EMIR Refit:
A new era of data quality

The latest push for data quality from ESMA raises questions over how financial firms deal with change. Technological innovation has enabled an agile new approach – but how do you embrace this?

Discover new strategies to tackle regulatory reporting with the latest insights from industry experts and technology leaders.

EMIR Refit: The top questions answered

  • What is the EMIR Refit?

    The EMIR Refit is an update to the decade-old European Markets Infrastructure Regulation. The main aim of the Refit is to simplify reporting requirements for over-the-counter (OTC) and exchange traded derivatives (ETDs), improve the quality of reported data and increase visibility of systemic risk. The first phase of changes goes live on 29 April 2024.

  • What are the main changes in the EMIR Refit?

    The reporting rules are becoming more prescriptive, as well as updating which entities are obliged to report. The number of reportable fields is increasing from 129 to 203 and the Unique Transaction Identifier (UTI) and Unique Product Identifier (UPI) data elements are being introduced. The Refit will also require the adoption of the ISO20022 XML format for reporting.

  • What’s the difference between EMIR and ESMA?

    ESMA is the European Securities and Markets Authority. ESMA implements and enforces financial regulations to govern various markets. EMIR, the European Markets Infrastructure Regulation, is one such example.

  • What’s the difference between EMIR and MiFID II?

    Both EMIR and the Markets in Financial Instruments Directive (MiFID) II require firms to report the same types of transaction data to regulators, and both have a T+1 reporting timeframe. However, EMIR covers only derivatives trades, while MiFID II applies to bonds, derivatives, equities, emissions allowances and structured finance products. Under EMIR, firms must report to Trade Repositories (TRs), while under MiFID II firms must report in near-real time to an Approved Publication Arrangement (APA) and to an Approved Reporting Mechanism (ARM) on T+1.

  • Who has to report under the EMIR Refit?

    The EMIR Refit is changing some rules regarding which financial counterparties (FCs) and non-financial counterparties (NFCs) are obligated to report derivatives trades. There are new clearing thresholds for NFCs, while FCs need to report all over-the-counter (OTC) derivatives trades.

    Additionally, the Refit has expanded the definition of “financial counterparty” to include new entities, such as Alternative Investment Funds (AIFs) and their managers (AIFMs), as well as Small Financial Counterparties (SFCs). Clearing and reporting obligations vary depending upon entity and type of derivative contract.

  • What instruments are reportable under EMIR?

    Under the European Markets Infrastructure Regulation (EMIR), eligible firms must report all derivatives trades to a Trade Repository (TR).

  • What is a Trade Repository (TR)?

    A trade repository is an entity that centrally collects and maintains records of derivatives and securities financing transaction (SFTs) contracts. Various regulations, including the EMIR Refit, mandate that market participants report the details of their trades to the TR. Trade repositories allow authorities to accurately monitor systemic risk in financial markets.

Top industry commentary on the EMIR Refit

The seven day notification is a very significant challenge. Fine, if you’re sending 10 swaps a day and one is wrong. If you’re sending 100,000 or 2 million or 10 million messages a day, and quality assurance tells you you’ve got error sets across 5% of it […] That whole operation of the notification process becomes extremely challenging.”

Ewen Crawford

Senior Product Owner, Standard Chartered Bank

While regulators are trying to converge on the data and the changes, they’re also making a number of the changes in lockstep with one another. Because there is some variation, the challenge becomes a resourcing challenge, because very often the same subject matter experts across the organisation and across the architecture are dealing with these changes.”

Loren Schwartz

Senior Director, Regulatory Technology, CIBC

We’ve had Brexit since EMIR’s been implemented, which means that there could be some divergence between the EU and the UK regimes. Given that the UK market is one of the largest derivatives markets in the world, the UK may, in the coming months, decide that it wants to change tack. These things do happen when you have politics in the mix.”

Virginie O’Shea

Founder, Firebrand Research

We see a lot of exciting developments out there on automatically mapping things with machine learning, on rethinking how the subject matter experts can be involved in these projects at a very technical level, but without having to create technical projects unnecessarily. These things are always very compelling events to revisit architectures and so on.”

Christian Nentwich

Founder and CEO, Duco

One-size-fits-all does not fit in this environment. People that think “oh, I’ve got a very robust cash-management reconciliation solution that’s going to be able to work for derivatives” are going to get a big shock and surprise. There’s nothing like a complex swap to break everybody’s brains and processes at the same time.”

Loren Schwartz

Senior Director, Regulatory Technology, CIBC

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These are personal views and do not necessarily represent the views of the individual’s firm.

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