you're reading...
EMIR, Mifid

FIA review of regulatory reform in Europe

The Futures Industry Association(FIA) have just published this review of regulatory reform in Europe, covering rule sets such as EMIR, MiFID and others. Several topics are covered, many of which will be of interest to those in commodities and energy trading, including trade reporting and clearing. The document comes during the EMIR review being conducted by the European Commission.

On the trade reporting side, there are three recommendations of interest:

  • Exchange trade derivative reporting – it is suggested that this be abandoned since the requirement was not in the original G20 declaration, and the data could be more easily obtained from the exchanges themselves.
  • One sided reporting – move to having only one of the counterparties report the trade, as under Dodd Frank and other regimes. This would lower the burden of reporting for smaller counterparties. (It could be counter argued that once running properly, two sided reporting ensures a better quality of data, although this goal has yet to be attained).
  • One reporting regime – instead of diverse requirements across EMIR, MiFID REMIT etc., consolidate the reporting regime into one.

While all of these will be welcomed by most in the industry, some will be more practical than others.

The report also covers items such as clearing. In particular, there is a provision to make indirect clearing more attractive. The departure of clearing brokers would be detrimental to many. There are also many comments on third country synchronisation, which needs to be improved to make compliance easier.

Finally, there is once again mention of the issues that could be caused to the commodity and energy trading industries by loss of exemption under MiFID II (in the “trading strategies” section). The extension of CRD IV and mandatory clearing to most in the industry will not only increase capital costs, but also increase the relevance of the other recommendations in the paper.

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

One thought on “FIA review of regulatory reform in Europe

  1. Just to clarify, this is an FIA Europe white paper rather than an FIA (i.e. U.S.) one.

    Posted by Simon Puleston Jones | June 12, 2015, 9:34 pm

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s