EMIR Refit

The European Market Infrastructure Regulation (EMIR) has undergone significant changes with the introduction of EMIR Refit which has implications for regulated firms.

Here are the Top 5 Immediate Challenges faced by firms:

1) Boatload of New Fields

The data fields in EMIR Refit are set to undergo significant changes, with 89 new fields being added, 15 being withdrawn, and updates being made to existing fields. More fields combined with the requirement to create XML submissions means that some weighty files will be submitted to regulators.

2) Increased Trade Reconciliation Fields and Published Tolerance Levels

The number of reconcilable fields has increased and are being introduced in stages in order to mitigate the strain on firms in getting it right straight out the gate. By 2026, two years after EMIR Refit launches, there will be a whopping 149 fields that will be reconciled. This is a big change from the current 56 fields that are currently being reconciled in EMIR.

The good news is that EMIR Refit guidelines clearly communicate the fields that will be reconciled, if there is a tolerance, and when the reconciliation of the field will start. In preparation for better matching and pairing rates, the regulations attempted to remove ambiguity in field definitions. EMIR Refit increased the granularity of its definitions of the fields to include specific precision rates for numeric values and rounding guidance.

3) UTI

In EMIR Refit, clear steps have been taken to align with international standards and global harmonisation in reporting.

The UTI generation logic and timeline for sharing the UTI are enshrined in the regulations. The determination of which counterparty is responsible for generating the Unique Trade Identifier (UTI) depends on the type of transaction and the counterparties involved.

A firm grasp of the UTI generation, dissemination and increased counterparty communication means reporting timelines will be challenging especially considering transactions across jurisdictions and timezones.

4) CSV to XML

The move to XML formatted files aligns with objectives towards global harmonisation and improving data quality. From a technology aspect, XML files will be larger than CSV files and may take longer to generate. A small price to pay for better data quality.

5) Staggered GO LIVE dates between ESMA and the FCA

Firms having obligations under ESMA and FCA are required to maintain two different data standards for four months. They may also have to report the same trade to two different versions of the EMIR regime. Regulators have made it clear that firms cannot start reporting the EMIR Refit until the specified Go Live dates.

This can lead to a substantial increase in complexity, and firms must plan accordingly to address this challenge.