European Market Infrastructure Regulation Refit (EMIR Refit) is on the horizon with new reporting standards including more reporting fields, a change in reporting format from CSV to XML, an increase in the number of trading repository reconciliation fields for pairing a matching, and mandatory use of the Unique Product Identifier (UPI), which moves into production on 16 October 2023 and is designed to provide clear and consistent identification of products traded in derivative transactions.
The Refit will be implemented in different jurisdictions over the next few years, with the US, EU and UK among the first to put the revised regulation in place – the new standards will take effect in the US in January 2024, with the EU following in April 2024 and the UK in September 2024. Other jurisdictions are expected to follow in 2025.
With industry commentators describing EMIR Refit as the largest regulatory overhaul ever seen in derivatives markets, A-Team Group has dedicated a panel session to the topic at next week’s RegTech Summit London. The panel will be moderated by A-Team Group editor Sarah Underwood, and joined by Adam Turnbull, Global Head Regulatory Technology at Goldman Sachs; Avinash Shamdasani, Global Head of Trade and Transaction Reporting at BGC Partners; Nikolay Arnaudov, Team Leader Data Intelligence and Analytics at ESMA; and Emma Kalliomaki, Managing Director at the Association of National Numbering Agencies (ANNA) and Derivatives Service Bureau (DSB).We caught up with Emma Kalliomaki ahead of the event to find out more about EMIR Refit and use of the UPI. “EMIR Refit will create more data alignment and harmonisation than ever before across jurisdictions,” she says. “There will be divergence in jurisdictions where there is demand, but on the whole, there will be more alignment with regulatory authorities coming together on practical implementation matters such as the Legal Entity Identifier (LEI), UPI and critical data elements.”
The need for alignment across jurisdictions was signalled in G20 recommendations following the 2008 financial crisis and intended to help regulators monitor systemic risk in OTC markets. Kalliomaki suggests that as well as providing a regulatory solution, EMIR Refit will benefit firms as they use international standards such as the UPI, LEI and CFI (Classification of Financial Instruments) to aggregate and understand their risk exposure, and in turn, improve data quality and harmonisation across databases.
The UPI has been in user acceptance testing (UAT) at the DSB since April 2023. Kalliomaki says about 400 firms are already engaged in testing and expects some to ‘leave it later than others’. The DSB has also added a client onboarding support platform, extended UPI UAT into the OTC ISIN UAT environment, enabling OTC ISIN users to start testing combined OTC ISIN and UPI workflows, and provided an option for users of the UPI UAT environment to search for and create UPIs using a range of alternative underlier identifiers.
Kalliomaki concludes: “Testing is very important. Firms need to get into the testing environment to tweak and change their workflows to accommodate the UPI. Don’t leave it too late, not having everything in line and ready for EMIR Refit could put firms at risk.”
Register here to meet Emma Kalliomaki and join the discussion on how to leverage RegTech for EMIR Refit at next week’s RegTech Summit London.
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