New European trading reporting regulation take effect on Monday April 29, marking the culmination of years of work but the launch of European Market Infrastructure Regulation (EMIR) Refit is only the latest milestone in the global roll-out of new reporting requirements.

London-based reporting firm Kaizen has been working for years with firms bound by the new European Securities and Markets Authority (ESMA) regulation which sees the number of fields in a report increase to 203 from the 129 fields in the previous version.

Tim Hartley, the director of EMIR reporting at Kaizen, said firms are pretty ready to start reporting to trade repositories under the new regulation but there is still plenty to do over the coming weeks and months.

Hartley said: “Firms have done a lot of work to ensure they are adhering to the new field formats, they’ve read through the guidance from ESMA and they’ve attended industry working groups as well as Kaizen forums so they understand the different fields and, where there is some interpretation around the fields, they understand what is required.

“So for day one, that means they will be able to submit trades successfully. They have also been working hard to submit UAT (User Acceptance Testing) data to the trade repositories to make sure they can handle successfully lifecycle events.”

The Kaizen director said firms will be looking to fine-tune their reporting over the first days and weeks. “Most firms will have a laundry list of things they want to achieve on day two which could be performing full assurance testing on the data so not just checking that they have met the validation rules but also that the data itself is fit-for-purpose,” Hartley said.

The EMIR Refit rules that took effect on Monday are only the latest version of the regulation that first came into force in February 2014, designed to give regulators greater transparency into firms’ derivatives trading activities.

Hartley said the industry has adapted slowly to the various implementations so current iterations are proving less troublesome than earlier versions.

He said: “The industry has got much better at collaborating on these changes, what’s required and then working together to narrow down the list of problem fields and then discuss that. Where there is no consensus between the buy and sell-side firms, they then ask the trade associations to reach out to the regulators on their behalf.”

Trade bodies such as FIA and ISDA have been working hard in recent years to mediate between regulated firms and the bodies that regulate them.

Hartley added: “Also the regulators have learned from previous regulatory updates in that they have given firms 18 months to start to be ready but, even then, the regulator was talking about this before the 18 months so firms have had a good two years plus.

“Because the implementation period has been 18 months rather than the usual 12 and we’ve seen guidance documents from the regulators, the grace period for implementing the changes correctly will be very small so firms should not expect a grace period around getting the data right.”

Firms should not, however, be patting themselves on the back just yet: the April 29 launch in only one of the upcoming targets they need to be thinking about.

Hartley said: “For any historical derivatives that were executed prior to April 29, if they are still live after the 29^th, they need to be updated to the new format and firms have six months to update those trades into the new format. The regulators will be very unforgiving of any derivative that is not updated in that six month period.”

And, of course, Europe is only one of the jurisdictions updating its reporting rules. The UK is set to introduce its EMIR reporting obligations on September 30 for example.

Hartley said: “Some firms will be able to look at the changes under EU EMIR and learn from what has been implemented and the aftermath over the next couple of months.

“So for firms that have an EU and UK EMIR reporting obligation, it should be a smoother ride for UK EMIR because they have been through this already. But that does mean, that for those firms, their system has to output for a period a totally different set of results because the format is old for UK but it is already in the new Refit format for EU.”

The UK late September deadline and the EU deadline for historical trades a month later could create a problem for firms bound by both sets of regulation. Hartley said: “If you are reporting yourself, you have control. But if you have delegated reporting, you are a little bit at the mercy of who is doing the reporting for you and when they are geared up to make those changes. Despite the reporting obligation remaining with you, UK firms will be ready to learn from the EU lessons but there are challenges in that road as well.”

As well as Europe and the UK, most of the other main trading regimes are also looking to update their reporting regulations in the next two years.

“In other G20 jurisdictions, there’s a lot of different rewrites. In the US, CFTC reporting has seen recent wholesale change, there’s a rewrite for the Japanese reporting regime and the same for Singapore and Australia.

“Next year, there will be changes proposed for Swiss reporting and we envisage changes to SFTR and Mifid as well. A large sell-side bank is likely to be affected by all of these so the compliance and operational burden will be high in 2024 and 2025,” Hartley concluded.

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