The Dodd-Frank Act in the U.S. and EMIR in Europe introduced new data reporting requirements. Exchanges like CME Group have long been experts in processing and disseminating data to market participants. But regulatory reporting of swap data brings its own challenges. John Lothian News Editor-at-Large Doug Ashburn spoke with Jonathan Thursby, executive director and chief operating officer of data repository services at CME Group, about its repositories in the U.S. and Europe, and their philosophy and approach to repository services. Thursby says that CME Group views its repositories as a carry-on to its chief businesses of clearing and execution. “That is how it has always been at CME Group, and we see it that way moving forward as well,” he said.
A major portion of CME’s repository clients are using its services as an adjunct to clearing. When CME Clearing accepts a transaction for clearing it generally gets to elect the repository it reports to and naturally chooses CME. But the repository is not limited to straight-through processing from clearing clients, and has in fact been attracting new clients to its repository. As the new reporting regime begins in Europe, this will become a critical issue. EMIR, unlike Dodd-Frank, will require reporting of not just OTC derivatives, but exchange-traded derivatives as well.
Though processing and disseminating data to market participants is nothing new to exchanges, regulatory reporting is a bit different, and carries with it its own set of challenges. Thursby calls it a “warehouse of information for regulators to access versus a standard exchange.”
Under this utilitarian philosophy, according to Thursby, the goal is to decrease burdens on customers and lower operational risk, so we can “all move on with our primary businesses and let the regulators do their core function, which is monitor the markets.”