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.