With the EMIR Refit deadline less than 60 days away for entities within the EU and the UK’s own version set to launch in September, firms are expected to be in the advanced stages of preparation.
By now, firms should be close to completion of the Trade Repositories’ six-month User Acceptance Testing (UAT) phase, which opened in October. And they should have put in place a foundation resilient enough to minimize the impact of future regulatory updates, including Phase 2 of the EMIR Refit scheduled for 2026.To meet regulators’ expectations, firms will need to be prepared to meet the new reporting standards. Given the extensive scope of EMIR Refit, we examine a sample of the more significant changes from the perspectives of governance, workflows, data, and technology, and take a look at attempts at global regulatory harmonization in this area of the business.
We will be looking at the topic of EMIR Refit from a data standards perspective at A-Team’s Data Management Summit next week in London and RegTech Summit in October in London.
Key Rule Changes and Governance
The objectives of the EMIR Refit align with the broader G20 vision of creating a more resilient, transparent and efficient derivatives market. Specific goals include: streamlining transaction reporting obligations; reducing the compliance burden on non-financial counterparties, small financial counterparties, and pension funds; and enhancing the quality of data available to regulators. To this end, the EMIR Refit has introduced a number of changes that regulated entities need to be aware of.
In this latest incarnation, the definition of financial counterparties (FCs) has been expanded to include Alternate Investment Funds (AIFs) and their managers (AIFMs). This classification and the associated obligations of each apply to both EU and UK counterparties in an example of jurisdictional alignment between ESMA and the FCA.
Position-level reporting to TRs has been introduced. This requires express bilateral agreement between the counterparties. Reporting can now be outsourced to a qualified third party (e.g., S&P Global’s Cappitech, DTCC, or Regnology). However, the obligations and accountability for meeting the reg-reporting compliance standards remain with the counterparty (FC/NFC).
With the UAT window closing in 60 days, compliance teams need to ask themselves the following questions:
- How prepared do you feel your organization is for the EMIR Refit implementation, and what have been the biggest challenges in preparing for it?
- How much UAT testing has been completed and how has the experience been working with your designated Trade repository?
- What new metrics are you tracking post-implementation to evaluate EMIR Refit Compliance and how does this fit within your overall GRC program?”
Rule Change Impacts on Workflow
Financial counterparties are now responsible and legally liable for reporting OTC derivative contracts to Trade Repositories when trading with Non-Financial Counterparties, shifting the reporting burden away from NFCs except those that meet or exceed certain outstanding position thresholds.
One of the primary goals for EMIR Refit is to improve the pairing and matching rates between counterparties. To that end, the rules for product identifiers and trade identifiers have been strengthened.
Unique Product Identifier (UPI) codes are now mandatory for all trades. The UPI standard aims to simplify data aggregation and reporting. Issuers are required to apply for and pay for UPIs through ANNA.
The rules for generating UTIs have been amended to follow the CPMI-IOSCO Waterfall Method, which determines the counterparty responsible for creating the UTI and those elements that both parties must match.
S&P Global Cappitech’s UTI Connect is a pre-submission UTI enrichment and sharing tool, originally introduced for the Securities Financing Transactions Regulation (SFTR). UTI Connect is now available for EMIR and other dual-sided reporting jurisdictions that require matching UTIs.
Increases in the level of detail for each trade combined with the high volume of transactions are putting pressure on the already tight cut-off times, making the need for automated reconciliation and mismatch repair mandatory for almost all participants. Indeed, regulated firms need to be able to answer the question: How have you automated reconciliation and mismatch-repair workflows to minimize manual intervention and meet the T+1 cut-off times?
DTCC’s Repository and Derivatives Services (RDS) enable firms to meet their global trade repository and reporting obligations for derivatives and securities financing transactions (SFT) through DTCC’s locally registered trade repositories as part of the Global Trade Repository service (GTR). Derivatives Services also automate critical processes at key points in the post-trade lifecycle of credit and equity derivatives including credit event processing. And with DTCC Report Hub, a user can access a comprehensive suite of pre and post reporting capabilities to help mitigate compliance risks, enhance operational efficiencies and drive down costs
Data Management Impacts
Under the EMIR Refit, the number of reportable fields has increased significantly, from 129 to 203, requiring firms to undertake a comprehensive gap analysis and system updates for compliance. In addition, 41 fields have a new reporting format, and 33 fields have changes in computational rules.
Firms with experience implementing the EU’s Securities Financing Transaction Reporting (SFTR) regulation that came into force in 2016, shortly after the original EMIR, should be better prepared for EMIR Refit data challenges. However, smaller participants may struggle – for example – locating historical data for backloading outstanding trades.
Regnology Transactions (RT) is a modular solution built on a unified data model so it can effectively support multiple types of transaction-based reporting within one application.
RT delivers increased efficiency, data consistency, improved responsiveness, and increased security and compliance through dedicated reporting modules, internal portfolio recognition (IPR), numerous data delivery options, and deployment flexibility.
New Standards and Technology Impacts
XML and ISO 20022 have been adopted for Transaction Reporting under EMIR and for ESMA reporting generally. This standard will significantly improve reconciliation between FC/NFC counterparties and Central Counterparties (CCPs), and facilitate aggregation for better regulatory oversight.
The ‘.csv’ format option will no longer be acceptable at Trade Repositories after the April 29 go-live date, and smaller firms running their OTC derivatives books and records on spreadsheets might find the change from the current .csv option too heavy a lift.
The Quest for Harmonization
The evolution of EMIR since its launch in 2014 underpins a concerted effort toward global regulatory harmonization in the financial sector. These efforts aim to enhance transparency, mitigate systemic risks, and foster a more stable and resilient derivatives market.
However, the journey towards achieving global regulatory harmonization is fraught with challenges, mainly as individual countries’ regulators apply slightly different definitions and interpretations to the methodologies.
As the regulatory system evolves and global regulations become more prescriptive and granular, differences in how individual regulators have interpreted the rules for their local markets become apparent. This divergence can create complexities in matching for multinational firms operating cross-border with non-EU/UK countries, increasing compliance costs and operational burdens.
The CPMI-IOSCO Waterfall methodology for UTI generation often sees varied applications across different countries, non-EU/UK in particular. Moreover, the pace at which regulatory changes are introduced and the technological capabilities of different jurisdictions to adapt to these changes pose additional hurdles as some countries either struggle or simply choose not to comply fully with the new directive. Despite these challenges, the goal of global regulatory harmonization remains valid.
The continued collaboration between international regulatory bodies, such as the FSB, ESMA, and CPMI-IOSCO, is crucial in fostering dialogue and consensus on global standards.
Regular updates, guidance, and frameworks shared among these bodies help to align different jurisdictions’ approaches to financial regulation.
Breaking Down Barriers to Harmonization
Regulators and standard-setting bodies collaborating, sharing best practices, and lessons learned from implementing regulations like EMIR can help identify common challenges. Regulatory frameworks must allow for a certain degree of localization that can accommodate the unique aspects of each jurisdiction while still aligning with global standards.
Forums that bring together Regulators, Industry Participants, and Solutions Providers can create a valuable exchange of perspectives that supports the development of unified approaches to future regulatory changes.
EMIR Refit: What Next?
The path toward global regulatory harmonization presents numerous challenges, the latest of which is EMIR Refit. Regulatory harmonization will make a safer, more transparent, and efficient global financial system achievable.
The scale of the EMIR Refit has forced the industry to make fundamental changes to core systems and processes.
The old philosophy of “do just enough to be compliant, but no more” won’t cut it for a task this big in a T+1 market.
The coming months will be challenging for all participants as EU Refit goes live on April 29. EMIR-UK will still be on the old reporting regime until September.
Regulators acknowledge the challenges but expect the 180-day adjustment periods to resolve the majority of new reconciliation issues, followed by a consistent improvement in matching rates over the ensuing months. Recent enforcement actions under EMIR suggest that Regulators will be watching very closely.
EMIR Refit – Phase 2 is scheduled for 2026. This upgrade will introduce another 66 reconcilable fields and a new Valuation Reconciliation Status field that requires counterparties to reconcile Mark-to-Market Valuations. Participants should be confident they can quantify and meet the Phase 2 Refit and any other Refits that follow.
View our full agenda and more details here.
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