EMIR refit phase II went live on 27 April 2026 and, on the surface, the transition appeared successful. Trade repositories began receiving data as expected, and for some firms, early reconciliation feedback looked manageable. What has now become clearer, however, is that getting reports out on time was never the hardest part.

Reconciliation has long been framed as an overnight process that produces reports and flags exceptions for later resolution. Under EMIR, reporting was seen as the primary obligation and reconciliation as a downstream activity largely handled by trade repositories.

Phase II has exposed how limited that framing has become. The real test is whether the data behind those reports can withstand a level of scrutiny that is now routine.

What phase II represents

EMIR refit was always scheduled to be rolled out in two defined phases. Phase 1 went live in April 2024, establishing the reporting framework and bringing an initial subset of fields into reconciliation scope. Phase II activated 61 additional fields, totalling 148. Firms that were compliant under phase I have not suddenly become non-compliant. However, the reconciliation framework they were operating under has tightened, and the data quality bar is now significantly higher.

Driving this change is the reconciliation process across counterparties and trade repositories (TR). Where both counterparties report to the same repository, an intra-TR reconciliation is performed to compare both submissions internally. Where this differs, the repositories use an inter-TR reconciliation to compare submissions between them.

In both cases, trade repositories now compare both sides of a trade for each counterparty across all 148 fields, and report discrepancies back daily. With the expanded fields and 39 requiring exact matches, this feedback loop is much more demanding. Relevant fields are also rechecked at each reconciliation run, and routine end-of-day valuation updates can trigger full field comparisons.

Phase II is therefore, in practice, a daily stress test of data quality across a firm’s full reported positions.

The pressure points being exposed

Phase II involves repeated rechecking of applicable fields on existing positions. Trades carried forward from earlier reporting phases, historic lifecycle events, and prior enrichment decisions are all back in scope. Legacy data problems that have remained dormant are now becoming visible on a daily basis.

This was signalled well in advance. ESMA’s 2024 data quality report found that a year after phase I went live, around 2% of the 36 million submissions requiring conversion to the new format had still not been updated. ESMA also stated that improving reconciliation rates would be a supervisory priority in 2025, highlighting ongoing data quality concerns.

Static data mismatches illustrate the problem. Prior UTIs, counterparty identifiers, and product taxonomy fields often differ because data has been captured, enriched, or normalised differently across firms. Trades may also match perfectly on contract data and still fail on valuation, due to differences in methodologies, rounding conventions, or timing assumptions. Much of this variation was masked by phase 1’s narrower reconciliation scope. Under phase II, it becomes a daily break.

Operational complexity compounds the problem. New reconciliation status codes have been introduced in trade repository reports, and firms who did not update their systems pre-go-live are now receiving feedback they cannot correctly interpret. Additionally, amendments, novations, and compressions must be reflected consistently in the most recent reported state of a trade. Where lifecycle processing is fragmented, or intraday events are not resolved cleanly by end of day, reconciliation breaks become unavoidable.

High break volumes cannot be ignored

For firms that did not conduct pre‑go‑live reconciliation testing on their existing books, these issues are now surfacing at scale. Where break volumes rise quickly, teams still relying on manual or semi‑automated exception handling are likely to struggle. Upstream data controls, enrichment logic, and lifecycle consistency will determine how manageable phase II becomes over the coming months.

High reconciliation break rates are not simply an operational inconvenience. In February 2026, just weeks before phase II went live, ESMA imposed a €1.374 million fine on the trade repository REGIS‑TR for organisational failures under EMIR and SFTR. While the fine was not linked to firm‑side reporting quality, its timing was a clear signal that supervisory tolerance for structural control weaknesses is limited.

Regulators expect firms to act on reconciliation feedback, not simply monitor it. Breaks must be investigated, root causes identified, and remediation activity documented. Perfect reconciliation is not necessarily the immediate objective, but firms must demonstrate active management and appropriate governance over ongoing issues.

A shift in reconciliation thinking

Phase II reframes reconciliation from a back‑office task into something much closer to a continuous data quality control. Firms adapting well are embedding reconciliation as an automated feedback loop: field‑level comparison against trade repository output, prioritised exception queues with clear ownership, and a traceable audit trail showing how breaks are identified, investigated, and resolved.

With daily break populations spanning 61 additional fields, manual triage at this scale is not sustainable. Firms investing in structured reconciliation controls and automated exception handling are not just managing EU phase II more effectively today. They are also better positioned for UK EMIR phase II in September 2026 and future regulatory expansion, without repeatedly rebuilding controls.

EMIR phase II is live. The data is already showing firms where they stand. Whether this becomes an ongoing compliance burden or a catalyst for stronger, more resilient data foundations now depends on how quickly firms act on what the feedback is telling them, not simply whether reports are going out on time.