In June, the European Commission endorsed the ESMA proposed RTS and ITS of EMIR REFIT. This places the next hurdle on the European Parliament which needs to approve the regulation within their review period. Assuming no issues there, we shortly should see more clarity with when the EMIR REFIT go-live will take place (currently assumed for some time in H1 2024).

While the new standards won't appear for at least 18 months, there are several key items firms should have in mind now with their preparations.

ISO 20022 XML submission format - Like SFTR, EMIR is moving to the ISO 20022 format for submissions to a trade repository (TR). This is a large hurdle for many firms as most that are reporting directly to a TR are doing so in CSV format or to a smaller level in fPML. Luckily firms such as S&P Global (formerly IHS Markit) can assist with this type of data transformation to the XML requirements.

Counterparty details - Another interesting change occurs with counterparty data where more information is required about your counterparties you are trading with. Firms will need to answer whether their counterparties are above the clearing threshold, have an EMIR obligation themselves, are a financial or non-financial counterparty and what sector they are in. Similar to LEIs that became mandatory for MIFID II reporting in 2018, firms should have in mind well before the go-live date, how they will collect these new counterparty details from their clients and partners to comply with the new EMIR standards.

UTI formats and hierarchy - As part of the REFIT, ESMA is continuing to a make a push for continued improvement of pairing and matching rates of counterparty UTIs and submitted data. Low pairing rates were again spotlighted in ESMA's 2021 EMIR & SFTR Data Quality Report. As a result, ESMA is endorsing the UTI waterfall proposed by CPMI IOSCO in 2017. While firms will continue to have the ability to fall back on bilateral agreements to decide who is the UTI generator and receiver, the waterfall makes it clearer on who has the generating responsibility and ultimately needs to share these details in a timely fashion with counterparties. This process aims to put emphasis on how UTIs are shared to reduce cases of UTI pairing breaks due to late distribution of information between counterparties. In addition, leveraging our popular UTI Sharing and Enrichment platform for SFTR, &P Global (formerly IHS Markit) is expanding this product to cover EMIR (contact us at regreporting@spglobal.com to learn more).

Crypto reporting - Following on the theme of adapting EMIR fields to existing derivative products being traded, EMIR Level 3 will better support crypto-assets. Currently an issue that applies to crypto reporting is the lack of ISO currency codes for bitcoin or other cryptocurrencies to support submissions under the FX asset class. A solution is to report crypto derivatives as commodities. However, the commodity asset class doesn't include descriptions of cryptos and the products aren't well defined in the EMIR report. To remedy this problem, the REFIT has created a new field called 'Derivative based on crypto-assets' to identify crypto based transactions. According to ESMA, the identifier helps regulators in understanding volumes and risks of crypto asset derivatives.

Posted 23 August 2022 by Ron Finberg, Executive Director, Product Specialist at S&P Global Market Intelligence Cappitech

S&P Global provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.