Managing cross-jurisdictional trade reporting represents a complex operational challenge for global firms that are required to report across several independent frameworks. Although global regulators are moving toward more harmonised reporting, there is currently no cohesive global framework. Firms must consider their approach to these unique reporting requirements as part of their strategic objectives for global trade.
Managing Compliance with the Major Reporting Regimes
Navigating cross-jurisdictional compliance requires a clear understanding of the key characteristics of the main reporting regimes:
- European Market Infrastructure Regulation (EMIR)
- Dodd-Frank Act (US)
- Securities Financing Transactions Regulation (SFTR)
- UK EMIR
European Market Infrastructure Regulation (EMIR)
The EU’s EMIR is defined by a dual-side reporting obligation, which means both counterparties must report the transaction to an authorised trade repository (TR). EMIR also mandates centralised clearing requirements and imposes strict risk mitigation measures for non-cleared trades.
Dodd-Frank Act (US)
In the US, the Dodd-Frank Act utilises a single-sided reporting model for swaps where only one counterparty, typically the “swap dealer”, is required to report the transaction. Dodd-Frank also stipulates the requirement for real-time dissemination of certain swap data and the use of Unique Swap Identifiers (USIs) for tracking.
Securities Financing Transactions Regulation (SFTR)
The EU’s SFTR has a specific scope and often deals with transactions that fall outside the reporting requirements of other regulations. SFTR focuses on repos, securities and commodities lending and margin lending activities. Firms must be careful to identify trades that are reportable under SFTR and fulfil the relevant reporting obligations, even if they are not required under EMIR.
UK EMIR
In the post-Brexit regulatory landscape of the UK, the UK EMIR was created as a distinct regime governed by the Financial Conduct Authority (FCA). This divergence between the EU EMIR and the UK EMIR creates a dual compliance burden for UK firms, including mandating reporting to UK-registered TRs.
Challenges of Cross-Jurisdictional Trade Reporting for Firms
The differences between these regimes present several difficulties for firms reporting across multiple jurisdictions. As well as the practical challenges posed by different reporting frameworks, firms will also have to determine which jurisdiction’s rules apply to each trade based on their geographical operations when the location of the legal entity is different from the reporting branch. To manage this complexity, firms should avoid a siloed, regional approach to compliance and instead adopt a more holistic view of all global obligations. This will ensure that the strictest applicable requirements are adhered to, preventing gaps in reporting and ensuring compliance across all reporting frameworks. Firms that adopt a proactive approach will ultimately be more successful at navigating the complexities of cross-jurisdictional trade reporting. The key steps to manage this complexity include investing in modern RegTech solutions that can deliver a centralised reporting logic. By working with trusted partners that can deliver agile and responsive compliance solutions, firms can stay ahead of evolving regulations and ensure continuing compliance. Navigating EMIR, Dodd-Frank, SFTR, and UK EMIR simultaneously?
Contact Novatus Global to simplify your global reporting obligations and stay compliant across every jurisdiction.
