REGIS-TR – the Trade Repository for OTC Derivatives

Oct 2011 – AMEDA Meeting

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REGIS-TR

Oct 2011

1. Regulation in the making – European Perspective

2. Regulation driving structural changes in the industry

3. Trade Repository Offering – REGIS-TR

Agenda

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REGIS-TR

Oct 2011European Market Infrastructure Regulation – Draft Proposal

Proposed European Regulation

Key components in respect to trade repositories are: The risk mitigation goals impact financial and non-financial (i.e.

corporate) market participants

Clearing: Clearing to be mandatory also for non-financial market participants beyond a certain activity threshold

Reporting: non-standardised, non-clearable contracts should be electronically confirmed with an auditable monitoring process for all participants – no threshold applies

Timing: A reporting obligation for OTC derivatives positions no later than trade date plus 1 to record and report contracts with ESMA-registered trade repositories

Live contracts are to be “backloaded” into trade repositories before regulation materialises

ESMA to define the technical standards for reporting by June 2012

The new regulations apply from end-2012

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REGIS-TR

Oct 2011

1. Regulation in the making – European Perspective

2. Regulation driving structural changes in the industry

3. Trade Repository Offering – REGIS-TR

Agenda

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REGIS-TR

Oct 2011

Trades

Mandatory reporting trades of market participants with legal HQ in the EU/Eurozone

All market participants’ report details (e.g. volume, name of counterparty) of OTC derivatives trades to TRs or CCPs via an identification/reference number concept

Improving transparency in the OTC derivatives market

Trade repository A

Trades

Regulators/

authorities

Function of

trade repository

Market participants / User of OTC derivatives

CCP NTrade repository

BCCP M

Market participant A

ESMA collects data via TRs and CCPs

ESMA to define standards with TRs/CCPs and market participants

ESMA coordinates with third country authorities exchange of data or reports to an international institution

Levels of involved parties

ESMA

All TRs and CCPs active in EU/Eurozone need to be registered with ESMA

Information flows Regulatory requirements

Third country authority

e.g. IOSCO, IMF, BISGlobal institutions

Market participant B

Market participant C

Market participant D

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REGIS-TR

Oct 2011

SWAP USERS/TRADERS

SWAP USERS/TRADERS

Hundreds of new electronic connections between dealers and

clients

SWAP EXEC FACILITY

CLEARING HOUSE

TRADE REPOSITORY

Connection to between 20 – 30

execution facilities

Over 15 CCPS looking to capture OTC derivatives

Between 3 and max. 6 TRs will exist globally

Key issues for the market participants: Timely processing of electronically available position data Selection of provider(s) of choice Selection of reliable partners and establishment of reliable connectivity

Connectivity Environment

Post-implementation of global OTC Derivative Regulation

Source: Own research, TABB Group Research August 2011

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REGIS-TR

Oct 2011Participants choice in a changing environment

Primary questions to

be addressed

Direct vs. indirect interaction with Execution Facilities, Clearing Houses and/or Trade Repositories

One partner vs. divers network (multiple Facilities, CCPs and TRs)

Service Scope of provider - flexible offering and value-added services

What jurisdictions are involved when entering into new agreements/where is my data held

Can the regulatory change help increase internal operational efficiency and/or reduce existing legal risks

Project launch and project budgeting

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REGIS-TR

Oct 2011

1. Regulation in the making – European Perspective

2. Regulation driving structural changes in the industry

3. Trade Repository Offering – REGIS-TR

Agenda

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REGIS-TR

Oct 2011

50% 50%

Two European market infrastructures cooperate to provide a sophisticated trade repository responding to regulatory requirements

Shareholders: Well known European Market Infrastructures – reputation is top priority Providing exchange trading, clearing, settlement and custody services – demonstrating reliability and

security Allowing for added-value services well beyond regulatory compliance – collateral management,

matching, third-country domestic solutions…

European based (Luxembourg) entity with global reach Open governance structure

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REGIS-TR

Oct 2011

Full Registry Stamp Informative Stamp

Registration

Communication Matching Affirmation Reconciliation Consolidation

Administration

Regulators Participants Markets

Reporting

Core service offering for all OTC derivative classes

Any marketAny asset class

Interest rates and fixed-

income

Equities

Foreign exchange

Credit defaultswaps

Commodities

Bespokeproducts

Thanks to its «flexible option» registration, REGIS-

TR allows reporting of bespoke products

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REGIS-TR

Oct 2011Future developmentsParallel development of optional value-added services for the industry

Value-added Services

Exposure Management:

Existing international or domestic collateral pools for collateralisation of exposures in OTC derivatives

Exposure valuation:

Inclusion of pricing and valuation data: Directly by the participant – bilateral exposure

agreements

Independent third-party exposure valuation

White-labelled Trade Repository services:

Provision of REGIS-TR expertise to domestic repository solutions – discussions ongoing in Americas, Africa and Asia/Pacific

Benefits

Increased efficiency of available collateral, freeing cash for other activities

Flexibility and means of validation of provided exposure calculation (particularly for buy-side clients)

Increased coverage of global positions without costly interoperability with external providers

*Authorised Reporting Mechanism

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REGIS-TR

Oct 2011

Customer of REGIS-TR

(Domestic Trade Repository)

BME HARDWARE INFRASTRUCTURE

EUROPEAN TRADE REPOSITORY

Domestic TRADE REPOSITORY

Customer of REGIS-TR

(European Trade Repository)

Supervisor of REGIS-TR

(Domestic Trade Repository)

Supervisor of REGIS-TR

(European Trade Repository)

OperationsHelpdesk

Global response - based on our White-labelling Concept

Solution for a global architecture – REGIS-TR technical solution

OperationsHelpdesk

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REGIS-TR

Timing of delivery and roll-out Continues evolution of the service under the involvement of the customer base

Dedicated FTE resources serving customers and developing the service offering:

4 project managers and 7 IT specialists dedicated full-time to the development and enhancement of the product and service portfolio

4 full-time client relations managers (RM) dedicated to customer support, additional leveraging of the Clearstream UK Office and its relationship managers (team of 8) dedicated to supporting UK based participants as well as the remaining sales forces of Clearstream and Iberclear in Luxembourg, Frankfurt and Madrid (further 25 RMs)

Helpdesk of 7 customer service employees fully-dedicated to the operations and helpdesk activities

Further resources can be leveraged, if needed, from the shareholders to support during peak times

Product roll-out*

Nov 2011 Dec 2011 June 2012

ongoingCustomer Consult.

July 2011 Mar 2012

Functional

Enhance.

ongoing

Equities/Commodities CDS**FX & White-labeling

Nov 2012

Exposure Mgmt.

* Transaction reporting foreseen for 2013 – depending on MiFID Reviw developments

** CDS repository services possibly earlier, latest in November 2012

Oct 2011

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REGIS-TR

Contact Details

REGIS-TR

42, Avenue J.F. KennedyL - 1855 LuxembourgTel: +352 243 36481

Email: tderenbach@regis-tr.com