Given the announcement by the Depository Trust & Clearing Corporation (DTCC) that it would be establishing a European-based trade data repository in the UK earlier this week, it was only a matter of time before another willing party decided to join the fray. The DTCC’s potential competition comes in the form of Trax platform operator Xtrakter, which has today stated that it is consulting its users, regulators and other market participants about whether it should develop its own European trade repository.
The subject of a European-based trade repository for the credit default swap (CDS) market has long been a bone of contention and a number of parties have spoken out about the desire for more than one repository. Others believe there should only be one global option to ensure data consistency across borders. The concern of those in favour of a single repository is that data may become too fragmented across multiple repositories and this would negate the benefit of establishing a repository in the first place. After all, regulators are seeking to have a more consolidated view of the markets globally.
On the face of it, Euroclear owned Xtrakter is in a fairly good position to provide such a service. It is involved in the derivatives market currently, is an approved reporting mechanism (ARM) under MiFID and already has a data repository as a result. It was also granted approval earlier this year by the Financial Services Authority (FSA) to be able to regulatory report using the new Alternative Instrument Identifiers (AII).
Moreover, due to its Euroclear owners it may seem like a more Continental European friendly option. A key consideration in the politically charged discussions that have gone by thus far.
Xtrakter is now seeking input from the market at large and will conduct consultation on the subject between 15 July and 15 September this year.