Opinion & Analysis

Where it makes commercial sense, fund managers are electing to report their OTC and exchange-traded derivatives directly to the trade repositories. In theory, those fund managers looking to delegate the reporting have several choices: their clearing broker, their fund administrator or a technology or service vendor.

FX Transaction Monitoring

Custodian banks provide a number of services to their pension fund and asset management clients in addition to the safekeeping of assets. One such service, which has accrued significant controversy in recent years, has been the execution of FX transactions. Execution of FX transactions has historically been a lucrative business line for custodian banks, many of whom are now struggling to protect their revenue sources in the current economic environment.

The introduction of derivative reporting under the European Market Infrastructure Regulation (EMIR) has proved somewhat chaotic, but it is only a prelude to more extensive reporting to trade repositories under version two of the Markets in Financial Instruments Directive (MiFID II). Ironically, MiFID I is a source of the confused implementation of EMIR.

Regulators have given derivatives counterparties more time to back-load their existing swap portfolios into the trade repositories. However, even back-loading is bedevilled by unique identifiers and, in this case, the difficulty of agreeing and assigning them to transactions which took place in the past.

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