Thomson Reuters reveals new timeline for Sef compliance

Thomson Reuters today unveils an official timeframe for preparing its suite of products for compliance with new regulations for over-the-counter derivatives, which will see a new global rulebook implemented for its conversational trading platform by the middle of next year.

"We are now setting out a clear timeline for our own regulatory compliance activities that will enable our customers to plan for the forthcoming regulatory changes. At a time of regulatory uncertainty we feel it is important to take a lead and help our customers navigate the maze," said Jas Singh, global head of treasury at Thomson Reuters in London.

Earlier this year Singh signalled the vendor's intention to make Thomson Reuters Dealing compliant with swap execution facility (Sef) rules by the fourth quarter. But according to officials at the firm, preparing the platforms for regulatory change has been a colossal effort and the middle-of-2012 timeline will still be well ahead of expected regulatory deadlines.

"This has been a really major focus for us ever since the Group of 20 first announced the proposed regulations in 2009. We run several trading platforms and we're responsible for supporting our customers' trade workflow, so understanding the rules and helping them prepare is crucially important," said Sarah Hayes, global head of strategy for sales and trading at Thomson Reuters in London.

According to Hayes, much of the effort in preparing for regulatory change has focused on Thomson Reuters Dealing because users of the conversational platform will have to meet strict new requirements if it is to qualify as a Sef. Once the new rulebook comes into force next year, clients will be able to see multiple quotes and route their orders through to central counterparties and trade repositories after execution, as demanded by regulation.

Thomson Reuters Matching will see less significant changes, said Hayes, as the platform already meets European criteria for multilateral trading facilities (MTFs), which are expected to be similar to those of a Sef. "Matching is already regulated today as an MTF so by and large, it is Sef-ready. There will still be small enhancements to make sure it meets the new requirements, as with all the platforms we offer," she said.

The announcement from Thomson Reuters coincides with the completion of a detailed survey of roughly 70 market participants earlier this year to gauge the extent of awareness and preparation for the impending regulations among the vendor's client base.

Although the full results of the survey have not been published, clearing has emerged as the primary focus among banks as details around workflow are still unclear, and clearing is intrinsically linked to the pricing of instruments, Thomson Reuters said. It also confirmed there is likely to be a shift away from single-bank platforms when the rules come into force.

"There is a general acceptance from banks that liquidity for instruments in scope will shift from single-bank portals to newly regulated Sefs, MTFs and organised trading facilities. The key challenges seen here by respondents are how banks will then differentiate themselves to customers and how buy-side firms will connect to multiple venues available," said Hayes.