LONDON (Reuters) - The European Union's markets watchdog has asked the bloc for an urgent definition of derivatives, two days after mandatory reporting of the financial contracts began.
The European Securities and Markets Authority (ESMA) said there is no common pan-EU definition for some foreign exchange and physically settled commodity derivatives, making it difficult to apply the bloc's new reporting rules.
In a letter to the European Commission and made available to the press on Friday, ESMA said a measure needed to be adopted urgently to clarify the definitions.
Until that is done, national regulators will not have to require users of the foreign exchange forward contracts and physically settled commodity forwards to report those trades.
The aim of reporting is to give regulators a snapshot of where risks and exposures lie if one side of a trade goes bust.
ESMA's intervention comes after an already shaky start as some market participants were not ready to report.
(Reporting by Huw Jones; editing by Tom Pfeiffer)