FinfraG: The Clock is Ticking
Fabian Klar, Relationship Manager at REGIS-TR, discusses the importance of our status as the first and only foreign Trade Repository for Switzerland
I am pleased to confirm that the Swiss financial regulator, FINMA, confirmed REGIS-TR’s status as the first and only foreign Trade Repository in Switzerland. This is very important for REGIS-TR as it enables us to offer a comprehensive FinfraG reporting service to market participants. To recap, the Swiss Financial Market Infrastructure Act, known by the short-hand “FinfraG”, came into force on 1 January 2016 and, amongst other things, it requires reporting of derivative transactions to a Trade Repository. The main rationale behind FinfraG is to align the Swiss regulatory framework with international standards, particularly EMIR.
It was always our stated intention to provide a solution for market participants, and we have been working towards this for more than a year. As a non-domestic Trade Repository we’ve been working closely with both ESMA and FINMA for recognition of this status. Now that this approval has been granted, we can confirm that we will be able to provide FinfraG reporting services right off the bat – an important point since it will allow reporting participants to have a choice of Trade Repository for the regulation from the start.
We have built a new TR framework fully compliant with FinfraG standards and regulatory requirements, granting operational separation from other services, data confidentiality and system robustness. On top of that, REGIS-TR´s know-how in post trading transparency requirements adds value to our system and quality to the outbound reports as per market demand. We are the second largest EMIR TR by volume and we already provide reporting solutions to more than 1,500 clients.
There is a natural expectation that a newly implemented regulatory regime will require adjustment. We have seen this with the iterative implementation of EMIR, as my colleague John talks about in his blog here. By offering reporting services right from the get-go, REGIS-TR will therefore be able to guide and support customers throughout this process.
The FinfraG reporting obligation will be introduced on a phased basis depending on counterparty classification, but the first market participants have to start reporting 6 months after the approval of the first TR, i.e. 2 October 2017. Thanks to our participation along with a domestic Swiss service provider, as with EMIR, Swiss participants should also benefit from the service levels, product innovation and appropriate pricing levels inherent with competitive pressure.
A number of our EMIR customers have a FinfraG reporting obligation. We ran workshops with well over 100 customers in Zurich and Geneva last summer and it was widely welcomed that they would be able to leverage a broadly similar infrastructure through REGIS-TR, same relationships and same connectivity for their FinfraG and EMIR reporting. Of course, there are differences between the two which will need to be overcome. Unlike EMIR, FinfraG is single sided reporting based on a cascading principle. Market participants will have to implement rules into their systems to determine which trades they need to report and which they will need to suppress. However, being able to use the same TR for both regulations will naturally help participants achieve some operational synergies.
We’ll continue to support our participants with comprehensive reporting guides and with our free test environment and we have the benefit of already holding multi-jurisdictional status for EMIR reporting. We’re well familiar with the key issues in the reporting landscape and cognizant of the work being undertaken, not only at EU but at global level, to develop common standards and data elements. Our experience in this space can be a real asset to all actors in the Swiss regulatory reporting lifecycle.
With the TRs now announced, the clock is ticking! If you have a FinfraG reporting obligation you will need to start looking for a service provider soon. In this context, we're happy to also let you know that we're rolling out an updated version of our FinfraG reporting test environment as of 10 April, which you can access free of charge. For more information on the services we’ll be providing to help you cover this requirement, check out our website. You can also contact your relationship manager for further details, or get in touch via firstname.lastname@example.org.
Fabian Klar is a Relationship Manager at Clearstream Banking S.A. and is responsible for institutional client relations across Europe.
He is one of the lead Relationship Managers for REGIS-TR, with expertise in the regulatory reporting space built up since EMIR reporting went live.
He is also key relationship manager for a number of REGIS-TR clients, including a number of Tier 1 European Banks.