ISDA and several industry associations have today issued this statement advocating a global set of guidelines for trade reporting, in an attempt to unify rules across the globe. A key recommendation is that regulators adopt a “single sided” reporting model, that is one where only one side of the trade is obligated to report it to the regulator. The side that must report is determined by a set of hierarchical rules which often combines status  (.e.g “Financial counterparty” vs “Non financial counterparty”) as well as the type of deal for example the party that is the seller.

EMIR currently uses a double sided reporting regime, as does REMIT, where both parties to a trade must report it, using the same UTI (Unique Trade Identifier). The rationale for such an approach is to improve data quality. The ISDA statement questions whether this approach is successful and instead argues for the use of existing methods such as the trade confirmation as a quality gate on the data. Single sided reporting regimes include reporting under the Dodd Frank Act in the US, and in future under Finfrag in Switzerland.

The response from ESMA as part of the EMIR review last year recommended keeping double sided reporting. In order to reduce the burden on smaller counterparties, the review response suggested that if a “small non financial counterparty” (not to be confused with an NFC-) trades with a financial counterparty, the financial counterparty would be obligated to report the other side’s record as well. This is a form of “enforced delegated reporting”.

Delegated reporting occurs under a double sided reporting regime, when one side of a trade asks the other to report their half to the trade repository on their behalf. Under EMIR, such delegation does not relieve the delegating party from their obligation to report. The ISDA statement recommends against this rule as well, arguing that reporting should be the sole responsibility of one party.