The Depository Trust & Clearing Corporation (DTCC) was the obvious candidate to provide trade repository services not just in Europe but throughout the world. After all, the DTCC had already built and been operating a trade repository for credit derivatives for the last six years.

COO: How long have you been working on a trade repository, and what makes you confident of success?

Sroka: KDPW_TR is part of The Central Securities Depository of Poland (KDPW_CSD), an institution present in the Polish capital market for 20 years. This equips us with considerable experience in serving financial market players, not only in Poland. We have developed communication channels and an IT infrastructure, put in place and frequently tested data security and business continuity procedures, and us a recognisable brand which ensures reliable, timely, safe and affordable services. On 2 November 2012, the Central Securities Depository of Poland launched the trade repository service (KDPW_TR) in response to the European Market Infrastructure Regulation (EMIR). 2013 was the year of preparation for registration with the European Securities and Markets Authority (ESMA) and building of the final solutions with regard to EMIR and other guidelines. On 7 November 2013 ESMA registered KDPW_TR, confirming that it fulfils all trade repository requirements under EMIR. The KDPW_TR was one of the first four such institutions to be registered in Europe.

COO: Who supplied your technology and was it completely ready to go live on 12 February 2014?

Sroka: Our trade repository service operates on in-house technology that was designed and tested by our IT team. We were completely ready for 12 February and have operated since that day without any problems.

COO: Which OTC and exchange-traded derivative asset classes are you supporting?

Sroka: All types of contracts subject to the reporting obligation may be reported to KDPW_TR, including equity derivatives, currency derivatives, credit derivatives, interest rate derivatives, commodity derivatives, and other derivatives.KDPW_TR is authorised to register all classes of derivative instruments transacted across the European Union (EU) both on regulated markets and in the OTC markets.

COO: How are you reconciling one-sided trades with other trade repositories and what links do you have with other trade repositories?

Sroka: The reconciliation process has been agreed by the trade repositories and all of them execute it in a uniform manner. First, the other counterparty is identified. Next, data is matched. In case of a divergence, the reporting members are notified in a message.

COO: Which technology vendors and middleware providers are you working with as partners or as application or service or connectivity providers?

Sroka: Most developers are Polish companies present on the local capital market, including Risco Software, Sygnity, Comarch, Bazy i Systemy Bankowe, Areto, and others. As for international institutions, our relations with Bloomberg are the most advanced.

COO: Which geographies do you intend to support?

Sroka: We are focused on EU countries.

COO: Which data delivery channels do you support?

Sroka: KDPW_TR uses proprietary XML messages.

COO: How would you describe the degree of readiness and the performance - in terms of delivering clean data to you - so far of fund managers, corporates, banks and brokers?

Sroka: All institutions are faced with a major reporting challenge. In our opinion, they are doing very well. Financial market players have managed without major problems. Nonfinancial entities, especially smaller companies, are doing somewhat less well.

COO: Please describe your fee schedule.

Sroka: Our fees include annual participation fees, and fees linked to the volume and type of registered data. The fee for reporting a trade in an exchange-traded contract is PLN 0.05 (c. €0.01) for each trade and for reporting a trade in a non-exchange-traded derivative contract PLN 0.15 (c. €0.03) per trade. The monthly fee for maintaining trade information in the trade repository is PLN 0.05 (c. €0.01) per active trade.

COO: Where are your clients obtaining Legal Entity Identifiers (LEIs), and how many have obtained them?

The maximum sum of fees for reporting trades and fees for maintaining trade information in KDPW_TR is PLN 250,000 a year (c. €60,000) for trades of one counterparty reported by one reporting participant. The cap applies only if a reporting participant has reported no more than 25 million trades of a counterparty within the year. The annual fee depends on the type of participation and ranges from PLN 2,000 (c. €480) to PLN 40,000 (c. €9,590).

COO: How would you describe the degree of readiness and the performance - in terms of delivering clean data to you - so far of fund managers, corporates, banks and brokers?

Sroka: All institutions are faced with a major reporting challenge. In our opinion, they are doing very well. Financial market players have managed without major problems. Non financial entities, especially smaller companies, are doing somewhat less well.

COO: How are you dealing with the lack of clear guidance on Unique Trade Identifiers (UTIs)?

Sroka: KDPW_CCP and the Polish Bank Association (ZBP) have proposed ad hoc solutions which enable reporting. Currently, the market should follow the Q&A published by ESMA on 11 February.

COO: How are you dealing with the lack of clear guidance on Unique Product Identifiers (UPIs)?

Sroka: The entire market realises the importance of the issue and everyone awaits the guidelines.

COO: Is your local regulator taking a relaxed attitude towards compliance with reporting obligations by fund managers, banks, brokers and corporates since 12 February 2014?

Sroka: Our regulator is in regular contact with ESMA and our trade repository. The regulator also realises the problems related to the reporting start-date. We have jointly organised meetings for market participants with the reporting obligation to communicate all necessary information as widely as possible.

COO: How would you describe your relationship with ESMA?

Sroka: We have good contacts with ESMA and our relations are definitely positive.

COO: Do you expect the trade repositories of Europe to consolidate over the next few years?

Sroka: At this stage it is hard to predict how the landscape of the trade repository market will change in the future. Six approved trade repositories are enough, in our opinion. There might be a consolidation processes in the future, and not only in the EU.

COO: What other regulatory reporting obligations do you support, such as the reporting obligations under the Alternative Investment Fund Managers Directive (AIFMD)?

Sroka: We support reporting requirements regarding EMIR.

COO: Do you make it possible for clients to delegate reporting to a third party? Do fund managers have to open a separate account for each fund or can they use a third party omnibus account?

Sroka: Naturally, it is possible, but the decision should be preceded by a business analysis, and every instance may have different applications and a different business case.

COO: Are you a Local Operating Unit (a pre-LOU)?

Sroka: According to a decision of the Regulatory Oversight Committee (ROC) on 27 December 2013, the Central Securities Depository of Poland (KDPW) has been awarded the pre-LOU status. As a result, identifiers assigned by KDPW in order to report data to trade repositories become pre-LEIs.On 19 August 2013, the Central Securities Depository of Poland was assigned the prefix (2594) necessary to assign LEIs.

COO:What are your unique competitive advantages?

Sroka: A policy of competitive pricing is only one factor attracting participants to the KDPW_TR. What is crucial to such entities is the security of collected and stored data on instruments and trade counterparties. KDPW has 20 years of experience in this regard and follows top security standards. Furthermore, KDPW has established secure and reliable channels of communication with financial institutions. Another advantage of the repository, which is part of KDPW, is its business continuity plan. Procedures are triggered in case of unexpected developments, including a back-up data centre, which guarantee the security of stored information. KDPW was the first player in the central and eastern European (CEE) region to open a trade repository, as early as 2 November 2012. It should be noted that we are approved by ESMA for registration of all types of contracts which are required to be reported so that financial institutions do not need to use the services of more than one repository.

COO: How do you expect the trade repositories, their users and regulatory attitudes to evolve over the next five years?

Sroka: At the current time, each jurisdiction has established its own trade repository requirements. In certain jurisdictions, there are even multiple trade repositories for the same asset class. As a result, industry participants need to build connectivity to various trade repositories according to their business models and preferences. Ideally, the financial industry would prefer to see the establishment of one global trade repository for each derivative asset class – interest rates, credit, equity, foreign exchange and commodities - where transactions could be reported under a common set of data standards. This would facilitate timely access by global regulators and create a single reference point for both financial derivatives players and their supervisors.