EMIR REFIT Reconciliation — Phase 2 update

In our previous article, we explored how EMIR REFIT Phase 2 is expanding reconciliation to 148 fields and introducing stricter valuation checks. Now, as implementation approaches, the focus turns to operational readiness — and what firms must do to stay ahead.

From 27 April 2026, trade reconciliation enters a far more rigorous phase. The enhanced framework — aligned with ESMA guidelines — is designed to improve data quality, transparency, and supervisory oversight.

Here’s what matters most:

A more structured reconciliation process

Reconciliation will follow a clear sequence:

• Transaction pairing (UTI + LEI matching)
• Data comparison (only after successful pairing)
• Valuation reconciliation (with strict rules and exclusions)

Importantly, only the end-of-day “latest state” of a trade is reconciled — increasing the importance of accurate lifecycle management.

Phase II significantly raises the bar

As highlighted earlier, the number of reconciled fields increases dramatically — from 87 fields to 148 fields now covering:

• Contract linkages (e.g. prior/subsequent UTIs)
• Product and underlying data (including complex instruments)
• Detailed economic terms (prices, spreads, payments)
• Asset-class-specific attributes

In many cases, exact matching is required, meaning even small inconsistencies can trigger breaks.

Valuation reconciliation becomes a focal point

• Building on our previous article, we look at some of the key changes:
• After submitting valuation updates, all fields are reconciled (not just valuation).
• Valuation reconciliation status now has three outcomes:
  • RECO – fully reconciled
  • NREC – not reconciled (outside tolerance)
  • NOAP – not applicable (excluded)
• Valuation reconciliation and general reconciliation are assessed separately.
• It’s possible to pass general reconciliation but fail valuation reconciliation.

Valuation Reconciliation Logic

Two checks are applied:

1. Valuation amounts within tolerance
   1. CCPV → rounding rule
   2. MTMA → ±2.5% tolerance
   3. MTMO → ±5% tolerance
   4. Mixed MTMA/MTMO → ±5%
2. Opposite signs required (one positive, one negative)

If either fails → NREC
All valuation fields must reconcile → RECO

Trades Excluded from Valuation Reconciliation

Status becomes NOAP when:

• One counterparty is a small non-financial counterparty (NFC-)
• Exchange-traded derivatives reported at trade level
• Execution date equals expiration/early termination date
• Position component reports (POSC), unless revised

More granular reporting = more actionable insights

Reconciliation reports will contain richer mismatch details, helping firms identify issues faster — but also increasing the volume of breaks if upstream data isn’t aligned.

Early testing is critical

As part of its readiness programme, P9 is already preparing clients for these changes, with UAT testing that began in February 2026 and is now completed. We will also continue to work closely with clients to ensure a smooth transition to the enhanced reconciliation regime.

What firms should prioritise now:

✔ Align static data across counterparties
✔ Review lifecycle event handling (amendments, terminations, corrections)
✔ Validate valuation methodologies and rounding logic
✔ Strengthen reconciliation monitoring and break resolution processes