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EMIR

The approval process for TR inspections and its wider implications

See here for a case report by Allen and Overy on the JD Supra web site (and reproduced from http://www.practicallaw.com) about a UK high court judgement involving ESMA vs. DTCC. As background, the case itself was non contentious and was brought by ESMA in order to be authorised to carry out an inspection of the DTCC Trade Repository (who were not suspected of wrong doing). It is necessary under UK law for an application to be made to the High Court in order for an inspection to be carried out under Article 63 of EMIR. The judgement itself can be found here.

Aside from the notable point that TRs are being inspected, the reason the case is interesting is because it was the first time such a judgement has been made. In it, the judgement emphasises (via amending the draft order) the importance of maintaining the principle of “privileged information”, and that the inspection should not require DTCC to disclose any such information. This emphasis is important due to pressures that could be applied to waive such privileges.

In the world of energy, this case also will cause us to think about how the RRM inspection regime will work under REMIT. The RRM supervision regime, and rules, do not appear to be as strict or comprehensive as for EMIR TRs. Although RRMs do not actually store the data, there are also fewer constraints on matters such as pricing. RRMs need to “self attest” compliance with financial and technical security requirements, with an “audit” regime to back it up. It will be interesting to see how such audits will work.

About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on the regulation of the commodity, energy and financial markets. He has more than 23 years of experience in the financial, energy and commodity markets, covering regulatory compliance, credit, risk and financial technology. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy and Commodity Regulation. Before that, he founded Coherence, a consulting firm specializing in credit risk in commodity and energy trading as well as software product management. The credit practice ultimately became part of Sirius Solutions, where he was the Managing Director of Europe. He has also held management roles at KWI and Iris Financial, among other organizations. Mr. Handler holds a degree in computer science from Imperial College, University of London.

Discussion

2 thoughts on “The approval process for TR inspections and its wider implications

  1. Part of the RRM requirements is the Obligation to “keep a record of the information transmitted to the Agency for a period of at least 12 months from the date of Transmission” (Requirements for the registration of
    Registered Reporting Mechanisms (RRMs), p.20, 5.9). That said, a RRM must actually store the data and that is among others how the rather strict security compliance requirements are justified by ACER.

    Posted by Georg Beretits | May 20, 2015, 6:47 am
    • Yes, there are many requirements listed for RRMs, particularly around security etc. In the end though, unlike an EMIR TR, the RRM is not the ultimate destination for the data. In addition, wider aspects of the running of the RRM, such as pricing, are also not regulated.

      Posted by avivhandler | May 20, 2015, 7:00 am

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