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EMIR refit: get ahead of upcoming changes

  • August 16, 2022

By Joanne Salkeld at MarketAxess

The European Commission's regulatory fitness and performance programme (REFIT) is aimed at simplifying EU legislation and reducing any unnecessary regulatory burdens for citizens and businesses. However, this is set to change as part of the EMIR Refit - currently under consultation.

Data quality is the key concept behind the change - there are still a lot of issues with current EMIR reporting, with matching rates still not particularly high, despite the regulation going live in February 2014.

There are a number of proposed changes with further clarity still to come, but here we summarise 5 of the biggest proposed changes it is worth being aware of:

    • Volume changes to the reportable fields – As the regulator increases its scrutiny over data quality, the number of submittable fields is set to rise to 203, as opposed to 129. The new fields and tighter validation rules are intended to improve data quality.
    • Submitting your report in ISO 20022 XML format.
    • Changes to the delegated reporting model – Financial counterparties have an obligation to report on behalf of Non-Financial counterparties.
    • Reporting a Unique Product Identifier (UPI), bringing the Refit in line with guidance from the International Organization of Securities Commissions (IOSCO) and the Committee on Payments and Market Infrastructures (CPMI).
    • Changes to the Unique Trade Identifier (UTI) hierarchy, affecting how firms will need to generate these going forwards

What happens next? As with most regulatory mandates, the premise is simple—but execution is the challenge. We hope to know the official go-live date at the end of September but this timeline is as yet unconfirmed by the regulator. Nevertheless, the clock is starting to tick - in reality, once details are confirmed and new requirements are made clear, there isn’t much time to prepare and get this right.

Look at the quality of data around current EMIR reporting

Use the time we have now to get ahead - look at the current quality of data under existing EMIR reporting. Ask these questions - are the fields submitted correctly, is it in line with best practice and does it align with what is specified by the regulator? This level of preparation ahead of the go-live date will be key to successful delivery.

Don’t neglect internal communications

While we await clarity, regular updates to all stakeholders are important. With evolving regulation, there are often unanswered questions, and changing timelines so communication between teams is important. If new processes are being implemented, time for training and onboarding also needs to be factored in. Raising awareness of the potential challenges and reputational risk to mitigate these challenges is also important.

Testing, testing, testing!

Rewinding the clock back to the original time of implementation in 2014, many firms, especially those with less resource, were not prepared. This ultimately could led to issues with regulatory compliance and potential fines. As we await clarity, our reminder to firms planning for change is to allow time for testing - there can often be unexpected issues that need to be resolved and it’s important to allow for this.