Reporting obligation(under art. 9 of EMIR)

Who should report under EMIR?

EMIR establishes the reporting obligation on both counterparties that should report the details of the derivative trades to one of the trade repositories (TRs), i.e. the buying party should report and the selling party should report. This obligation covers both financial and non-financial counterparties. Only the individuals are exempted from the obligation to report their derivatives trades. However as their counterparty is usually a financial institution, the latter has the obligation to report those trades.
EMIR uses the term “non-financial counterparty” which covers all other counterparties that cannot be qualified as a financial counterparty. EMIR sets obligations and requirements applicable to the non-financial counterparties that enter into derivative contracts thus expanding the coverage of the regulation.

What should be reported under EMIR?

EMIR requires reporting of the transaction details for both types of derivatives trades – exchange traded derivatives (ETD) and OTC derivatives. ‘OTC derivative’ or ‘OTC derivative contract’ (under Article 2 of EMIR) is a derivative contract the execution of which does not take place on a regulated market or on a third- country market considered as equivalent to a regulated market. For example, the derivative contracts traded on MTFs (multilateral trading facilities) are OTC derivatives in the context of EMIR. The exchange traded derivatives (EDT) are not explicitly defined under EMIR.
From legal point of view the scope of the financial instruments covered by EMIR are set out in Annex I, Section C, points (4) to (10) of MiFID II Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014:

(4) Options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields, emission allowances or other derivatives instruments, financial indices or financial measures which may be settled physically or in cash;

(5) Options, futures, swaps, forwards and any other derivative contracts relating to commodities that must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event;

(6) Options, futures, swaps, and any other derivative contract relating to commodities that can be physically settled provided that they are traded on a regulated market, a MTF, or an OTF, except for wholesale energy products traded on an OTF that must be physically settled;

(7) Options, futures, swaps, forwards and any other derivative contracts relating to commodities, that can be physically settled not otherwise mentioned in point 6 of this Section and not being for commercial purposes, which have the characteristics of other derivative financial instruments;

(8) Derivative instruments for the transfer of credit risk;

(9) Financial contracts for differences;

(10) Options, futures, swaps, forward rate agreements and any other derivative contracts relating to climatic variables, freight rates or inflation rates or other official economic statistics that must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event, as well as any other derivative contracts relating to assets, rights, obligations, indices and measures not otherwise mentioned in this Section, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are traded on a regulated market, OTF, or an MTF;

(11) Emission allowances consisting of any units recognised for compliance with the requirements of Directive 2003/87/EC (Emissions Trading Scheme).

Guidance for points 6 and 7 (commodities that can be physically settled) are available here.

Please note that EMIR does not cover the following:
(1) Transferable securities;
(2) Money-market instruments;
(3) Units in collective investment undertakings.

From practical point of view the minimum required information to be reported is separated into two main categories:

To whom should be reported?

All OTC derivative contracts and exchange traded derivatives should be reported to one of the registered trade repositories.
Please find below a list with the trade repositories that have been registered by ESMA:

Trade RepositoryDerivative asset classEffective date
DTCC Derivatives Repository Ltd. (DDRL)All asset classes14/11/2013
Krajowy Depozyt Papierów Wartosciowych S.A. (KDPW)All asset classes14/11/2013
Regis- TR S.A.All asset classes14/11/2013
UnaVista Ltd.All asset classes14/11/2013
CME Trade Repository Ltd. (CME TR)All asset classes05/12/2013
ICE Trade Vault Europe Ltd. (ICE TVELL)Commodities, credit, equities, interest rates05/12/2013

How the derivatives can be reported?

In order to assist you finding the best solution for your EMIR reporting we can perform an evaluation of the IT infrastructure of the company as well as available the resources and the type of the instruments and the number of trades that should be reported.
We can suggest the best cost effective option for your EMIR reporting solution.
Generally there are three main options:

  • Direct reporting to the TR: establishment of procedures, usage of plugins and template files that will be available to your company, as well as assistance in choosing the best cost effective trade repository (TR) in the context of the number of trades that are or should be reported.
  • Delegated reporting to a counterparty: analysis of the options about your counterparties to report on your behalf, i.e. the number and type of the counterparties that can take over the EMIR reporting functions for certain transactions that go through them.
  • Delegated reporting to a third party solution: analysis and pointing out a third party solution in the context of cost-efficiency and implementation advantages.

EMIR Reporting Ready, Ltd. has established strong relations with third party solutions companies whose IT infrastructure can be used in order to establish a smooth EMIR reporting process.  For further information please click here for our Solutions.

What is LEI?

LEI stands for Legal Entity Identifier. It is a unique sequence of numbers and letters that identifies the counterparties, CCPs, beneficiaries and brokers. The information about the LEIs of all your partners and clients (legal entities) is essential for successful transaction reporting.

What is UTI?

UTI stands for Unique Trade Identifier. It identifies a specific trade and it is generated under certain rules provided by ESMA. This is required in order to ensure accurate identification of reported trades by both counterparties.

Current rules

According to art. 4a of Commission Implementing Regulation (EU) No 1247/2012 in case counterparties fail to agree on the entity responsible for generating the unique trade identifier to be assigned to the report, the counterparties shall determine the entity responsible for generating a unique trade identifier in accordance with the following:

(a) for centrally-executed and cleared trades, the unique trade identifier shall be generated at the point of clearing by the central counterparty (CCP) for the clearing member. Another unique trade identifier shall be generated by the clearing member for its counterparty;

(b) for centrally-executed but not centrally-cleared trades, the unique trade identifier shall be generated by the trading venue of execution for its member;

(c) for centrally-confirmed and cleared trades, the unique trade identifier shall be generated at the point of clearing by the CCP for the clearing member. Another unique trade identifier shall be generated by the clearing member for its counterparty;

(d) for trades that were centrally-confirmed by electronic means but were not centrally-cleared, the unique trade identifier shall be generated by the trade confirmation platform at the point of confirmation;

(e) for all trades other than those referred to in points (a) to (d), the following shall apply:

(i) where financial counterparties trade with non-financial counterparties, the financial counterparties shall generate the unique trade identifier;

(ii) where non-financial counterparties above the clearing threshold trade with non-financial counterparties below the clearing threshold, those non-financial counterparties above the clearing threshold shall generate the unique trade identifier;

(iii) for all trades other than those referred to in points (i) and (ii), the seller shall generate the unique trade identifier.

Commission Implementing Regulation (EU) No 148/2013 specifies that the Trade ID can have up to 52 characters, including four special characters, the special characters not being allowed at the beginning or at the end of the code. Therefore, a Trade ID that is less than 52 characters in length is permissible provided that it meets the other criteria laid out here. There is no requirement to pad out Trade ID values to make them 52 characters long.

EMIR Q&As TR Answer 18 further clarifies that one Trade ID should be applicable to any one derivative contract that is reported to a trade repository under EMIR and that the same Trade ID is not used for any other derivative contract. It is also acknowledged that contracts reported under EMIR rules might also reported under the rules of other jurisdictions. Hence, the same Trade ID should be allowed to be used in both those jurisdictions for reporting the given contract in order to facilitate the reconciliation among all the data sets.

As an illustration, ESMA considers that any of the methods provided in the following list of Trade ID construction would be deemed to meet the requirements for reporting under EMIR. ESMA reserves the initial three-character sequences ‘E00’ to ‘E99’ inclusive for these purposes. The Trade ID should be formed by the concatenation (without separators) of the three elements in each case.

Method 1:

  1. The characters ‘E01’.
  2. The MIC code (ISO 10383) of the applicable trading venue.
  3. A unique code generated by that trading venue (for centrally executed but non-centrally cleared trades) or by a CCP used by that trading venue to clear the derivative contract (for centrally executed and cleared trades). If the CCP generates the code and if derivative contracts executed on that trading venue could be cleared by more than one CCP, then measures should be put in place to avoid different CCPs generating the same value.

Method 2:

  1. The characters ‘E02’.
  2. The (20 character) Legal Entity Identifier of the generating entity (normally one of the parties to the trade and pursuant to the points (a), (c) and (e) of the hierarchy mentioned in Article 1(4) of the Commission Implementing Regulation (EU) No 1247/2012 (ITS on reporting to TR).
  3. A unique code generated by the unique Trade ID generating entity.

Method 3:

  1. The characters ‘E03’.
  2. A unique code generated independently by both counterparties based on the pre-agreed set of information about the trade in such a way that both counterparties will arrive at the same code and that it would be unique with respect to any other report. The two counterparties are responsible for providing the same code. The information used should include Common Data from Table 2 of the Commission Delegated Regulation (EU) No 148/2013 and the Legal Entity Identifiers of the two counterparties.

For derivative contracts that are also reportable under the provisions of the Dodd-Frank Act the same value as the one to be reported under the Dodd-Frank Act, i.e. the Unique Swap Identifier16, could be used.

Counterparties should agree which form of a unique Trade ID they will use before reporting the derivative contract. This therefore includes determining the approach that they will use to define which entity generates the unique Trade ID.

EMIR REFIT applicable on 29 April 2024

ESMA provides the following information in the final report:

  • The agreement between the counterparties is no longer a first option but becomes rather a fallback scenario for some specific cases
  • UTI generation waterfall approach is in line with the global UTI guidance
  • The rules on UTI generation equally apply for reporting at position level
  • In case of delegated reporting the UTI can be generated by the delegated party
  • In case both counterparties have the same status, the sorting of the LEI will determine the entity responsible for generating the UTI – the LEI that is first when sorting.

Please find below Article 7 of Commission Implementing Regulation (EU) 2022/1860

  1. The counterparties shall report derivatives using the UTI generated in accordance with paragraphs 2, 3 and 5.
  2. A derivative, reported either at transaction or position level, shall be identified using a ISO 23897 Unique Transaction Identifier (UTI) in field 1 in Table 2 of the Annex. The UTI shall be composed by the LEI of the entity which generated that UTI followed by a code containing up to 32 characters which is unique at the level of the generating entity.
  3. The counterparties shall determine the entity responsible for generating the UTI in accordance with the following:

(a) for cleared derivatives other than derivatives between two CCPs, the UTI shall be generated at the point of clearing by the CCP for the clearing member. A different UTI shall be generated by the clearing member for its counterparty for a trade in which the CCP is not a counterparty;

(b) for centrally-executed but not centrally-cleared derivatives, the UTI shall be generated by the venue of execution for its member;

(c) for derivatives other than those referred to in points (a) and (b), where either counterparty is subject to the reporting requirements in a third country, the UTI shall be generated pursuant to the rules of the jurisdiction of the counterparty that must comply first with those reporting requirements.

Where the counterparty subject to reporting under Article 9 of Regulation (EU) No 648/2012 must comply first with the reporting requirements, the entity responsible for generating the UTI shall be as follows:

(i) for derivatives that were centrally-confirmed by electronic means, the trade confirmation platform at the point of confirmation;

(ii) for all other derivatives, the counterparties shall agree on the entity responsible for generating the UTI. Where the counterparties fail to agree, the counterparty whose LEI is first based on sorting the identifiers of the counterparties with the characters of the identifier reversed shall be responsible for the generation.

Where the applicable laws of the relevant third country provide for the same reporting deadline as the one applicable to the counterparty subject to reporting under Article 9 of Regulation (EU) No 648/2012 pursuant to first subparagraph of Article 9(1) of Regulation (EU) No 648/2012, the counterparties shall agree on the entity responsible for generating the UTI.

Where the counterparties fail to agree, and the derivative was centrally-confirmed by electronic means, the UTI shall be generated by the trade confirmation platform at the point of confirmation.

If the UTI cannot be generated by the trade confirmation platform at the point of confirmation, and the details of the derivative have to be reported to a single trade repository, that trade repository shall be responsible for generating the UTI.

If the UTI cannot be generated by the trade repository to which the details of the derivative have been reported, the counterparty whose LEI is first when sorting the identifiers of the counterparties with the characters reversed shall be responsible for the generation;

(d) for derivatives other than those referred to in points (a), (b) and (c), that were centrally-confirmed by electronic means, the UTI shall be generated by the trade confirmation platform at the point of confirmation;

(e) for all derivatives other than those referred to in points (a) to (d), the following shall apply:

(i) where financial counterparties conclude a derivative with non-financial counterparties, the financial counterparties shall generate the UTI;

(ii) where non-financial counterparties above the clearing threshold conclude a derivative with non-financial counterparties below the clearing threshold, those non-financial counterparties above the clearing threshold shall generate the UTI;

(iii) for all derivatives other than those referred to in points (i) and (ii), the counterparties shall agree on the entity responsible for generating the UTI. Where the counterparties fail to agree, the counterparty whose LEI is first based on sorting the identifiers of the counterparties with the characters of the identifier reversed shall be responsible for the generation.

  1. The counterparty generating the UTI shall communicate the UTI to the other counterparty in a timely manner and no later than 10:00 a.m. Coordinated Universal Time of the working day following the date of the conclusion of the derivative.
  2. Notwithstanding paragraph 3, the generation of the UTI may be delegated to an entity different from that determined in accordance with paragraph 3. The entity generating the UTI shall comply with the requirements set out in paragraphs 2 and 4.

What is UPI?

UPI stands for unique product identifier. This is a new field that will apply from 29 April 2024.

The product identifier (UPI) used in derivatives reporting fulfils a series of conditions, such as uniqueness, persistence, consistency, neutrality, reliability, open source, scalability, accessibility, availability at a reasonable cost basis, appropriate governance framework.

The global aggregation of OTC data will require the adoption of a global UPI by the relevant jurisdictions. ESMA is following the principles applied in the IOSCO UPI technical guidance.

Furthermore, ESMA maintains the following approach: all derivatives admitted to trading or traded on a trading venue or a systematic internaliser will need to be identified with an ISIN (only), whereas all remaining derivatives will need to be identified with UPI (only).

ESMA will ensure sufficient flexibility of the XML schemas for reporting.

What are the new collateral fields on and after 29 April 2024?

Current reportable valuation and collateral fields are provided in the EMIR table 1, Counterparty Data, fields 17 to 26. Please refer to the table below.

EMIR FieldCounterparty Data Field Description
17Mark to Market Value of ContractMark to market valuation of the contract, or mark to model valuation where applicable under Article 11(2) of Regulation (EU) No 648/2012.
18Currency of mark to market value of the contractThe currency used for the mark to market valuation of the contract, or mark to model valuation where applicable under Article 11(2) of Regulation (EU) No 648/2012.
19Valuation DateDate of the last mark to market or mark to model valuation. The valuation should be performed on a daily basis.
20Valuation TimeTime of the last mark to market or mark to model valuation.
21Valuation TypeIndicate whether valuation was performed mark to market or mark to model.
22CollateralisationWhether collateralisation was performed. Options: Uncollateralised; One-way Collateralised; Partially collateralized; Fully Collateralised.
23Collateral PortfolioWhether the collateralisation was performed on a portfolio basis. Portfolio means the collateral calculated on the basis of net positions resulting from a set of contracts, rather than per trade.
24Collateral Portfolio CodeIf collateral is reported on a portfolio basis, the portfolio should be identified by a unique code determined by the reporting counterparty.
25Value of the CollateralValue of the collateral posted by the reporting counterparty to the other counterparty. Where collateral is posted on a portfolio basis, this field should include the value of all collateral posted for the portfolio.
26Currency of the Collateral ValueSpecify the value of the collateral for field 25.

Current RTS and ITS on reporting only require the reporting of margins before haircuts have been applied.

On and after 29 April 2024 all collateral data should be submitted with a separate XML report. New fields are introduced for pre-haircut and post-haircut margins:

  • Variation margin posted by the counterparty 1 (pre-haircut)
  • Variation margin posted by the counterparty 1 (post-haircut)
  • Initial margin collected by the counterparty 1 (pre-haircut)
  • Initial margin collected by the counterparty 1 (post-haircut)
  • Variation margin collected by the counterparty 1 (pre-haircut)
  • Variation margin collected by the counterparty 1 (post-haircut)

Article 5 of Commission Implementing Regulation (EU) 2022/1860 regarding collateralization:

Reporting counterparty shall identify the type of collateralisation of the derivative contract or a portfolio of derivatives referred to in field 11 in Table 3 of the Annex as follows:

(a) as ‘uncollateralised’ where no collateral agreement exists between the counterparties or where the collateral agreement between the counterparties stipulates that the counterparties post neither initial margin nor variation margin with respect to the derivative or a portfolio of derivatives;

(b) as ‘partially collateralised: counterparty 1 only’ where the collateral agreement between the counterparties stipulates that the reporting counterparty only posts regularly variation margins and that the other counterparty does not post any margin with respect to the derivative or a portfolio of derivatives;

(c) as ‘partially collateralised: counterparty 2 only’ where the collateral agreement between the counterparties stipulates that the other counterparty only posts regularly variation margin and that the reporting counterparty does not post any margin with respect to the derivative or a portfolio of derivatives;

(d) as ‘partially collateralised’ where the collateral agreement between the counterparties stipulates that both counterparties only post regularly variation margin with respect to the derivative or a portfolio of derivatives;

(e) as ‘one-way collateralised: counterparty 1 only’ where the collateral agreement between the counterparties stipulates that the reporting counterparty posts the initial margin and regularly posts variation margins and that the other counterparty does not post any margins with respect to the derivative or a portfolio of derivatives;

(f) as ‘one-way collateralised: counterparty 2 only’ where the collateral agreement between the counterparties stipulates that the other counterparty posts the initial margin and regularly posts variation margins and that the reporting counterparty does not post any margins with respect to the derivative or a portfolio of derivatives;

(g) as ‘one-way/partially collateralised: counterparty 1’ where the collateral agreement between the counterparties stipulates that the reporting counterparty posts the initial margin and regularly posts variation margin and that the other counterparty regularly posts only variation margin with respect to the derivative or a portfolio of derivatives;

(h) as ‘one-way/partially collateralised: counterparty 2’ where the collateral agreement between the counterparties stipulates that the other counterparty posts the initial margin and regularly posts variation margin and that the reporting counterparty regularly posts only variation margin with respect to the derivative or a portfolio of derivatives

(i) as ‘fully collateralised’ where the collateral agreement between the counterparties stipulates that both counterparties post initial margin and regularly post variation margins with respect to the derivative with respect to the derivative or a portfolio of derivatives.

How to calculate the mark-to-market value?

ESMA requires that the primary valuation methodology which should be used is mark-to-market. Only where mark-to-market is not feasible (for example due to a market being ‘inactive’), then “reliable and prudent” marking-to-model may be used to value trades and positions. The relevant EMIR regulation (No 149/2013) also requires the reporting counterparty to take steps to review and document the use of an appropriate model, which may require the counterparty to obtain appropriate internal approvals and liaise with other counterparties.

For centrally cleared contracts, the valuations reported by each counterparty should be those calculated by the CCP, on a daily basis, at а position level. This does not mean that the report should always be made by the CCP. The CCP may make data available to the counterparties, so that the latter can report.

For uncleared business, the contracts should be valued by the counterparties themselves.

The counterparties are subject to the requirement to daily mark-to-market/mark-to-model the valuation of the reported transactions. The changes in mark-to-market or mark-to-model valuations on already reported transactions need to be reported on a daily basis (end of day).

The mark-to-market value should be based on the End of Day settlement price of the market (or the CCP) from which the prices are taken as reference. If an End of Day settlement price is not available, then the mark-to-market value should be based on the closing mid-price of the market concerned.

The mark-to-market value should represent the absolute value of the contract.

Should the valuations be agreed between the counterparties?

As the valuation is part of the Counterparty data fields, in the case of derivative not cleared by a CCP, the counterparties do not need to agree on the valuation reported.

On and after 29 April 2024 the valuation data should be agreed between the counterparties.

How to calculate the value of the collateral?

After 1st Nov 2017 according to Commission Delegated Regulation (EU) 2017/104 (revised EMIR RTS) all posted and received collateral should be reported. The fields that specify the type of the collateral have increased from 1 to 6 different fields: initial margin posted; variation margin posted; initial margin received; variation margin received; excess collateral posted; excess collateral received.

In case the collateral agreement allows the covering of exposures in transactions that are not reportable under EMIR, the value of the collateral reported should be just the collateral that covers the exposure related to the reports made under EMIR. If it is impossible to distinguish within a pool of collateral the amount which relates to derivatives reportable under EMIR from the amount which relates to other transactions the collateral reported can be the actual collateral posted covering a wider set of transactions.

After 29th April 2024 new fields for pre-haircut and post-haircut are introduced.

Which currency to be used as the collateral base currency?

ESMA advises All collateral for a single portfolio should be reported in one single currency value. The reporting counterparty is free to decide which currency should be used as a base currency as long as this base currency is one of the major currencies and is used consistently for the purpose of collateral reporting for a given portfolio.

How the change in the amount of collateral should be reported?

Valuation update (V) in field No. 58 refers to any change in fields 17 to 26 of table 1 and for that reason changes in the amount of the collateral should be reported as a (V) in field 58.

Should the collateral details be reported at the trade, position or portfolio level?

Collateral should be reported at the same level at which it has been posted. If collateral has been posted against a portfolio of trades or positions, for example, then the details should be reported at the portfolio level.

What are the changes in RTS since Nov 2017?

On 21 January 2017 the revised RTS and ITS have been published in the Official Journal. They enter into force on 10 February 2017 and apply from 1 November 2017.

Commission Delegated Regulation (EU) 2017/104 introduces the following amendments to the EMIR RTS:

  • New rules on the reporting of a contract composed of a combination of several other derivative contracts. In case the fields in the report do not allow reporting of a complex products by a single line, then the counterparties should decompose the contract and agree on the number of lines (with separate UTIs) that should be submitted. The transaction reports should be identified by using the new field ‘Complex Trade Component ID’ for any transaction reports resulting from the same derivative contract.
  • New rules on the reporting of a previously reported contract which is subsequently cleared by a CCP. The existing contracts shall be reported as terminated and the new contracts resulting from the transaction shall be reported. For contracts concluded and cleared on the same date, only the cleared contract shall be reported.
  • New rules for the reporting of collateral exchanged by the counterparties, including specifying what exactly should be reported, by whom, and how it should be valued.
  • Rules for the reporting of the notional amount for different classes of derivatives. For swaps, futures and forwards (traded in monetary units) the notional amount should be the reference amount from which the contractual payments are determined in derivatives markets. For options the notional amount should be calculated using the strike price. Financial CFDs and commodities denominated in units (like barrels or tons) – the resulting amount of the quantity at the relevant price set in the contract.
  • A new section of asset class specific fields for credit default swaps (CDS) with 10 fields and other new or renamed fields.
  • More fields are included to correctly reflect the different types of collaterals: initial margin posted; variation margin posted; initial margin received; variation margin received; excess collateral posted; excess collateral received and the relevant fields that identify the currency of the new types of the margin fields.
  • More new fields like: “Level” to indicate whether the reporting is done on a trade level or a position level, etc.

Commission Implementing Regulation (EU) 2017/105 covers the following amendments in EMIR ITS:

  • Rules for clearly identifying the counterparty side depending on the different asset classes.
  • Identification and classification of the derivatives. The ETDs will be identified by ISIN or AII. The OTC derivative contracts will be identified by their types. Two more categories are added: ‘SB’ for spread bet and ‘ST’ for swapton.
  • Unique Trade Identifier (UTI). The UTIs of the cleared trades should be generated by the CCPs. For centrally-executed bit not centrally cleared trades the UTI shall be generated by the trading venue. For centrally confirmed and cleared trades the UTI generation obligation is placed to the clearing member. For trades that were centrally confirmed by electronic means but were not centrally cleared the UTI should be generated by the trade confirmation platform at the point of confirmation. Financial counterparties (FC) trading with non-financial counterparties – the FCs. For all other cases – the seller is responsible to generate the UTI and communicate it to the buyer. The UTIs should be generated and communicated in a timely manner so that the other counterparty can meet its reporting obligations.
  • Clear rules about identifying the venue of execution.
  • Extending the deadline for backloading from 12 February 2017 to 12 February 2019.

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

What are the changes in RTS/ITS applicable on 29 April 2024?

ISO 20022 XML will apply on 29 April 2024.

On 17th Dec, 2020 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.

On 7th Oct, 2022 EU EMIR REFIT regulatory technical standards (RTS) and implementing technical standards (ITS) have been published in the Official Journal of the European Union.

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.