Reporting to Trade Repositories

The supervision of compliance with the reporting obligations lies entirely with the AFM. Apart from the above division of tasks, DNB does have access to the reports received by the AFM to the extent necessary for the performance of DNB's duties. DNB can also independently consult with a DNB-supervised financial company on questions related to reporting, including for OTC derivatives.

If you are going to enter into derivative contracts, you must:

• decide whether to do your own reporting or outsource it
• choose a Trade Repository for the reporting that you do yourself

Companies must apply for a Legal Entity Identifier (LEI) and renew it annually. Several important fields of transaction reporting must be reported based on a LEI code. This code is globally unique to the institution that has applied for the LEI.

Reporting obligation

The reporting obligation applies to all derivatives and every user thereof. This means that if you are a party to a derivative contract, you must report the contract to a Trade Repository. This applies regardless of whether this contract is traded on an exchange, MTF or over-the-counter and regardless of whether this contract is subject to the central clearing obligation or bilateral clearing requirements.

Both parties to a derivative contract must separately report the details of that contract and any amendment or termination thereof, each to a Trade Repository of their choice. The data must be reported no later than the working day following the execution of the transaction, amendment or settlement of the contract. Certain exceptions to the reporting obligation are possible in the case of intra-group transactions.

Trade Repositories

In total, there are currently 6 registered Trade Repositories in the EU:

• DTCC Data Repository (Ireland) Plc, established in Ireland
• Regis-TR, established in Luxembourg
• LSEG Regulatory Reporting B.V., established in the Netherlands
• Krajowy Depozyt Papierów Wartosciowych S.A. (KDPW), established in Poland.

Report yourself or outsource

You can choose to report yourself, or outsource. The following options are available:

• Each counterparty itself reports directly to the Trade Repository.
• The two counterparties agree that one of the other counterparties will assume both reporting obligations.
• One of the counterparties outsources the reporting obligation to a third party while the other counterparty itself reports.
• Both counterparties outsource their reporting obligation to various third parties.
• Both counterparties outsource their reporting obligation to the same third party, such as the CCP.
• For transactions involving both a financial and a non-financial counterparty, the financial counterparty will be responsible for both parties' reporting obligations. This concerns only small non-financial counterparties.
• If intra-group transactions take place and one of the parties is a non-financial party, the supervisor can be notified that an exception to the reporting obligation is being used. This possibility does not exist if the parent is a financial institution or is established in a third country.

Why this obligation?

There is currently no clear overview of how parties build up derivative positions. The above reporting obligation will change this. Trade Repositories should be accessible to ESMA, national competent (supervisory) authorities and relevant central banks. Regulators will thus get a better overview of counterparty risk and will be able to identify any problems, such as concentration of risk, at an early stage. In addition, the Trade Repositories provide the market with an overview of aggregate positions by class of derivatives.