Webinar Recording: EMIR and SFTR Data Quality – What Fund Managers Need To Know, Sept 28th 2022 – Watch it back
We were joined on Wednesday February 1st by industry experts Bernardo Castel-Branco and Benjamin Shenkin from Alpha FMC and Daniel Lawlor from Aquest Advisory to discuss how to prepare for the upcoming EMIR Refit changes and present an oversight framework for Fund Management Companies.
Over 90 industry colleagues joined on the day and some key takeaways are listed below:
On October 7th 2022, the technical standards for EMIR Refit were published in the Official Journal of the European Union and on December 20th 2022, ESMA published the final guidelines and technical documentation relating to the reporting validations.
The reconciliation and reporting requirements under the EMIR REFIT will see the number of reportable fields brought to a total of 203, a value higher than that required under both MIFIR and SFTR. This is a hefty increase from the current 129 which will also see the removal of 15 existing fields deemed surplus to requirements, and the material change to the definition or requirement for approximately 30 more.
Some of the new fields, such as the Prior and Subsequent UTI may pose a challenge to many firms, whereas others such as the introduction of the Unique Product Identifier (UPI) under Anna DSB should facilitate the effective aggregation of OTC derivatives transaction reports on a global basis and reduce data quality inconsistencies caused by the varied use of ISIN and Classification of Financial Instrument (CFI) codes.
The introduction of the UTI waterfall, and departure from flexible bilateral agreements, may also assist in clarifying the creation and dissemination of the trade identifiers in the case where no agreement exists between counter-parties as to where the responsibility lies. Given the early T+1 deadlines the waterfall imposes, this is likely to be seen as a welcome change.
The updated reporting encompassing these changes will also change and cease to be in the more “plug & play” CSV format, instead switching to a more rigid XML. This move, in line with ISO 20022 standards, is likely to have contributed to the 18 month implementation period as opposed to the usual 12 month turnaround seen as the industry norm for regulatory change.
There will be increased responsibility on trade repositories to report breaches and relay these to the reporting entities to resolve – this involves the TRs reconciling on pairing and matching in order to produce exception reporting. Abnormal, missing or stale values are to be highlighted to the reporting entities by the TR.
Some 61 of the reconcilable fields only become required 2 years post refit go live.
In light of the above amendments being introduced under the EMIR Refit, much of the discussion centered around what firms should be doing now, as we cross the 15 month mark until the EU go live date. The key action raised, indicated that firms should start or update their programs as soon as possible.
On the evening we also announced the creation of the Fund Recs EMIR Working group which is open to all clients using our EMIR solution. The Working Group provides a platform for Fund Recs and our clients to collaborate on identifying practical solutions to the challenges posed by the regulation.
Additionally, in collaboration with Danny from Aquest, we will be publishing an industry whitepaper to support the industry in understanding their obligations. The document will be a consolidation of regulator comment and indication of current market practice among peers.
Fund Recs develops cloud reconciliation software for the funds industry. We'll be sharing our experiences and thoughts on our blog as we build our company.
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