Are you Complying with the EMIR Regulatory Reporting Obligations?Salvus Team
Only a few weeks ago, and after five years in effect, CySEC published its first compliance review, related to the trade reporting obligations under EMIR. The primary purpose of this first review, conducted by the Cypriot competent authority, was to assess the quality and timeliness of the reporting obligations performance by Investment Firms. In this commentary, we will analyze the outcome of the review and provide insights for you to ensure compliance in order to get you prepared for the next round of on-site inspections.
What did the review reveal and what to do about it?
Given that the EMIR Reporting Technical Standards were amended a few times since its introduction in February 2014, with the latest updates coming into force in November 2017. As a result, many firms did not update their practices and positions were not reported correctly.
Compliance tip: Please note that with the Level 2 EMIR reporting obligations and after November 2017, firms are obliged to report the updated valuation to the trade repositories in a separate report.
A significant amount of trades were rejected, without any actions taken from the appointed delegated parties or the investment firm.
Compliance tip: It is important to point out here, that the investment firm has the ultimate responsibility to ensure,
a) the reporting obligations are correctly sent, and
b) are reconciled by the responsible people within the firm.
Having a detailed monitoring policy/manual of the procedures and processes to ensure compliance with the EMIR obligations, is mandatory and has not been treated as such by most investment firms.
Compliance tip: The internal dedicated person shall acquire knowledge in regards to the information reported on the firm’s behalf and among others ensure to;
– collect the correct LEIs and IDs from the counterparties,
– report the correct ISIN and CFI codes of the reported instruments,
– report the correct country ISO codes,
otherwise the trades will be rejected.
Finally, the regulator reported that a large number of trades remained unmatched between the counterparties involved in a trade. The findings showed that when two counterparties with EMIR reporting obligations entered into trade, the same Unique Trade Identifier (UTI) was not used.
Compliance tip: Investment firms must ensure to report the same UTI for the reported trades, otherwise the trades will remain unpaired and the firm not compliant.
We hope this article is of help for you to effectively stay on top of the EMIR reporting obligations and for any upcoming inspection preparation. If you require more details are needed, please let us know.
The information provided in this article is for general information purposes only. You should always seek professional advice suitable to your needs.