REGIS-TR – The trade

repository for OTC derivatives

7th Summit for an Enlarged Europe
Split – Croatia 12-13 May 2011
Agenda REGIS-TR
12-13 May 2011

1. REGIS-TR – responding to regulatory demand

n Market environment and changing regulatory framework
n Introduction to REGIS-TR – The European Trade Repository for
OTC derivatives

2. High-level product scope and functional offering

3. Product developments

2
 REGIS-TR

European Market Infrastructure Regulation (EMIR) – Draft proposal 12-13 May 2011

Proposed Key components in respect to trade repositories are:

European
Regulation n Risk: The risk mitigation goals impact financial and non-financial
(i.e. corporate) market participants

n Clearing: Clearing to be mandatory also for non-financial market

participants beyond a certain activity threshold

n Reporting: non-standardised, non-clearable contracts should be

electronically confirmed with an auditable monitoring process for all
participants – no threshold applies

n Timing: A reporting obligation for OTC derivatives positions no later than

trade date +1 to record and report contracts with ESMA-registered trade
repositories

n ESMA is to define the technical standards for reporting by June 2012

n The new regulations are to apply from end-2012

3
 REGIS-TR
Improving transparency in the OTC derivatives market 12-13 May 2011

Levels of involved parties

Information flows Regulatory requirements
n ESMA collects data via TRs and
Global institutions e.g. IOSCO, IMF, BIS
CCPs
n ESMA to define standards with
TRs/CCPs and market participants
Regulators/ Third country n ESMA coordinates with third
ESMA country authorities exchange of
authorities authority
data or reports to an international
institution

n All TRs and CCPs active in

Trade Trade EU/Eurozone need to be registered
Function of CCP N CCP M with ESMA
repository A repository B
trade repository

n Mandatory reporting trades of

market participants with legal HQ in
the EU/Eurozone
Market Market Market Market n All market participants’ report
Market participants / participant A participant B participant C participant D details (e.g. volume, name of
User of OTC derivatives counterparty) of OTC derivatives
Trades Trades trades to TRs or CCPs via an
identification/reference number
concept

4
Two European market infrastructures cooperate to provide a sophisticated REGIS-TR

trade repository responding to regulatory requirements 12-13 May 2011

50% 50%

n To be ESMA regulated and looking for compliance with non-European regulators across the globe
n Service covering all OTC derivative products (one-stop-shop) before regulation materialises
n Servicing all types of market participants and respective activity profiles in the OTC derivative space

n Shareholders:
n Two well known European Market Infrastructures
n Providing exchange trading, clearing, settlement and custody services
n European based (Luxembourg) entity with global reach
n Open governance structure
5
Agenda REGIS-TR
12-13 May 2011

1. REGIS-TR – responding to regulatory demand

2. High-level product scope and functional offering
n Core service offering
n Participation and account structure
n Access and connectivity
n Fee structure

3. Product developments

6
 REGIS-TR

Core service offering for all OTC derivative classes 12-13 May 2011

Registration n Full Registry Stamp

n Informative Stamp
Interest rates
and fixed-
income
Administration n Communication
n Matching Credit default
Equities
swaps
n Affirmation
All markets &
n Reconciliation all contracts
n Consolidation

Foreign
Reporting n Regulators Commodities
exchange
n Participants
n Markets

7
 REGIS-TR

System architecture and contingency measures 12-13 May 2011

Technical architecture:
§ Developed on BME’s mainframe IBM platform with a central database server using
DB2
§ Efficiency, high security and scalability

Contingency measures:
§ Use of existing BME’s mainframe also used for CSD function:
n Maximum back-up quality standards
§ Availability of two redundant locations with data centres and offices, with synchronous
data replication:
n Integrity of back-up data
§ Internet access = BME Internet infrastructure with high capacity bandwidth and
complete redundancy: connection with two different ISPs through two independent
nodes. All components duplicated
§ Tested every 6 months

8
 REGIS-TR

Flexible approach to access, participation and communication 12-13 May 2011

Flexible participation possibilities:

§ Direct participation, legally as well as technically & functionally
§ Direct participation, legally, but outsourcing the reporting activity to another participant
§ Indirect use of REGIS-TR via and existing participation

Flexible communication with REGIS-TR:

§ Manual input/queries with secured Internet access. Web access, exportable to CSV files
§ Mass upload/download of XML files through secured Internet access
§ Automatic transfer of XML files through a SWIFTNet FileAct

Flexible access/information exchange

§ XML reporting provided by “push” to respective supervisory authority
§ Web based access with “supervisor” profile defined for each supervisory authority providing:
§ Immediate full view of relevant entities’ positions exportable to CSV files
§ Pre-defined queries exportable to CSV files

9
 REGIS-TR
12-13 May 2011
Flexible fee structure allowing full fee predictability

Fee model structure (direct participants):

§ Flexible fee structure to suit the needs of all types of participants
§ Three different fee models established, for small, medium and large
volume participants
§ Full cost transparency and fee predictability before the introduction of a
transaction
§ Fee caps limiting maximum costs to participants
§ Family groups can benefit of increasing discounts and adapted fee caps

10
Agenda REGIS-TR
12-13 May 2011

1. REGIS-TR – responding to regulatory demand

2. High-level product scope and functional offering

3. Product developments
n Near-future product and service enhancements

11
Future developments REGIS-TR

Committed product release roadmap 12-13 May 2011

n Leveraging of BME IT department, with more than 200 professionals, specialised in

development, systems and communications and security in the business of market
infrastructures and financial services
n Developments jointly agreed with customer committee participants
n Development costs borne by REGIS-TR and recovered by usage fees
n No up-front investment risk for the industry – usage commitment necessary

Q4/ Q1/ Q2/ Q3/ Q4/ Q1/ Q2/ Q3/

2010 2011 2011 2011 2011 2012 2012 2012
Launch – Interest rate
derivatives ü
Release 2 – Forex
derivatives
Release 3 – Equities and
commodity derivatives
Release 4 – Credit
derivatives

12
 Future developments REGIS-TR

Parallel development of optional value-added services for the industry 12-13 May 2011

Value-added services
Transaction reporting: Benefits
§ Application as ARM under MiFiD Increased quality and consistency of
§ Offering of transaction reporting for OTC derivatives in data consolidated in one reporting
accordance with MiFiD II channel to regulators

Collateral management:
§ Existing international or domestic collateral pools for Increased efficiency of available
collateralisation of exposures in OTC derivatives collateral, freeing cash for other
activities

Exposure valuation:
§ Inclusion of pricing and valuation data:
Flexibility and means of validation of
§ Directly by the participant – bilateral exposure agreements
provided exposure calculation
§ Independent third-party exposure valuation (particularly for buy-side clients)

White-labelled trade repository services:

Increased coverage of global positions
§ Provision of REGIS-TR expertise to domestic repository without costly interoperability with
solutions – discussions ongoing in Americas, Africa and external providers
Asia/Pacific
13
 Contact details
REGIS-TR
Thilo Derenbach
Deputy Managing Director

42, Avenue J.F. Kennedy

L - 1855 Luxembourg
Tel:+352 243 36481
Email: commercial@regis-tr.com