Point Nine Trade/Transaction Reporting

1. Point Nine
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Strictly private and confidential
Post Trade Excellency

2. Point Nine
Introducing Point Nine
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• Founded in 2002, Point Nine is one of the industry leaders in post trade execution,
operation, processing and reporting.
• We collaborate with both buy and sell side financial firms and corporates to help
them meet the ever-expanding challenges of post-trade processing.
• Circle, our in-house proprietary technology, provides a real-time solution to all our
customers and their trading relationships.

3. Point Nine
EMIR – What is it about? (1)
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• In the wake of the global financial crisis the G20 states agreed to subject the financial marketsto extensive regulation serving stabilization
and transparency. In particular, it was intended to ensure supervision of over-the-counter (“OTC”) trading of derivatives(“OTC
derivatives”) which were considered to have played a central role in causing the financial crisis.
• In order to achieve this objective, the “European Market Infrastructure Regulation“ (“EMIR“) entered into force on 16August 2012 within
the European Union (“EU“).As a regulation, EMIR is directly applicable in all member states.
• However, most of EMIR’sprovisions were still inapplicable without the supplementaryRegulatoryTechnical Standards(“RTS“) issued by
the EU-Commission in the form of Delegated Regulations. The first RTS entered into force on 15 March 2013, after being adopted by the
EU-Commission in December 2012 and being approved by the European Parliament and Council.
• In addition to the RTS the EU-Commission issued the Implementing Technical Standards (“ITS“) in the form of Commission Implementing
Regulations, which entered into force on 10 January2013.
• However, as to now, onlya part of the RTS and ITS envisaged for EMIR entered into force.
EMIR, including the corresponding additional regulations and the national provisions, is intended to reduce the
risks – in particular, counterpartycredit risks and systemic risks – and to increase transparency and security in
OTC derivatives markets.

4. Point Nine
EMIR – What is it about? (2)
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► When analysing EMIR’s consequences and its implementation, the complicated connections and
interactions with other regulations must be considered as well.
► By timely detection of interfaces with other regulations it is possible to raise significant synergetic potentials.
l EMIR is a key elementof the European reform-agenda
to establish a safe, healthy and transparentas well as
responsible financial system,which “serves the real
economy and benefits society as a whole”.
l EMIR also implements requirements of the G20 to
improve market transparency and stability.
l In order to achieve these objectives,the legislators in the
G20 areas issued various regulations, which
complement and partially overlap each other.
EMIR EMIR in the context of other regulatory projects
SFA
Singapore
FIEA
Japan
Dodd-
Frank
Act
EMIRMiFIR
MiFID2
REMIT
CRD IV
MAD/
MAR
FInfraG
CH

5. Point Nine
EMIR – What is it about? (3)
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EMIR
MiFIR MiFID/Mi
FID2
Derivatives
trading
l Reporting obligation for all derivatives
l Clearing obligation for OTC derivatives
l Risk-mitigation techniques for non-cleared OTC
derivatives.
l Obligation to use certain trading
venues for counterparties subjectto
the clearing obligation
l Clearing obligation for derivatives
traded on regulated markets
In addition and complementary to EMIR, especially the Markets in Financial Instruments Directive (“MiFID“), currently being fundamentally revised (“MiFID2“) and
supplemented by the Markets in Financial Instruments Regulation (“MiFIR“), also serves the objective of an extensive regulation of derivatives trading. Hereby, the
EMIR provisions on clearing obligations, in particular for OTC derivatives, are supplemented by, e.g., trading obligations in regulated markets and clearing
obligations for derivatives traded on regulated markets.
The complex– and not alwaysunambiguous – connections and interactions between those regulations must
also be taken into account.

6. Point Nine
EMIR – What is it about? (4)
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Regulatory
Technical
Standards
(RTS)
EMIR
Implementing
Technical
Standards
(ITS)
Other
• FAQ (ESMA/EU-Commission/NCAs)
• Basel-/IOSCO-FSB
l EMIR is a regulation,and thus directly applicable in all EU member states. However,with many regulatory issues EMIR
confines itself to only laying outgeneral framework principles.
l The Commission Implementing Regulations (ITS) and Regulatory Technical Standards (RTS) which have been or will be adopted
serve to further specify and clarify the provisions ofEMIR.
l Several other publications by ESMA and other institutions can be used for the further comprehension and interpretation ofthe
provisions of EMIR and the ITS / RTS.
EU Countries National Laws and
Regulations

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EMIR – Who is affected
In general, EMIR affects all market participants involved in derivatives trading (from the first
derivative) and provides extensive requirements for them. Some of the requirements provided by
EMIR are applicable to market participants, even if they do not provide financial services. In this
regard the regulation distinguishes between financial and non-financial counterparties.
All other undertakings involved in derivatives
trading, e.g.
l Energy suppliers
l Industrial undertakings
l Corporates
l Investment firms
l Credit institutions
l Insurance undertakings
l Assurance undertakings
l Reinsurance undertakings
l UCITS and, where relevant, their
management companies
l Institutions for occupational retirement
provision
l Alternative investment funds
Financial Counterparties
With EMIR now even undertakings
operating in the real economy are directly
affected by a financial market regulation
Non-financial Counterparties

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EMIR – What has to be done? (1)
Not or not fully complying with EMIR can result – among other possible sanctions – in substantial fines.
of all derivative
contracts (whether
traded on regulated
markets or OTC) to
trade repositories
Reporting
of standardised OTC
derivative contracts
through central
counterparties
Clearing
for OTC derivative
contracts not subject to
the clearing obligation
Risk-mitigation
Annual external audit of compliance with the EMIR provisions
EMIR-Audit

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EMIR – What has to be done? (2)
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l The market participants concerned are subject
to certain reporting obligations and have to
provide comprehensive information on
derivative contracts entered into by them, as
well as respective modifications,to central
trade repositories.
l Compliance with the reporting obligation
requires the clarification ofthe nature and
scope of the reporting obligation as well as
the processing of the required data.
The reporting obligation
entered into force on
12 February 2014
Challenge Essential fields of action
Processing and documentation
l Documentation of the system’s suitability for complete and correct reports
l Documentation of reporting the existing derivatives
l Documentation of the reports
Adaption of processes and systems
l Adaptation / amendment of the required data in the systems
l Draft of the extraction and format of the reporting data
l Coordinating the data with the counterparty
l Testing of reporting with the register
l Implementation of a troubleshooting procedure
l Storage of the transaction data
Choice of a trade repository
l Analysis of services and costs of different trade repositories
l Decision and signing of contract
l Detailed analysis of required documentation
l Coordination of formatting and procedures for the reporting
l Clarification of data fields, which need to match (tolerance limit)
Determination of the data subject to the reporting obligation
l Analysis of the position-keeping systems
l Identification of relevant data
l Back-loading
l Compilation of existing derivative contracts
l Application for a Legal Entity Identifier (“LEI“) for every unit subject to reporting
l Agreement on a Unique Trade Identifier (“UTI“) with the counterparty
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Nature of the reports
l Decision about reporting unit (centralised / decentralised)
l Possible delegation of the reporting obligation (analysis of existing master agreements and,
where necessary, adaptation, entering of new contracts).
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EMIR – What has to be done? (3)
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- Purpose: Reducing counterparty credit risk
through central clearing of OTC derivatives.
- In general, all OTC derivative contracts where both
parties are subject to a clearing obligation, have to
be cleared.
- Financial counterparties have to clear all their
standardized OTC derivative contracts through a
Central Counterparty (“CCP“).
- Non-financial counterparties are obliged to clear
all their standardized OTC derivative contracts
through a CCP as soon as their positions in OTC
derivative contracts exceed a determined clearing
threshold. Furthermore, non-financial
counterparties are obliged to monitor their OTC
derivative positions with regard to a possible
excess of the clearing threshold.
- In order to detect a possible excess of the clearing
threshold, all derivative contracts held within the
counterparties’ group have to be evaluated.
Clearing
l Decision for one (or several) CCP(s)
l Direct or indirect membership of a CCP
l Drafting of contracts
Exemptions
l EMIR-group / intra-group transactions
o Determination of the group
o Group companies in third countries
l Derivative contractsobjectively reducing risks
o Determination of risk-reducing derivative contracts
o Proof of the hedging purpose and the respective suitability
o Contractualadjustments,where necessary
o Taking EMIR into account, when concluding new derivatives
Clearing threshold
l Status as financialor non-financialcounterparty
l Complete, group-wide surveyand classification of derivatives
l Demarcation between OTC and exchange tradedderivatives
l Method for determination of the notional amount
l Determination of the clearing threshold (optionally based on alternative
scenarios)
l Monitoring of the clearing threshold
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Challenge Essential fields of action

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EMIR – What has to be done? (4)
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All counterpartiesthat enter into OTC derivative contracts
not cleared by a CCP, have to ensure that adequate
procedures and arrangementsare in place to measure,
monitor and mitigate operationalrisk and counterparty
credit risk.
These risk-mitigation techniquesinclude:
l Timely confirmation of the derivative contracts’terms;
l Implementation of suitable dispute resolution
procedures;
l Valuation of outstanding contracts;
l Timely, accurate and appropriately segregated
exchange of collateral;
l Performance of a portfolioreconciliationwithin
certain time frames (depending on the number of OTC
derivative contracts); and
l Regular analysis of the possibility to conduct a
portfoliocompression (starting at a certain number of
outstanding contracts).
Challenge Essential fields of action
Processing and documentation
l Proof of a risk management for operative and default risks that is appropriate for the volume of
derivative transactions
l Proof of timely and correct confirmations
l Proof of regular and complete portfolio reconciliation
l Documentation of explanation for concluding that a portfolio compression exercise is not
appropriate
Adjustingsystemsand procedures
l Risk- and collateral-management
l Implementation of risk measurement, -monitoring and -mitigation techniques
l Implementation of timely confirmation and, where necessary, draw up of confirmation procedure
l Implementation of procedures for the valuation of outstanding contracts, maturity control, data
import and routines for the portfolio reconciliation
l Definition and implementation of procedures and responsibilities for dispute resolution
Clarification ofrequirements
l Analysis of the current state of risk management
l Identification of necessary adjustments
l Assessing the appropriateness of a portfolio compression exercise
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Agreements with the counterparty
l Defining form and procedure of the timely confirmation
l Implementation of procedures for dispute resolution
l Agreement on time and procedure of portfolio reconciliation
l Clarification of procedures for portfolio compression
l Analysis and, where necessary, adjustment of contracts (i.e., ISDA documentation)
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12. Point Nine 12
EMIR – What has to be done? (5)
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Certain non-financial counterparties
have to obtain certification from an
external auditor once a year that
they implemented appropriate
systems to ensure compliance with
the EMIR requirements.
When?
The audit has to take place within nine months of the end of the fiscal
year. The audit obligation enters into force for the fiscalyear starting after
16 February 2013.
What?
An externalauditor has to certify that the counterpartyimplemented
appropriate systems to comply, in particular, with the following obligations
l Clearing obligation;
l Reporting obligation; and
l Risk-mitigation techniques.
Who?
Non-financialcounterparties, which are notsmall capital companies, do
not have any personal liable partner and during the past fiscalyear
entered either:
l OTC derivative contracts with a total notional volume of more than
EURO 100 million; or
l more than 100 OTC derivative contracts.
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Challenge Essential fields of action

13. Point Nine 13
EMIR – What has to be done? (6)
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14. Point Nine
Transaction Reporting Diagram
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Trade
Repository
Customer
Trading Platform
CRM
Legacy Systems
Central Database
CCP
Trading
Repository
ARM
RRM
Circle
Report Generation
Data
Mapping
Data
Fetching
Data
Validation
Controls
Notifications
Reconciliation
G.U.I
Circle
• Data Validation
• Report Generation
Automation
• Report Submission
Automation
• Download status messages
• Controls to manage reporting
activity
• Instrument IdentificationFor
EMIR Reporting
• Data Mapping fromPlatform
to Reports
• Data Enrichment
• UTI Generation
• Data Validation
• Pre-matching
• Reconciliation
• Exception Management
• UTI Sharing
• Controls

15. Point Nine
Get In Touch
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