Transaction Reporting Matters

Market Watch 40 (MW40), dedicated to transaction reporting issues, was published earlier this month, followed a few days later by FSA consultative guidance, which features two articles in MW40.

Back in May, EDX London was absorbed into Turquoise Global Holdings to form Turquoise Derivatives (EDX London – which was a Recognised Investment Exchange – is now in the process of being ‘De-Recognised’ whilst Turquoise Derivatives operates as an MTF). As a consequence, derivatives traded on Turquoise Derivatives are considered to be OTC for transaction reporting purposes and not via a regulated market. However, in recognition of potential significant technical changes that firms may have to undertake the FSA will allow firms to report transactions in derivatives admitted to trading on Turquoise Derivatives as if they were derivatives admitted to trading on a regulated market or, if so wished, they can be reported as OTC transactions. Please see the consultative guidance (the consultation period for this topic closes 22 September) for further details.

The second part of the guidance concerns the reporting of derivative transactions conducted through clearing platforms of derivative markets where reference data is not made available to the FSA and Authorised Reporting Mechanisms (ARMs). The publication gives the example of EUREX which does not provide alternative instrument identifier codes for flex derivative contracts. In these circumstances firms will be required to report such transactions using the equivalent ISIN for ISIN derivative markets or the Aii code for Aii derivative markets of the standardised derivatives contracts. It is proposed that this guidance becomes effective as of 31 March 2012. MW40 reminds us that before this implementationdate firms are not required to report transactions in derivatives conducted through clearing platforms of derivative markets where reference data is not available to the FSA and ARMS (but can do so if wished).

Elsewhere in MW40 there is finalised guidance for reporting derivative transactions through clearing platforms of derivative markets (see Regulatory Roundup 30 re the draft guidance published in May) which includes a change in implementation date of the guidance from 13 November 2011 to 31 March 2012. For the avoidance of doubt, this guidance is only in respect of transactions in derivatives conducted through clearing platformsof ISIN or Aii markets. In contrast, transactions executed on the order book of an ISIN derivative market are already reportable under SUP 17 whilst the ‘hard-go-live’ date of 13 November 2011 for Aii marketderivative transactions remains (see Regulatory Roundup 30). Finalised guidance for reporting transactions in Chi-X ccCFDs(see Regulatory Roundup 23) is also included.