Overcoming challenges in the new EMIR REFIT reporting requirements

Overcoming challenges in the new EMIR REFIT reporting requirements

As deadlines for implementing EMIR reporting changes near for the EU (set for April 29, 2024) and the UK (scheduled for September 30, 2024), grasping the nuances of these revised requirements becomes paramount.

MAP FinTech, a RegTech platform that supports EMIR, recently delved into the new REFIT and how companies can get prepared.

From the reporting commencement date, all submissions by Reporting Counterparties and Entities Responsible for Reporting to the TRs must align with these new mandates. This covers derivatives concluded after the reporting kickoff date and any changes or terminations reported post that date, regardless of the derivative’s initial conclusion date. This implies it could affect an outstanding derivative—one previously concluded and reported.

Specifically, entities will receive a transition period of 180 days to adjust their outstanding derivatives to the updated regulatory guidelines. They can leverage a unique event type labelled ‘Update’. However, if they’ve dispatched a comprehensive message report labelled ‘Modify’ or ‘Correct’, it necessitates including the entire derivative report details as per EMIR REFIT’s revamped Regulatory and Technical standards.

Remarkably, both the EU and UK versions of EMIR REFIT introduce 87 and 88 novel fields respectively. Additionally, several fields have witnessed alterations in their naming, description, acceptable values, or a blend thereof.

This highlights the immense preparatory tasks Reporting Counterparties and Entities Responsible for Reporting must undertake, Map FinTech explained. They need to amend all pertinent fields for outstanding trades to match these new criteria. But there’s a notable exception: entities shouldn’t generate new Unique Trade Identifiers (UTIs) for existing derivatives, even if they don’t entirely match the updated format. Nonetheless, other fields influenced by EMIR REFIT in the context of outstanding trades must comply with the changed requirements.

The transition phase doesn’t alter the duty to report significant events within T+1. Meaning, events post the reporting launch date should be reported by the next working day’s end. Fulfilling this mandate undeniably presents substantial challenges for reporting entities.

Moreover, as per the updated reporting standards, some entities might need to revise their reporting method or modify how they communicate collateral and valuation details. This emphasises that these entities must carefully devise their strategies, executing them in tandem, to guarantee that their trades swiftly align with the renewed standards. A lack of preparation could expose them to potential vulnerabilities.

Moreover, it’s crucial for entities not engaging in delegated reporting and those with counterparties governed by identical reporting duties to commence discussions regarding the management of outstanding trades. This dialogue seeks to synchronize the necessary adjustments, ensuring both parties comply with EMIR REFIT rules.

Lastly, understanding that all these preparation steps need simultaneous execution with ongoing EMIR reporting protocols is vital. This guarantees that existing EMIR reporting operations stay active and efficient up to the final pertinent date.

At MAP FinTech stated that it prides itself on its deep knowledge in managing migration and transition phases, especially regarding outstanding trades. Its methodologies have been effectively implemented during past regulatory updates such as EMIR. Furthermore, its robust toolkit simplifies the task of auto-updating outstanding trades, meeting the new criteria while reducing the reporting entity’s workload.

MAP FinTech is poised to aid any firm under EMIR Reporting in adapting smoothly to EMIR REFIT’s evolving demands.

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