In 2012, the European EMIR regulation came into force to improve the transparency of over-the-counter (OTC) and exchange-traded (ETD) derivatives markets and reduce credit and operational risks. Twelve years later, a regime update reinforcing the requirements applicable to derivatives processing is about to come into force.
This new regime will be applied to all EU entities currently subject to EMIR reporting, i.e. financial and non-financial counterparties involved in derivatives transactions, including banks, investment funds, insurance companies and management companies/AIFMs. The requirements apply regardless of whether these entities report directly or delegate their obligations to a third party.
The Commission Delegated Regulation (EU) 2022/1855 of 10 June 2022 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council with regard to regulatory technical standards and Commission Implementing Regulation (EU) No 2022/1860 of 10 June 2022 laying down implementing technical standard on European Market Infrastructure Regulation reporting (“EMIR Refit”) were adopted on 10 June 2022. The European Stability Mechanism (ESMA) is taking a prominent role in providing guidance to market participants on how to comply with the new EMIR Refit reporting requirements. The Guidelines of ESMA on reporting under EMIR, published on 23 October 2023 (“ESMA Guidelines”) provides comprehensive information on the new reporting landscape. With its Circular CSSF 23/846, the CSSF has integrated the ESMA Guidelines into its administrative practice and regulatory approach.
The EMIR Refit has not altered the fundamental objectives of EMIR, but rather seeks to improve and refine specific provisions in order to increase regulatory efficiency, reduce administrative burdens and tailor requirements for different market participants.
The EMIR Refit reporting technical standards as well as ESMA Guidelines will come into effect on 29 April 2024.
All the reports submitted by the counterparties to the trade repositories after the start of reporting under the EMIR Refit will have to comply with the amended requirements. This applies to the reports of derivatives concluded after the reporting start date and to any modifications or terminations reported after that date, irrespective of when the derivative that is modified or terminated was concluded.
New obligations
The number of fields to be declared for each transaction has increased from 129 to 203, with 77 new, 67 modified and only 3 fields deleted. The new fields include data categories relating to guarantees, product prices and specifications, and complex financial instruments.
To ensure consistency in reporting standards, the ISO-20022-XML format will now be used for transmitting data to a central repository. This aligns with the data transmission format used in MiFIR and SFTR regulations.
EMIR Refit emphasises the responsibility of the reporting entity, requiring error notifications to be sent to the regulator. There is also a stronger emphasis on data quality, starting with the Legal Entity Identifier (LEI) needing to be kept up to date.
Evolutions
The CSSF has announced a stricter position on EMIR. It has made it clear that any failure to report by 29 April 2024 will be considered a breach of EMIR reporting obligations.
With EMIR Refit on the horizon, discussions are already underway about a possible EMIR 3.0, which could bring further changes to reporting requirements.
Share on
