EMIR REFIT – Enforcement of New Reporting Standards is now approaching
- Antonis Hadjicostas
- Dec 23, 2023
- 2 min read
Updated: Mar 9
On 12 February 2014, the European Market Infrastructure Regulation ("EMIR") Reporting took place for both over-the-counter ("OTC") and exchange-traded ("ETD") derivative contracts, as defined in Section C of Annex I of MiFID II. All such derivatives are subject to reporting requirements, irrespective of parties involved into the derivative transactions.
Overall, all derivative transactions, including conclusion, termination and modification shall be reported to the European Securities and Markets Authority ("ESMA") approved Trade Repositories ("TRs") within the following working date post the execution of the derivative transaction.
ESMA, as part of its mandate, has conducted a Regulatory Fitness and Performance Programme ("ReFIT") assessment on the area of EMIR, a long-lasting harmonization effort in collaboration with global regulators for improving the quality of data around EMIR derivatives reporting.
Following the ReFIT assessment, ESMA concluded that necessary amendments shall be made, in order to further address all the regulatory transparency issues as well as the continuous rising of compliance costs. In this respect, both Regulatory Technical Standards ("RTS") and the Implementing Technical Standards ("ITS") have been issued in October 2022 in the Official Journal of the European Union, introducing a 18-month implementation period, leading to the enforcement date of April 29th, 2024.
The EMIR ReFIT Chronicle
What the new EMIR ReFIT aims to achieve
Achieve a global harmonization on reporting standards.
Alignment amongst TRs, via the introduction of the ISO 20022 message format for reporting, reconciling and accessing of TR data.
Introduction of a new process for exchanging UTIs and performance of reconciliation amongst TRs.
The introduction of a unified process for UPI under ANNA DSB, a centralised harbor for UPIs, aiming to eliminate to the extent possible any misalignments as well as the number of reportable fields in the near future.
What the EMIR ReFIT key changes …
Significant increase of reportable fields – in particular, the total number of reportable fields will be increased from 129 to 203. A grace period of 6 months for entities to update their outstanding derivatives to the new reporting format is provided, ending on 29 October 2024.
New reporting mechanisms via XML schemas utilising ISO 20022 standards, abolishing the existing CSV reporting mechanism. The new reporting format will allow an easier porting between TRs within Europe.
Introduction of a unified process of UPI utilisation.
Provision by TRs to reporting entities of end-of-day information in order to provide support in terms of enhancing the quality of the EMIR reportable data.
Introduction of enhanced reconciliation checks between TRs. From 29 April 2024 onwards, 85 reportable fields will be subject to reconciliation checks, which will be increased by 66 additional fields, merely related to valuation fields, two years after the “go-live” date.
Financial Counterparties ("FCs") are required to established internal procedures and arrangements so as to ensure that in cases where an Non-Financial Counterparty ("NFC-") decides to stop performing its EMIR reporting on its own and hence delegated this responsibility to the FC, the latter would be in a position to start reporting on behalf of the NFC- within 10 working days from the NFC- notification date.
Conclusion
Upcoming EMIR ReFIT developments shall not be underestimated and concerned entities shall ensure that internal and external arrangements are properly and timely implemented with minimum interruption on their day-to-day operations by 29 April 2024.
