A number of firms that have applied to the European Securities and Markets Authority to operate a swap data repository – or SDR - have had their applications returned to them by the European superregulator and may not be operational until November at the earliest. The original deadline requires market participants to report trades in interest rate swaps, credit default swaps and listed derivatives that are based on these instruments by September 23. The second phase, scheduled for January 1, 2014, includes all other derivatives, including foreign exchange, commodities and equity-based products.
Under European derivatives reform – enacted via the European Market Infrastructure Regulation – ESMA has oversight for SDRs, which are required to collect and store data on OTC derivatives trades. Their creation is a key pillar of G20 plans to improve transparency and reduce systemic risk in the swaps market. The reporting obligations apply to listed derivatives as well as privately-negotiated trades that will migrate onto exchange-like platforms and pass through clearing houses under the European Market Infrastructure Regulation.
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