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Challenges with EMIR Reporting Solutions

Challenges with EMIR Reporting Solutions

by Michiel Wijn, Senior Manager, Corporate Treasury Solutions, PwC (The Netherlands) and Erwin Bastianen, Senior Consultant, Corporate Treasury Solutions, PwC (The Netherlands)

As of last month, companies within the EU are required to report derivative positions under the European Market Infrastructure Regulation (EMIR). Over the last couple of months, companies have been preparing to comply with the EMIR reporting requirements. This article looks at the journey corporates have taken to select and implement their reporting solutions in time for the deadline. We also look at how we expect their reporting to evolve in the near future.

The European Securities and Markets Authority (ESMA) approved the first group of Trade Repositories (TRs) in November last year. This triggered a compliance date of 12 February 2014 for EMIR derivative reporting, leaving companies only 90 days to understand the TR landscape and implement an EMIR reporting solution. Quite a few companies postponed their selection of a trade repository, mainly to:

  • See which TRs would be most commonly used by the industry;
  • See how treasury management system (TMS) vendors would position their EMIR solution; and
  • Assess how dealing platforms capture and transfer the right EMIR data fields into the TMS.

As a result of companies delaying their TR selection, many had to be onboarded by the TRs just before the compliance date. This led to a significant challenge for TRs, as they had to onboard high volumes of customers in a relatively short timeframe. In a few cases, this resulted in some TRs not having the capacity to onboard late subscribers in time.

Besides the selection of a TR, companies faced difficulties collecting certain EMIR data fields. Some of these data fields were not captured by companies before EMIR was introduced. To collect and store this data, the technology (e.g., TMS) and underlying processes needed to be changed. Many companies currently have manual processes in place to capture this data and anticipate creating more robust processes around reporting in the future. Furthermore there has been a lot of uncertainty around new data fields, such as the Legal Entity Identifier (LEI) and the Unique Trade Identifier (UTI). ESMA communicated standard procedures around these data fields just one day before the reporting deadline. It is now up to the market to adopt these standards.