Europe’s financial regulator has revised the current framework for the reporting of derivatives trades under the European Markets Infrastructure Regulation (EMIR).
The European Securities and Markets Authority (ESMA) is now seeking feedback on its changes which aim to resolve the widespread issues which have arisen in the reporting process.
The consultation addresses three categories within the current standards: clarifications of data fields, adaptions of existing fields to the reporting logic stated in the existing Q&As, and the introduction of new data fields to reflect market practice.
“This is a very big surprise for the industry,” said PJ Di Giammarino, CEO of regulatory think tank JWG Group. “There is an awful lot in here that turns Q&A advice into prescriptive rules.
"In essence, the consultation proposes to re-write a number of key concepts while firms are busy preparing for MiFID II reporting. It creates more residual noise from EMIR that wasn’t foreseen in a busy 2015 implementation window.”
Europe’s trade reporting rules came into effect in February this year, after the technical standards were published late in 2013. It was widely assumed the requirements would be postponed, however at the eleventh hour, the European Commission refused to grant an extension, leaving firms scrambling to comply at the last minute.
Instead, the firms have had to rely on a series of Q&A’s on EMIR trade reporting that have been updated throughout the year.
Because of the short timeframe between the release of the technical standards and the enforcement date, there was not a sufficient consultation with the industry. ESMA is looking to remedy this with its latest consultation.
Since the implementation of the onerous requirement, the trade reporting process has been said to be heavily flawed, largely because reports from counterparties have had a very low matching rate at trade repositories.