The much-anticipated technical standards for reporting under the European Markets Infrastructure Regulation (EMIR Refit) were published on the 07 October 2022 to the Official Journal of the European Union. This initiative is off the back of years long harmonization efforts by global regulators and ESMA to improve the quality of reported derivatives data.
Firms will need to report under the new standards and start upgrading outstanding derivatives to the new format from 29 April 2024.
Here we discuss some of the challenges firms face and the Point Nine tools available to help clients with their preparations for EMIR REFIT GO LIVE
|1. New Format
Firms will be required to submit their transaction reports to the trade repositories (TR) in the ISO20022 XML format. This will normalize the reporting formats across trade repositories which will allow for an increase in the supervisory effectiveness by the regulators. Point Nine has been submitting their EMIR transaction reports in XML format for a number of years now. All transaction reports submitted to the TR and the feedback status received from the TR is visible on the Trade Blotter on the Point Nine client portal.
Pre and post reporting reconciliations will become even more prevalent, under EMIR refit as ESMA is also increasing the number of reconcilable fields through a phased-in approach. ESMA is introducing the new Valuation Reconciliation Status to reflect the outcome of the reconciliation of the Mark to Market Valuations between the counterparties.
Here Point Nine is well equipped and can offer our clients the P9Recon tool.
P9Recon is an agile, fast, efficient and scalable solution. Data from multiple sources can be reconciled. This can include the reconciliation of your internal systems, front office booking systems vs your regulatory reporting platforms or your trade portfolio vs your counterparty’s portfolio. Trade, position and collateral data can also be validated against the regulators specifications.
Another tool available to our clients is the Reconciliation Blotter on the Point Nine Portal. Here our clients have the transparency to the TR reconciliation status per UTI (paired / unpaired / matched / unmatched). Not only to the current status but also to the reconciliation history of the UTI. This makes direct access to the trade repository portal optional for our clients.
|3. UTI management
Point Nine already has a full UTI solution in place on trade, position and valuation level as required by EMIR refit. Point Nine can be the UTI generating party for its clients and its counterparties using ESMA prescribed methods or ingest the UTI received from our clients counterparties.
Our clients’ counterparties can share with us either the UTI or the methodology used to construct them. As long as the methodology is available, Point Nine can replicate it.
In case Point Nine will construct the UTI, this can be shared with our clients’ counterparties or the methodology used to construct the UTI.
Both processes can be done either by exchanging files, or automatically through database access.
Post reporting, our clients are notified of their unpaired UTIs if any, through our Reconciliation Blotter on the Point Nine Portal and these are investigated and resolved.
|4. Reportable Fields
The number of fields to be reported is increasing from 129 to 203. We see the Event Date field introduced in EMIR like it is under SFTR. The Direction fields are replacing the Counterparty Side (buyer/seller field) and firms will also be able to specify the direction per leg of the transaction where applicable.
Another interesting field is the Derivative based on crypto-assets field, which will allow counterparties to identify if the underlying is a crypto -asset.
| 5. Instrument reference data
Another important element under EMIR refit is instrument reference data. Point Nine currently enriches and validates instrument reference data through various sources such as ESMA and FCA FIRDS, FIS, Bloomberg and also via ANNA DSB. Validation rules are also in place to verify the CFI codes reported, where CFI attributes are validated against the relevant data fields in the transaction report, for example the asset class, underlying type and delivery type fields.
Point Nine will also apply the same approach to the UPI, Unique Product Identifier field, which will need to be populated in the over-the-counter (OTC) derivatives transaction reports under EMIR Refit.
| 6. Delegated Reporting
In the cases where Delegated Reporting is being performed, here the regulation mandates that the Report Submitting Entity (RSE) must provide the Entity Responsible for Reporting (ERR) with transparency to the records reported on their behalf, and to any data quality issues encountered. As the ERR would be responsible for the notification to their National Competent Authority of any errors, emissions or omissions in their reporting similar to the requirement currently under MiFIR transaction reporting.
Point Nine’s portal with its Trade and Reconciliation Blotters provides this transparency to its clients and access to the portal can also be granted to our clients’ clients
|To conclude, with Point Nine’s many validation rules and robust automated email notification system, clients can be assured that data quality is maintained at all times. In cases of abnormal values in data fields, or missing mandatory information, or missing valuations, or CFI codes that do not correspond to the classification of the product, or an execution date that is out of trading hours, or an invalid LEI and LEI expirations clients are promptly notified (as soon as files are received) by the automated email system and through the Point Nine client portal.|
We encourage all firms to start with their preparations as soon as possible.
Should you have any questions about EMIR REFIT or how Point Nine can assist with your EMIR REFIT preparations please do not hesitate to get in touch firstname.lastname@example.org