MAP FinTech recently took the opportunity to explain the increased data quality reconciliation requirement that is coming on under EMIR REFIT.
With the forthcoming deadlines for the updated EMIR reporting in the EU, slated for April 29, 2024, and the UK’s due on September 30, 2024, grasping these revised requirements becomes pivotal.
Under the newly established EU and UK guidelines, there’s a pronounced emphasis on heightened data quality reconciliation standards. Here, reconciliation denotes the verification method adopted by Trade Repositories (TRs) to ensure that every side of a derivative deal is identically reported by each Reporting Entity.
Even though TRs are tasked with this verification, the ultimate onus of comprehensive and precise reporting rests with the Reporting Entities. This implies that trades must be appropriately paired and matched (explained further below). Reporting Entities are obligated to be informed of the outcomes from the inter/intra TR reconciliation activity, and promptly address any discrepancies in transactions to guarantee the thoroughness and correctness of their data submissions.
Pairing is the TRs’ method of recognising and connecting the two sides of a derivative deal using identifiers like UTI, Counterparty 1, and Counterparty 2. Matching, on the other hand, occurs post the pairing phase. Here, the TRs ensure that specific elements of the deal (like the field ‘Direction’) align perfectly between the two transaction sides.
The EMIR REFIT introduction has resulted in a marked uptick in the intricacy of data reconciliation stipulations. This surge in complexity is largely due to the increased reconcilable fields – a jump from 80 to 148. The imposition of stricter matching thresholds further intensifies this intricacy.
Here’s a peek into some fields that now require reconciliation:
- UPI (from the initiation date)
- Valuation fields (2 years post-initiation)
- PTRR (Post-Trade-Risk-Reduction) (from the initiation date)
- Additional Sub-product (2 years post-initiation)
To conclude, the reconciliation will be rolled out in two stages. Initially, from the reporting kick-off date, 87 fields will undergo reconciliation. Following that, 61 more reconcilable fields will be operational two years post the inauguration of the reporting mandate.
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