Chair: Kiri Self CEO - TRG Post-Trade Services

Rapporteur; Darren Pearson, Principal Consultant, TRG Post-Trade Services

• Introduction by KS - Welcomed attendees to the first Regulation subject-group meeting.
• Thanks were expressed to SNR Denton for hosting the event.

Overview

• KS reiterated key messages from CAS WG launch meeting in February 2012

Meeting scope & objective

• To discuss & agree 3 actionable items to bring to the forthcoming initial plenary session on Wednesday 30 May, 2 -5pm at The London Stock Exchange, 10 Paternoster Square, EC4M 7LS. Register Here
• KS opened the floor for suggested discussion points & actionable items for the initial plenary session.
• The following is a list of issues & questions raised & discussed:
• MiFID or EMIR - The floor expressed the view that actionable items in this group would be betterserved by being time-line based per the roll-out of new regulations so; whichever regulation is due for introduction to the market first should be the focus of the group's discussions and actions.
• CCP Clearing - Valuations & Margin - The floor questioned which entity in the chain is to decide the 'official' mark for collateral calculations. This was raised as any disagreement has high-potential to delay the agreement-process with knock-on effects to downstream operational processes & therefore an increase in operational risk.
• It was agreed that collateral is a subject which needs to 'live' in both the Regulations and Market Infrastructure groups due to the clear cross-over/impact between process & regulation.
• CSD Regulations - It was felt that further clarity is needed in this area. In addition, it was expressed that the impact to retail banking should be included per interest from the floor.
• Legal Entity Identifiers (LEI) - the floor agreed that this subject should sit firmly within the Standards WG.
• Dodd-Frank - It was felt that further & deeper assessment of the impact of these regulations is required to assess the on-the-ground impact to firms & specifically, operational work-flows. It was acknowledged that there is wide-scope which can have impact to any firm's BAU regardless of where they sit in the market.
• Trade Repositories - The security of data reported was raised as a concern.
• Deciphering regulations vs. the impact to real-world BAU was raised as a concern. This was further acknowledged by a representative from an industry think-tank per feedback from clients
• Regulatory Arbitrage - It was mentioned that there are cross-border inconsistencies so likely to be winners & losers.
• The FSA split - What will be the impact to the market?

Summary

Initial actionable items for the subject-groups initial plenary meeting:

1/ MiFID III regulations shall be the groups focus with all discussions & agreed-actions time-lined per the rollout of the relevant regulation per the immediate impact to business.

2/ Basle III & the impact to the collateral-process.

3/ The break-up up the FSA (Financial Services Authority) and the impact of this change.

Other info: Proposals for Chair, Co-Chair or Rapporteur (Notary) will be announced at the forthcoming plenary session, Wednesday 30 May, 2 -5pm at The London Stock Exchange, 10 Paternoster Square, EC4M 7LS. Register Here

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This & other CAS WG subject-groups were created to gather discuss & agree proposals on wider-industry concerns. With this mind, the full-suite of subject-groups is as follows: Risk, Regulation, Standards & Market-Infrastructure

Kiri Self - CEO - Post-Trade Services, The Realization Group

Darren Pearson - Principal Consultant - Post-Trade Services, The Realization Group

Background:

The Regulation Subject Group is focused upon:

• Understanding new regulation, the impacts and cross-border inconsistencies
• Basel III and the treatment of collateral
• The European Markets Infrastructure Regulation (EMIR) and how it impacts both Over-the-Counter (OTC) Central Counterparty (CCP) clearing and Central Securities Depositories (CSD) regulation
• The Markets in Financial Instruments Directive revision (MiFID II) and its impact on internal infrastructures and the market at large
• The Financial Services Authority (FSA) break-up and how the new Bank of England regulator will change the City
• Dodd-Frank’s impact upon OTC derivatives CCP clearing
• Trade Repositories

The Group has Kiri Self of the Realisation Group as Acting Chair, and is open to nomination for this position.