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Preparing for EMIR Refit

By Lavinia Ponniah, DTCC Director, RDS Product Management | 2 minute read | July 18, 2023

EMIR Refit reporting rules will go into effect in less than 10 months, introducing many new fields and concepts to the EU and UK reporting regimes. And while ESMA has published reporting guidelines, a number of issues remain outstanding, given the increased amount of data reporting required.

Related: Navigating the seas of regulatory change

I recently joined representatives from ISDA and ESMA to discuss how firms can best prepare for these upcoming technical standards that will impact both financial and non-financial counterparties entering into derivatives contracts.

A summary of our discussion is below:

Regulatory Objectives

The EMIR refit aims to enhance the information available to regulators and increase the usability of data. There are many pieces to contribute to the goal of improving data from a regulatory perspective:

  • Full standardization of data - through Global UPI, UTI and ISO 20022, which are expected to increase data transformation
  • Global harmonization - the use of global standards will further enable data aggregation among regulators.
  • Lifestyle events model - will add sophisticated logic around the event date.
  • Data quality requirements from trade repositories - helpful for counterparties which should use feedback and flag any substantial data quality issues identified

Industry Preparations

DTCC and other trade repositories have been conducting roundtables with ESMA, as well as discussing with the FCA their final policy statement, commonalities with EMIR and deliberate divergences. In addition, industry preparations include bilateral working groups to ensure a seamless end-to-end flow of data:

  • ISDA working groups – working through challenges
  • ISO working groups – understanding derivative trade report schema
  • Industry working groups – discussing expected changes, from connectivity, submissions, changes to schemas, decommissions, impacts to reporting, changes to trade state reports, and knock-on impacts to reconciliations
  • Trade Repositories – discussing how to best exchange data in a timely fashion

Client Challenges

According to Ponniah, clients have raised the following challenges in implementing the technical standards of the EMIR Refit:

  • XML generation, particularly for small- to medium-sized firms
  • Increase in the number of new fields, including counterparty data
  • Introduction and operational processes surrounding the UPI and the UTI
  • Changes to Trade State management
  • Increased number and types of reconciliation fields
  • Calculation and execution of significant issue notifications
  • Extra day lag for Trade State report

The new EMIR Refit rules will improve harmonization and data quality and provide firms with a reason to review their regulatory reporting operating model and include automation. DTCC will continue to engage with industry partners as well as host working groups and webinars to best help clients prepare.

Lavinia Ponniah
Lavinia Ponniah

DTCC Director, RDS Product Management