EMIR Trade Reporting – The Next Horizon

The importance of ensuring complete, accurate and timely reports under EMIR is in the spotlight again. This follows a recent response from the European Systemic Risk Board (ESRB) to ESMA’s March 2020 Consultation Paper on reporting to trade repositories. Reporting firms are well advised to see the response as a shot across the bows and an indication of things to come.

In the March Consultation Paper, ESMA proposed a range of amendments to improve data quality with all parties in the reporting chain likely to be affected, from trade repositories to reporting firms. While many reporting firms have welcomed many of the proposals, in particular those which will make it easier for delegating firms to access trade repository data for the purposes of monitoring and reconciliations, ESMA was also highly critical of delegating firms, observing that:

“Some of the reporting entities… who delegated their reporting…. are often not capable to monitor whether their delegation agreement is abided by [and] in some cases not even aware that by delegating reporting they cannot transfer also their responsibility for the reporting. In other cases, delegating counterparties are aware of their obligations, but still unable to fully develop their technological knowhow to be actually capable to monitor the reporting."

The ESRB, which consumes the data reported under EMIR for the purposes of assessing systemic risk in financial markets, has echoed these frustrations in its response:

“Substantial data quality issues, which have affected the data collected under EMIR since the beginning of the reporting regime, are still present…the staff of the ESRB Secretariat believe that it is now time for both reporting entities and trade repositories to make substantial progress on this front.”

In doing so the ESRB might not only be looking to call time on inadequate reporting but has also thrown its weight behind the wide range of proposals. With the ESRB being a key stakeholder when it comes to EMIR reporting data, it is hard to imagine that their endorsement will not contribute to the implementation of most, if not all, of the ESMA proposals. If so then there are significant changes ahead which firms will need to prepare for, including:

• New fields to be included in reports;
• Alignment of reporting taxonomies (which currently differ among trade repositories) which are likely to require changes to how reports are created;
• Formalised agreements between NFC-s and FCs in respect of reporting arrangements;
• New notification requirements in the event of reporting problems;
• An updated decision tree for identifying the responsibility for UTI generation; and
• Strengthening the requirement to ensure that all LEIs included in reports are valid and current.

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With regulatory rhetoric heating up, reporting and delegating firms should take note of these proposals and consider how their own frameworks might be impacted. Now is also a good time to identify any existing problems in reports which have not yet been identified so that the slate can be wiped clean before the next phase of requirements come into effect. And with the FCA now requiring the identity of the Senior Manager accountable for EMIR reporting to be identified in Errors & Omissions reports it is more important than ever before that appropriate monitoring and assurance is in place to identify errors.

How We Help

Contact us or call +44 (0)20 7042 0500 to learn more about how we can help you address these regulatory requirements with our:

• range of trade and transaction reporting solutions from one-off logic specification reviews and assessments of systems and controls around your reporting framework, to regular, cost-effective analysis of your EMIR (and MiFIR) reports to identify issues relating to the accuracy, completeness and timeliness of reports. Our service includes the provision of a wide range of management information relating to the quality of reporting as well as industry benchmarking to assist senior managers with their ongoing oversight.
• practical suite of SM&CR solutions, designed to help firms and individuals review and maintain compliance against regulatory requirements and expectations. Our SM&CR services include post-implementation assurance reviews of your firm's current framework and ongoing assistance with employee assessment training. 

Complimentary Transaction Reporting Review

Take advantage of a complimentary one-time reporting analysis to help identify the percentage of reports featuring an error.

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Additional Resources:

• Upcoming Webcast: Transaction Reporting: The Top Five Data Errors and How to Fix Them - A Focus on MiFIR
• Training: Understand EMIR
• On-demand Webcast: EMIR - Refit Reporting Checklist
• Resource Page: Trade & Transaction Reporting
• Resource Page: SM&CR