What the 2024 EMIR Refit means for EU and UK reporting entities

Is your firm prepared for the upcoming EMIR Refit? As the 29th April 2024 go-live date approaches, understanding the forthcoming changes under the European Markets Infrastructure Regulation (EMIR) Refit is crucial.

According to Novatus Advisory, initially enacted in 2014 in response to the financial crisis of 2008, EMIR aims to enhance transparency in derivative trading. The 2024 EMIR Refit, also known as the Regulatory Fitness and Performance Programme, represents the most significant update to this regulation, focusing on quality enhancements and international data harmonisation.

The EMIR Refit will introduce several critical enhancements, including expanded reporting fields and life cycle reporting, an upgrade to the ISO 20022 messaging format, revised pairing and matching requirements, and the implementation of Unique Product Identifiers (UPIs) and Unique Trade Identifiers (UTIs). These changes are designed to streamline processes and improve data quality across reporting standards.

Understanding the divergence between the EU and UK regimes is essential as the 2024 EMIR Refit marks the first major separation between EU EMIR and UK EMIR reporting requirements. While the two frameworks will remain broadly similar, they will diverge in implementation dates and specific regulatory requirements. This split follows the broader trends of regulatory adjustments post-Brexit, necessitating adjusted compliance strategies for firms operating within both jurisdictions.

The EMIR Refit not only modifies existing frameworks but also introduces significant procedural changes. These include the expansion of reportable fields from 129 to 203 and enhancements in data quality expectations. Additionally, the Financial Conduct Authority (FCA) in the UK has published its final reporting rules which amend the current EU Regulatory Technical Standards and introduce new FCA Data Quality Standards.

Moreover, the Refit stipulates that counterparties must provide UPIs and adapt the UTI generation logic. This change will require a reconfiguration of data management systems to ensure accurate reporting and compliance with the new standards. The unique identifiers such as UPIs will be essential in improving the granularity and precision of trade reporting.

In conclusion, as the 2024 go-live date for the EMIR Refit approaches, both EU and UK-based reporting entities must be diligent in updating their systems and processes. This update is not just a regulatory requirement but an opportunity to enhance the integrity and efficiency of financial reporting in the derivatives market. Firms not currently responsible for reporting should also prepare to meet new demands, as expanded data collection requirements could necessitate significant operational changes.

Read the full post by Novatus Advisory here.

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