Deutsche Börse’s Response to CESR’s Consultation Paper Transaction Reporting on OTC Derivatives and Extension of the Scope of Transaction Reporting Obligations Ref.: CESR/10-809 Frankfurt / Main, 16 August 2010 Deutsche Börse Group Interest Representative Register ID: 20884001341-42 Deutsche Börse Group response to CESR consultation paper on Transaction Reporting on OTC Derivatives and Extension of the Scope of Transaction Reporting Obligations 1 Introductory remarks Deutsche Börse Group appreciates the opportunity to respond to CESR consultation on Transaction Reporting on OTC Derivatives and Extension of the Scope of Transaction Reporting Obligations. Deutsche Börse Group provides investors, financial institutions, and companies access to global capital markets and covers the entire process chain from securities and derivatives trading, clearing, settlement and custody, through to market data and the development and operation of electronic trading systems. Eurex, jointly owned by Deutsche Börse AG and SIX Swiss Exchange AG, is one of the world’s largest derivatives exchanges and the leading clearing house in Europe. It provides an extensive range of products, including some of the world’s most heavily traded derivative contracts. Eurex Clearing AG, a subsidiary of Eurex, provides clearing services for listed futures, options products as well as stocks and certain over-the-counter (OTC) markets. Its resilient and robust central counterparty clearing model has proven to be an important stabilizing factor in the global financial markets during recent times. Eurex Clearing sets industry leading standards with its realtime risk management and intraday margining. Market Data & Analytics business area provides services to clients that are subject to the transaction reporting obligation via Deutsche Börse’s transaction reporting system TRICE. Clearstream, a wholly owned subsidiary of Deutsche Börse, is a leading European supplier of post-trading services. Clearstream ensures that cash and securities are promptly and effectively delivered between trading parties as well as manages, safekeeps and administers the securities that it holds on behalf of its customers. Over 300,000 domestic and internationally traded bonds, equities and investment funds are currently deposited with Clearstream. On 31 May 2010, Clearstream announced that it was joining Bolsas y Mercados de Espana’s trade repository (TR) project providing reporting services for a wide range of OTC financial instruments. The initiative will contribute to achieving greater operational control and transparency in OTC derivatives. The new trade repository will serve all financial institutions as well as non-financial institutions and will deliver flexible participation levels that adapt to the diverse profiles and needs of all stakeholders and actors in the OTC derivatives market. Deutsche Börse Group response to CESR consultation paper on Transaction Reporting on OTC Derivatives and Extension of the Scope of Transaction Reporting Obligations 2 Comments We recognize the need of regulators and supervisors to ensure the stability and integrity of the financial system as a whole by utilizing supervisory tools such as transaction and position reporting. In this regard, we generally agree with the proposed outline by CESR in organising transaction and position reporting via Option 2 and extending the scope of transaction reporting obligation as proposed. The underlying guiding principles for transaction and position reporting should be to avoid any double reporting, neither by investment firms who are currently obliged to provide transaction reporting and the wider future scope of entities according to EMIR, nor by entities which already provide trade repository services, such as Central Counterparties (CCPs). It should be noted that the exercise of extending the scope of transaction reporting regime and implementing a position reporting regime is about effective monitoring of outstanding systemic risk in the financial market and in OTC derivatives markets in particular. Hence, from our perspective the underlying question is CCP-cleared or non-CCP-cleared rather than TR-reported or non-TR-reported. With this in mind, CESR may consider merits of the following roadmap: · Reporting mechanisms to report transactions in financial instruments admitted to trading on Regulated Markets are already in place and any duplication of reporting arrangements for this scope of instruments should be avoided. · It should be clear as well that a double reporting by investment firms cannot be identified by any service provider, so clear reporting behaviour at the source and clear regulation of the source of reporting is of essence. · For the CCP-cleared OTC derivatives transactions, the CCP already acts as a trade repository and provides the supervisors with all relevant data necessary to monitor the market. It should be avoided that the CCP duplicates the reporting onward to any trade repositories, as supervisors effectively already have the information for CCP- cleared trades from respective CCPs. · The remainder, i.e. non-CCP-cleared OTC trades, should be reported to TRs. Of course, as a matter of commercial servicing the TRs should be able to offer also position reporting services according to customers’ and supervisors’ needs. We believe that this roadmap would reduce any double reporting and enhance supervisory practices of regulators with least cost for the industry. Finally and as a general remark, as ESMA is not live yet and it may take some time for the new authority to be up and running, it would be very helpful to have more certainty as to how the regulators wish the new position reporting regime or the extended transaction reporting regime to look like in technical terms so that the industry can start to work on developing and providing solutions. Deutsche Börse Group response to CESR consultation paper on Transaction Reporting on OTC Derivatives and Extension of the Scope of Transaction Reporting Obligations 3 We hope that you have found these comments useful and remain at your disposal for further discussion. If you have any questions please do not hesitate to contact: Mathias Papenfuß Dr. Stefan Mai Member of CBF Executive Board Head of Section, Market Policy and European Public Affairs Clearstream Banking Frankfurt AG Deutsche Börse AG [email protected] [email protected] Sabina Salkic Market Policy and European Public Affairs Deutsche Börse AG [email protected] .