The European Securities and Markets Authority (ESMA) has updated its Q&A to address concerns over the European Markets Infrastructure Regulation (EMIR), despite those in the industry saying that the update has come too late.
The updated Q&As clarify, among others, issues related to reporting to trade repositories (TRs) such as on how to construct and generate Unique Trade Identifiers (UTI), the reporting of empty/not available fields, and the UPI taxonomy.
They were released by ESMA just a day before the final EMIR deadline for reporting derivatives trades to trade repositories (TRs), which was on 12 February 2014. However, the association said that it appreciated that it will require a certain amount of time for both reporting firms and TRs to properly incorporate the further guidance.
Other areas covered by the updated Q&A include OTC derivatives and CCP requirements.
However, the Emir trade reporting obligations could feasibly impact thousands of small to mid-size counterparties that have never been subject to this sort of financial regulation before, who would have needed more guidance and what to report and to not report.
Elspeth Goodchild of Rule Financial said in a Finextra blog that, despite offering a little more clarity and guidance around the implementation of the 12 February trade reporting mandate, it was arguably “too little too late”.
“It’s clear from all of today’s commotion that many institutions are still struggling to compile and submit compliant trade reports, and it’s evident that much uncertainty remains around … what constitutes a compliant trade report. Furthermore, confusion around the backloading of trades is also causing some issues.”
Goodchild added that EMIR has been plagued by confusion and uncertainty from the offset, and many firms have delayed the implementation of their trade reporting solutions in the hope of gaining some sort of clarity on the exact scope and requirements of the mandate.
“Unfortunately, this clarity never came. Some firms are still even unsure if they need to report at all, and are unaware of the steps they need to take to do so. The simple diagram below could help hard-pressed operations people decide on the correct course of action, but it is by no means exhaustive.”
The culmination of all this uncertainty, said Goodchild, was that many firms are now scrambling to compile and submit trade reports, having left it too late to implement an adequate solution and set up the necessary documentation and agreements in time for the deadline.
“Clearly, this delayed response by some firms has also caused significant issues for trade repositories. Even today, many trade repositories are struggling to onboard clients who were late to register, and this is having a knock on effect on the quality of service they are able to provide, even to those who registered ahead of their respective deadlines."
"In extreme cases, clients have even found themselves unable to access their chosen trade repository’s systems, despite having already completed the onboarding process.”
Goodchild's full article, including guidelines for the backloading of trades, can be found here
