Amundi, the European asset manager, has questioned the need for several trade repositories and suggested that a non-profit firm would be a sensible a solution.
The fund manager responded to the European Securities and Markets Authority’s consultation on proposed guidelines for the transfer of data between trade repositories, which ended last month. Amundi is merging with rival Pioneer and on the completion of the deal assets under management will reach approximately €1.3 trillion.
Trade repositories for derivatives reporting were authorised in the EU in 2013 under Emir, the central clearing regulations, and there are currently six authorised trade repositories. In its response Amundi said it was dissatisfied with fragmentation amongst both market venues and trade repositories.
“We do insist that a global comprehensive view of the market is essential in order to properly assess risks at a macro level,” added Amundi. “It is a concern not only for regulators but also for asset managers who receive money from clients who want their assets to be protected against market disruptions.”
Amundi continued that the issue of data transfer between repositories should be examined not only when a client moves to a new repository or when Esma withdraws authorisation but also as part of the creation of a central trade repository that would concentrate all the data reported to the existing six. “We even question the interest of having several trade repositories and suggest that a not-for-profit organism would be a sensible solution,” added the response.
In addition Amundi said the European Securities and Markets Authority should focus on the scenario after the UK leaves the European Union, and what happens to the current repositories that will no longer be based in the EU.
“We also think that the scenario of a merger of trade repositories cannot be analysed as a simple withdrawal of one license and the continuation of the other one,” added Amundi. “If the merging entities are not in the same country and the absorbing one is based in a third country, a specific procedure should be determined.”
However Citadel said it agreed with Esma that it is important to ensure competition. Citadel said in its response that market participants should have meaningful choices regarding where trades are reported and be able to switch without facing significant hurdles such as unreasonable fees or operational workflow challenges.
“As a result, we commend Esma for proposing guidelines that are designed to increase competition and market resiliency by standardising the data transfer process,” added Citadel. “Ensuring a standardised and robust process for transferring data between trade repositories should be useful both in the normal course of business and during times of market stress.”
CME Group, which operates a trade repository in Europe authorised by Esma, said the transfer of client data has been an ongoing issue since the inception of Emir and it supports the initiative to create uniform guidelines.
“CME Group believes that an agreed approach to porting endorsed by Esma will help to remove barriers to customers wishing to move to a new trade repository that better serves their needs, particularly in terms of more competitive prices and a better service offering as acknowledged by Esma,” said the response.
The US exchange operator said that if a client has requested a transfer, they should not be charged, as this would harm competition. “The costs to the trade repository of porting one client are reasonable in the event that a client moves only the core data relating to outstanding positions (excluding lifecycle events) and we believe that this cost should therefore be absorbed by the trade repositories as a cost of servicing clients,” added the CME.
However, the CME said that when a repository is withdrawing its registration, there will be a substantial cost and operational burden for new repositories due to the the volume of data being transferred. The response said: ‘“We consider that it is reasonable that a new trade repository be entitled to require the old one to pay a cost-related amount for this, out of its capital reserves if necessary.”
The London Stock Exchange Group, which operates the UnaVista trade repository said competition has been impeded by the lack of standardised processes for switching.
“LSEG has historically been a strong supporter of the open access principle, now enshrined in MiFID II,” said the response. “We believe that customer’s choice and ability to switch providers has an overall positive impact, as it leads to lower trading prices, reduced spreads, faster and more resilient technology, and a fundamental rebalancing of the relationship between the providers of infrastructure and its users.”
