The European Market Infrastructure Regulation (EMIR) framework set up a reporting regime for entities trading derivatives in Europe. With the new Level III regulations the framework received this year, traders will be faced by new challenges in their quest for compliance.
The European Market Infrastructure Regulation (EMIR) is the key framework for the regulation of over-the counter derivatives trading in the European Union. It came into force in August 2012 and received an overhaul in late 2014 before being updated to Level III this year. The revisions of the Regulatory Technical Standards (RTS) and the Implementing Technical Standards (ITS) are intended to bring more clarity into the existing regulatory process. The amendments entered into force on February 10, 2017 and are mandatory with effect from November 1, 2017.
The upcoming Level III update changes how reporting will be facilitated and the formalities concerning the definition of trade parties, positions as well as how to report special transactions. The following aspects will be elaborated on in the upcoming second blogpost concerning EMIR Level III updates:
- Use of the LEI (Local Entity Identifier)
- Position Reporting
- Delegation Scenarios
- Buyer and Seller Identification
- Reporting Collateral
- Generation and use of UTI’s (Unique Transaction Identifier) for the Trade ID
- Reporting of Compound Derivative Contracts
A rather big part of these regulatory updates leads to urgent needs for changes in order to make existing reporting systems compliant as of November 1st. But the changes in the regulation’s requirements also resulted in updated specifications regarding the message structure and processes used by the transaction registers (such as REGIS-TR or DTCC). These will also be covered in a second blog post concerning EMIR Level III updates.
Traders, banks and financial ﬁrms have many of the systems and data sets needed to cover their EMIR reporting. But compared to previous changes, these new ones have a considerable impact on the IT-side implementation requirements and force companies to quickly change their existing reporting structure to stay compliant. Due to the nature of the aforementioned changes and the implications of translating and implementing the requirements for existing IT-systems specialized consulting support for technical and procedural questions is advised.
SEEBURGER has been offering a solution for EMIR reporting since the mandatory launch in February 2014, with hudreds of customers utilizing the solution. The Trade Reporting Solution (TRS) is supported by a rounded team of technical and business experts who ensure that published regulatory changes are available for the start of each new release through a content subscription.
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Written by: Stefan SchröerStefan Schröer, Product Manager, Business Unit Utilities is responsible for thought leadership and product development related to SEEBURGER’s trading and reporting technology for the Financial Services and Utilities Industries. Stefan has more than 20 years of business and technology experience working with specific technology initiatives for the Utilities industry, both on-premises and in the cloud. Stefan has been with SEEBURGER since June 2013, and prior to this with various players in the German utilities industry.