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ESMA updates Q&As on EMIR implementation

On 21st Nov, 2021 ESMA has published updated Q&As on EMIR implementation.

The amendments include:

  • calculation of the clearing threshold;
  • hedging definition.

For more information please contact us at office@emirreporting.eu.

 

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ESMA launched a public consultation on its draft Guidelines for EMIR REFIT

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today launched a public consultation on its draft Guidelines for derivatives reporting under EMIR – EMIR REFIT.

The Consultation Paper (CP) includes draft Guidelines on a wide range of topics related to reporting, data quality and data access under EMIR Refit. ESMA has also published validation rules that clarify dependencies between data fields, as well as their applicability in the different use cases.

The Consultation paper focuses on:

  • how reports should be constructed and in what circumstances reports should be made;
  • reporting logic, including the use of action and event types;
  • reporting in the case of delegation as well as under provisions on allocation of responsibility for reporting;
  • the population of specific sections of fields; and
  • the correct population of fields for different reporting scenarios and different products.

The Draft Guidelines also clarify important aspects of the procedures to be implemented by reporting entities and Trade Repositories to enhance data quality. The paper also clarifies certain operational aspects concerning data access.

The proposed Guidelines, together with the validation rules, complement the revised draft EMIR technical standards on reporting by counterparties, data quality and data access. These standards were submitted to the European Commission on 16 December 2020 and, for the first time under EMIR, mandated the end-to-end use of ISO 20022 XML messages.

ESMA’s proposals aim to facilitate compliance and ensure consistent implementation of the EMIR reporting rules.

Next Steps

The closing date for responses is 30 September 2021. ESMA will consider the responses to this consultation with a view to finalising the proposed Guidelines and will publish a final report in Q4 2021/Q1 2022 (subject to the adoption of the draft RTS and ITS on reporting by the European Commission).

For more information please contact us at office@emirreporting.eu.

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Updated EMIR Q&As

On 28 January 2021 ESMA has published an updated EMIR Q&As.

The updates cover:

  • Reporting of valuations;
  • Procedure for terminating ‘dead trades’ by TRs;

 

For more information please feel free to contact us at office@emirreporting.eu.

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ESMA updates EMIR Q&As for the post-Brexit transition period

ESMA has updated the Questions and Answers on OTC requirements and reporting issues under the European Markets Infrastructure Regulation (EMIR).

The Q&A document clarifies the status after the post-Brexit transition period of legacy derivative transactions executed on UK markets and is relevant for EU counterparties in order to determine applicable EMIR requirements, and for position calculations against clearing thresholds.

In addition, Parts IV and V were amended to clarify the reporting technique for derivatives executed on a third country venue and cleared on the same day.

The purpose of the Q&A document is to promote common supervisory approaches and practices in the application of EMIR. It provides responses to questions posed by the general public, market participants and competent authorities in relation to the practical application of the Regulation. This document aims to ensure that the supervisory activities of the competent authorities under the Regulation are converging along the lines of the responses adopted by ESMA. It should also help investors and other market participants by providing clarity on EMIR requirements.

For more information please feel free to contact us at office@emirreporting.eu.

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ESMA Final Report on RTS and ITS under EMIR REFIT

ESMA has published a Final Report on technical standards (RTS and ITS) under the EMIR REFIT Regulation

The report covers:

  • data reporting to Trade Repositories (TRs),
  • procedures to reconcile and validate the data,
  • access by the relevant authorities to data and
  • registration of the TRs.

This final report and draft RTS and ITS largely reflect the original proposals included in the consultation paper and focuses on further harmonisation of the reporting requirements as well as enhancements in the counterparties’ and TRs’ procedures on ensuring data quality.

Key proposals

The key proposals included in the technical standards are:

  • Alignment with international standards – in particular the global guidance developed by CPMI-IOSCO on the definition, format and usage of key OTC derivatives data elements reported to TRs, including the Unique Transaction Identifier (UTI), the Unique Product Identifier (UPI) and other critical data elements. The introduction of these changes into the EU regulatory framework will foster global data harmonisation and will facilitate compliance for those entities that are subject to derivative reporting requirements in non-EU jurisdiction(s);
  • End-to-end reporting in ISO 20022 XML – ESMA proposes that XML schemas developed in line with ISO 20022 methodology are used not only for the communication between the TRs and authorities (as is the case now), but also for reporting from TR counterparties, similar to the requirements in place under SFTR. A fully standardised format for reporting will eliminate the risk of discrepancies due to inconsistent data. While end-to-end reporting in ISO 20022 XML is expected to further enhance data quality and consistency, by reducing the need for data cleaning/normalisation and facilitate their exploitation for various supervisory and/or economic analysis;
  • Harmonised data quality requirements across TRs – another cornerstone of the technical standards relates to the enhanced and harmonised data quality requirements for data validation and data reconciliation processes, that take place at the TRs once derivatives are reported to them;
  • Simplified rules for extension of registration from SFTR to EMIR – ESMA clarifies the relevant documentation to be provided by TRs willing to extend their registration from SFTR to EMIR in line with the existing requirements for extension from EMIR to SFTR; and
  • Standardised process for data access – ESMA includes references to standardise the type of information and the timeline for setting up data access for authorities.

Next steps

The draft technical standards have been submitted to the European Commission, and the proposed timeline for implementation of the technical standards by the reporting counterparties and TRs in the Union is 18 months from the date of their publication in the Official Journal.

In the meantime, ESMA will commence working on the guidelines on reporting under EMIR REFIT as well as on the technical documentation, including XML schemas and validation rules. ESMA aims to provide the industry with the relevant guidance and documentation sufficiently ahead of the reporting start date to ensure a smooth transition to the reporting under the revised rules.

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ESMA issues a public statement for issues affecting EMIR and SFTR

On 10 November 2020 ESMA has issued a public statement on the issues affecting EMIR and SFTR reporting following the end of the UK transition period on 31 December 2020.

The public statement covers the following:

  • Onboarding to TR;
  • Reporting – UK counterparties are not expected to report to EU TRs any derivative concluded on 31 December 2020 and onwards;
  • Reconciliation – from 1 January 2021, the derivatives where at least one of the counterparties is an UK-based entity, i.e. EU-UK; UK-EU, UK-UK should not be reconciled. Therefore, they should be also excluded from the inter-TR reconciliation process.
  • TR recordkeeping;
  • Counterparty recordkeeping;
  • Data access;
  • Portability of data from a UK-based TR to an EU TR;
  • Portability of data to UK TRs;
  • Aggregations.

 

For more information please feel free to contact us at office@emirreporting.eu.

 

 

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ESMA updated EMIR validation rules table

On 10 September 2020 ESMA has published an updated table with EMIR validation rules. The updates are applicable from 8 March 2021.

Field Reporting Timestamp – updated rule “The reporting timestamp should be equal or later than the execution timestamp reported in the field 2.25. The reporting timestamp should be equal or later than 2014-02-12. ”

Field Valuation timestamp – updated rule “The valuation timestaamp should be equal or later than 2014-02-12.”

Field Initial margin posted is conditional. If field 1.21 (Collateralisation) is populated with  “OC” or “FC”, this field shall be populated. If field 1.21 (Collateralisation) is populated with “U” or “PC”, this field shall be left blank. After 8 March 2021 the field Initial margin posted will no longer be optional.

Field Variation margin posted is conditional. If field 1.21 (Collateralisation) is populated with “PC”, “OC” or “FC”, one of the fields 1.26 (Variation margin posted) or 1.30 (Variation margin received) shall be populated (with a positive value or zero) while the other field shall be left blank or populated with zero. If field 1.21 (Collateralisation) is populated with “U”, this field shall be left blank.

Field Maturity date – updated rule “The maturity date should be equal or later than 2014-02-12.”

Field Settlement date – updated rule “The settlement date should be equal or later than 2014-02-12.”

Field Maturity date of the underlying – updated rule “The maturity date of the underlying should be equal or later than 2014-02-12″

For more information please feel free to contact us at office@emirreporting.eu.

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Updated ESMA EMIR Q&As for EMIR Refit

On 28 May 2020 ESMA has updated its Questions and Answers document on practical questions regarding data reporting issues, under the European Markets Infrastructure Regulation (EMIR).

ESMA has added Trade Repository (TR) Q&A 54 and provides clarifications on reporting of OTC derivatives by a financial counterparty (FC) on behalf of a non-financial counterparty below clearing threshold (NFC-) under EMIR Refit.

In particular, the TR Q&A 54 clarifies:

  • What are the reportable details that the NFC- should provide to the FC;
  • How the FC should proceed if the NFC- does not renew its LEI;
  • How the FC should proceed if an NFC that has been classified as an NFC+ changes its status to NFC- and fails to timely inform the FC of this fact;
  • How FC and NFC- should proceed if they report to two different trade repositories.
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Updated EMIR Q&As

On 4th Feb 2019 ESMA has issued an update of its Q&A on practical questions regarding EMIR.

The amendments to the existing TR Q&A 34 on Contracts with no maturity date confirms that counterparties may report a derivative with Action Type “P” if the derivative is included in a position on the same day that it is reported.

The amendments to the existing TR Q&A 38 further clarifies when reports should be submitted with Action Type “N” and when with Action Type “P” in relation to reporting derivatives that are terminated before the reporting deadline.

A new TR Q&A 50 which clarifies the approach counterparties should take for reporting the field “Confirmation Means”. Following the amendment of the EMIR Reporting Validation Rules on 9 August 2018, scenarios may be reported where a derivative is traded on a trading venue then confirmed on a different platform or not confirmed.

For any questions please feel free to contact us at office@emirreporting.eu.

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Updated EMIR validation rules table

On 9th August ESMA has updated EMIR validation rules table with regards to the revised technical standards on reporting under Article 9 of EMIR.

The amendments will be applicable from 5th November 2018.

ESMA updated its validation rules for the submitted reports for the following fields:

  • Reporting Timestamp
    The reporting timestamp should be equal or earlier than the timestamp of the receipt of the report by the TR (trade repository). The date part of the timestamp cannot be earlier than the day preceding the date of the receipt of the report by the TR. The receipt of the report should be understood as the moment the report enters a TR’s system.
  • Reporting Counterparty ID
    For action types “N”, “M”, “C”, “R”, “Z”, “V” and “P”: This field shall contain a valid LEI included in the GLEIF database maintained by the Central Operating Unit.
    The status of the LEI for all the above action types shall be “Issued”, “Pending transfer” or “Pending archival” and in addition for action type “C”: the status of the LEI could also be “Lapsed” and “Retired”.
    For action type “E”: This field shall contain an LEI included in the GLEIF database maintained by the Central Operating Unit, irrespective of the registration status of that LEI.
  • ID of the Other Counterparty
    If field 1.3 “Type of ID of the other Counterparty” is populated with “LEI”, this field shall be populated with a valid LEI included in the GLEIF database maintained by the Central Operating Unit. For action types “N”, “M”, “C”, “R”, “Z”, “V” and “P”: The status of the LEI shall be “Issued”, “Lapsed”, “Pending transfer” or “Pending archival” and in addition for action type “C” the status of the LEI could also be “Retired”.
    For action type “E”: This field shall contain an LEI included in the GLEIF database maintained by the Central Operating Unit, irrespective of the registration status of that LEI.
    If field 1.3 “Type of ID of the other Counterparty” is populated with “CLC”, this field shall contain up to 50 alphanumerical digits where any character is allowed.
  • Confirmation means
    If field 2.15 “Venue of execution” is populated with a MIC code other than “XXXX” or “XOFF” and field 2.35 “Cleared” is populated with “N”, this field shall be populated with “N”.
  • Underlying Identification
    If field 2.2 “Asset class” is populated with “EQ”, this field shall be populated.
    If field 2.2 “Asset class” is populated with “CR”, one of the fields 2.7 “Underlying identification type” or 2.84 “Reference entity” shall be populated.
    If field 2.2 “Asset class” is populated with “IR”, at least one of the following fields shall be populated: 2.7 “Underlying Identification”, 2.39 “Fixed rate of leg 1”, 2.55.” Floating rate of leg 1”
    If field 2.2 “Asset class” is populated with “CO” or “CU”, this field can be left blank.
    When populated, this field shall contain one of the following values: “I”, “A”, “U”, “B”, “X”. “NA” is accepted, when the actual value is not available. Up to 2 alphabetical characters.

For more information please feel free to contact us at office@emirreporting.eu.

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