EMIR Refit - Key changes and impact

The #EMIR (European Market Infrastructure Regulation) #Refit (Regulatory Fitness and Performance Program) formally known as Regulation (EU) 2019/834 , is a major update to the original EMIR regulation. The EMIR Refit was introduced to simplify the original regulation and make it more proportionate. It aims to reduce the regulatory burden on smaller market participants without compromising the original goals of reducing systemic risk and increasing transparency in the derivatives market.

The new updates aim at further enhancing harmonization and standardization of reporting across the EU.

Three key areas of change are set below as follows:

New reporting fields’ obligations

The number of reportable fields will increase from 129 to 203, putting increased pressure on ?reporting entities to ensure completeness and accuracy of the reporting.

Implementation of ISO 20022 standard

Reporting entities must ensure that any reports submitted to TRs comply with the standardised ISO-20022-XML template, the same format used for the Securities Financing Transactions Regulation (#SFTR) and the Markets in Financial Instruments Regulation (#MiFIR).

Unique Product Identifier (UPI)

A UPI will be assigned for all OTC derivatives products, in addition to the existing ISIN and CFI code. This enhances uniformity in reporting and reduces breaks in post reporting reconciliations between trade repositories.?In 2019, the Financial Stability Board (FSB) designated the #DSB as both the service provider for the UPI system for OTC Derivatives and the operator of the UPI reference data library. The UPI is used for identifying OTC Derivative products in Transaction Reporting data and to help assess systemic risk and detect market abuse.

Unique Trade Identifier (UTI)

Historically, the UTI has been bilaterally agreed between counterparties and not centrally generated at point of trade execution. EMIR Refit introduces prescriptive steps in determining the responsible party required to generate the UTI which is based on a new waterfall methodology, following the CDE Guidance.?

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The complex reporting logic as well as the latest reporting format resulting from EMIR Refit will have to be implemented by the reporting entities by 29th April 2024. Since concerned financial institutions will likely be facing technical and procedural challenges during the implementation period, they shall ensure an early start to the internal integration of the relevant obligations.

With?this imminent go-live date reporting entities with derivative exposure need to ensure they are compliant with the new reporting rules. The requirements apply irrespective of whether firms report directly to a trade repository or delegate their obligations to a third party.