Sapient Global Markets has published a new report examining the implementation and ongoing operational costs associated with over-the-counter derivatives trade reporting.
The report scrutinises firms’ expenditure to the meet the Dodd Frank and European Market Infrastructure Regulation (EMIR) compliance deadlines and the ongoing costs associated with supporting and amending reporting systems.
It also claims to demonstrate how the piecemeal and siloed nature of many implementations has resulted in a “lack of flexibility and extensibility” to meet future requirements.
The report examines the total cost of ownership of trade reporting, based on implementation cost, IT and infrastructure expenditure, operations and support staff, and repository fees.
It also highlights ongoing issues related to the current state of supporting trade reporting, noting why many firms are re-examining their strategies and internal infrastructures.
This includes difficulties achieving cross-jurisdiction compliance, poor data quality and siloed systems creating risk and cost.
“With many challenges surrounding trade reporting, the question we often hear is whether participants can afford to continue with their current approach,” said Randall Orbon, senior vice president at Sapient Global Markets.
“It is apparent, given the amounts already invested, that building, re-building and re-engineering current systems is not a viable option for what is a highly commoditised function.”
“Now that several major deadlines have passed, many organizations are looking for alternative ways to lower their total cost of ownership without compromising reporting quality or compliance.”
Orbon has also claimed that there is likely to be a shift among market participants toward alternatives, such as managed or cloud-based services, that are designed to reduce the cost and complexity of trade reporting.
