In 2012, EMIR came into force as a European regulation to increase transparency in the over-the-counter (OTC) and exchange-traded derivatives (ETD) markets and to reduce credit and operational risks. A decade on, EMIR Refit strengthens the obligations rules for derivatives processing, clearing and contract risk management, reporting and the operation of clearing houses and trade repositories.
In today’s closely monitored financial industry, accurate and standardised reporting is a key element in promoting transparency and providing stakeholders with an accurate picture of the market. The recent revision of the EMIR regulation, known as EMIR Refit (Regulatory Fitness and Performance Programme), has introduced significant changes in terms of regulatory obligation rules.
CACEIS has launched a major project to ensure it has everything in place prior to EMIR Refit coming into force on 29th April 2024 for the European Union (ESMA) and 30th September 2024 for the United Kingdom (FCA).
When it comes into force, there will be a rise in complexity of reporting to trade repositories, with the following changes:
- The number of fields to be reported for each transaction will increase from 129 to 203. 77 of these are new, 67 have been modified and only 3 have been deleted. The new fields include data categories relating to collateral, product prices and specifications, and complex financial instruments.
- Data transmission format: in order to further harmonise reporting standards, the ISO-20022-XML format will be used for data transmission to a central repository, in line with the format used for data transmission under the MiFIR and SFTR regulations.
In addition, EMIR Refit places the entity responsible for reporting back in a central role, with a duty to send error notifications to the regulator in line with thresholds defined by ESMA (European Securities and Markets Authority), stricter rules on data quality, and a duty to keep Legal Entity Identifiers (LEI) up to date.
The heightened responsibility is also seen in strengthened verifications on transmitted data. EMIR Refit effectively doubles the data points that need to be reconciled between counterparty reports to trade repositories, which involves pairing and matching based on the Unique Trade Identifier and Legal Entity Identifier.
From January 2024, the new regulations will however relax the requirements imposed on small non-financial counterparties (NFCs) dealing with financial counterparties (FCs) for OTC derivatives.
CACEIS has made the necessary preparations to tackle these new challenges and provide targeted support to clients for both OTC and exchange-traded derivatives.
"EMIR Refit is yet another building block in the regulatory system designed to provide national regulators with an enhanced framework for the markets. We have rapidly adapted our processes and our service offering to new requirements as soon as they are implemented, and we play a key role in the monitoring and supervision of all the markets covered", concludes Charline Lescouzeres, Group Product Manager, Senior Expert.