For the most part, EMIR and MiFIR standards are fairly aligned. Despite differences in go-live dates, the UK EMIR REFIT technical standards are nearly identical to that of the EU under ESMA. This follows similar alignment for transaction reporting under MIFIR regulation where the biggest difference is the definition of Traded on Trading Venue (TOTV) and Underlying Instrument that is Traded on a Trading Venue (UTOTV) where ESMA removed UK trading venues.

Nonetheless, we are seeing EU and UK regulators taking greater ownership of their respective regulations which is expected to increase differences. For example, during Q1 of this year, both ESMA and the FCA published REFIT specific Q&As covering the new regulation. The answers included clarifications of various aspects of the regulation that they have been asked about. In the Financial Conduct Authority (FCA)'s case, the Q&A's were in the form of a consultation draft with reporting firms allowed to comment on the FCA's views.

As UK and EU regulators issue their own Q&A statements, this requires reporting firms to be aware of clarifications on how to report various trading scenarios. The answers may not be consistent for the EU and UK. We already are seeing examples of divergence of how to report different products such as FX Swaps and Payment Schedules that differ between REFIT rules and other jurisdictions. Similarly, we expect to see these small variances increase within the EU and UK under REFIT as the different regulators stamp their views on various trading scenarios they are asked about.

MIFID II changes coming

Speaking about divergence, during the quarter the European Council adopted revised rules effecting MIFIR which are expected to lead to updates to reporting and technical standards by late 2025. Even if similar changes are brought up by the FCA, there is currently no timeline when such and update would take effect in the UK thus triggering a gap in how

MIFIR is reported between the EU and UK.

Some of the proposed MIFIR changes include:

• Products in scope: Expanded to include some OTC currency derivative transactions
• Entities in scope: AIFMs discussed to be added
• Systematic internaliser determination: Updating formula of quarterly calculations

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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.