in a few weeks time, as we have already gone through this exercise in the past. However, certain implementations will be necessary with the introduction of the ISO 20022 XML format.

We at deltaconX support multiple reporting regimes with connectivity to various reporting channels (TRs, ARMs, APAs) by using our generic file format, which allows our clients to use the same files to fulfil their reporting obligations independently of the TRs, ARMs or APAs they have opted for.

Of course, we are not magicians, meaning that certain fields still need to be added depending on specific TR requirements. However, our clients would have to only do very modest changes rather than implementing completely new file formats and connectivity channels. All the rest is done by deltaconX to support its clients.

Also looking at the EMIR REFIT Consultation paper, we expect that certain fields like “Entity Responsible for Reporting” which is already included in our file format due to SFTR, can easily be reused for EMIR once the ISO 20022 regime is implemented.

To all the CME and NEX clients looking for a new provider, we can only advise you to be careful in your choice of entity, be it another TR or an intermediary, one that offers a wide degree of technical flexibility should this situation happen again. The entity should also be fit to meet the inevitable future new developments which will certainly arise from the various reporting regimes as they evolve.

If you want to learn more about our deltaconX regulatory platform, its capabilities and how we differentiate ourselves from other providers, please visit our website www.deltaconX.com and get in contact with us.

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