On 12th February 2014 derivatives market participants are required to be fully prepared to backload existing trades. Practical arrangements enabling this elaborate operation are just being worked out by clearing houses.
Exchange traded derivatives, which were entered into before 16th August 2012 and are still outstanding on 12th February 2014 have to be backloaded within 90 days of the reporting start date.
Furthermore, exchange traded derivatives, which were entered into before 16th August 2012 and outstanding on that date as well as entered into on or after 16th August 2012 and that are not outstanding on or after the reporting start date must be reported to a trade repository within 3 years.
Lifecycle events for those transactions don't have to be reported.
Pursuant to ECC (European Commodity Clearing AG) circular, ECC will report all positions that were open on 16th August 2012 (ECC has chosen Regis-TR as its trade repository), however, the following delegation options are considered currently by the ECC:
- when members delegate reporting they delegate trades, positions and backloading,
- when members delegate reporting they delegate only trades,
- when members delegate reporting they delegate trades as well as backloading.
The above choice has far-reaching practical consequences for derivatives' market participants as the trades and positions for which delegation of reporting will not be possible, will have to be reported by market participant itself.
It should be noted, for derivative contracts where ECC holds all reportable information, it offers a full delegation service without further need for interaction with the customer. Yet, for transactions where ECC does not hold all reportable information, it only offers a partial delegation service.
In this context the instance is the collateralization between ECC and the Clearing Member and its Non-Clearing Member, which is not known to ECC.
Another situation where, according to the ECC rules, trades have to be reported by the respective counterparties themselves are any previous bilateral trades that are replaced by the registered trade (including cancellation).
This is due to the fact that contracts registered for clearing are unaffected by any previous arrangements between the parties, including the question whether a trade has been previously concluded or whether said conclusion has been subject to clearing. Possibly existing OTC derivatives prior to novation are therefore not included in ECC's reporting offering.
More on derivatives reporting under EMIR regulatory regime see here.