On 22 July 2009, the Committee of European Securities Regulators (CESR) published a Consultation Paper on Classification and identification of OTC (over the counter) derivative instruments for the purpose of the exchange of transaction reports amongst CESR Members.

To detect market abuse, Competent Authorities (CAs) in the European Economic Area (EEA) are empowered by the Markets in Financial Instruments Directive (MiFID) to obtain reports on transactions on instruments admitted to trading on regulated markets. There is, however, a range of OTC instruments that mirrors such instruments which can be used for the purpose of market abuse, but not all CAs have extended their information gathering requirements to cover them.

A computerised system, the Transaction Reporting Exchange Mechanism (TREM), to facilitate the exchange of reports of transactions on regulated markets between CESR members, was built and implemented in November 2007. CESR now wishes to broaden the scope of TREM so as to include a number of OTC instruments. The purpose of this consultation is to define the framework for the enhanced exchange of information that would result, and specifically to identify which OTC instruments should be included.

The proposed approach included:

  • Options
  • Warrants
  • Futures
  • Contract for Difference and Total Returns Swap
  • Spreadbets
  • Swaps (except CfDs, TRS and CDS)
  • Credit Default Swap
  • Complex Derivatives

The “complex derivatives” label has been included in order to incorporate those derivatives that would otherwise not fall into a plain-vanilla category.

The consultation also included proposals for standardizing information to facilitate its exchange between CESR members’ different computer systems.

The consultation closes on 1 October 2009.

View Classification and identification of OTC derivative instruments for the purpose of the exchange of transaction reports amongst CESR Members, 22 July 2009