Policy Statement: Changes to reporting requirements, procedures for data quality and registration of Trade Repositories under UK EMIR

Following a joint consultation in November 2021 as regards the improvement of data quality in reports to be provided under the retained European Market Infrastructure Regulation (UK EMIR), the streamlining of such reports, and the ease of the registration process for trade repositories (TRs), the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) have now published their joint Policy Statement (PS23/2) in this context.
Therein, the two regulators outline the responses they have received to their consultation and stipulate the final rules as they will apply from September 30, 2024. The regulators have thereby made three corresponding new instruments which are also part of the policy statement and attached in the Annexes. These instruments are the following:
1. The Technical Standards (EMIR Reporting and Data Quality and Miscellaneous Amendments) Instrument 2023 (FCA 2023/4)
2. Technical Standards (EMIR Registration of Trade Repositories and Miscellaneous Amendments) Instrument 2023 (FCA 2023/5)
3. EMIR Rules (Procedures for Ensuring Data Quality) Instrument 2023 (FCA 2023/3)
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To recall, in their consultation, the PRA and the FCA sought to modify existing requirements or introduce new obligations concerning the following, among others:
(1) Reporting of derivatives data by counterparties to trade repositories:
Specifically, the regulators proposed amendments to the framework for derivatives reporting under Article 9 of UK EMIR to align the datafields – to the greatest extent possible – with those set out in the international guidance of the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) (e.g. addition of new „Position UTI“ field). Apart from those guidelines, the regulators proposed to require the reporting of the UPIs – the so-called Unique Product Identifiers – for derivatives traded on organized trading venues. Additionally, the regulators proposed to require counterparties to notify either of the regulator in case of „any material errors or omissions relating to their UK EMIR reporting“. Furthermore, the regulators proposed to require counterparties to establish processes and procedures as regards the reconciliation process and as regards possible interruptions in the reconciliation. Also, the FCA and PRA proposed to require the provision of minimum transaction data involving derivative transactions between financial and non-financial counterparties. Finally, the regulators sought to require counterparties to use standardised XML schemata based on the end-to-end reporting solutions in the ISO 20022 standards in their reporting obligations.
(2) Registration process of trade repositories (TRs):
In this context, the FCA proposed to streamline the registration process for TRs that are already registered or recognized under the Securities Financing Transactions Regulation (UK SFTR) and to incorporate the payment of the relevant registration fees. These changes were aimed at aligning the registration processes under UK EMIR and the UK retained version of the Securities Financing Transactions Regulation (UK SFTR).
(3) Obligations on trade repositories:
The FCA sought to require TRs to „establish procedures and policies for effective reconciliation, verification and orderly transfer of data between TRs“. The requirements would include, for instance, a verification of the completeness of the data received by trade repositories and the update of the Legal Entity Identifiers (LEIs) upon request.
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Both the FCA and the PRA now note that they have NOT made any substantive changes to the proposed new or modified requirements. In fact, the regulators state that changes were primarily made to improve clarity, to correct technical errors such spelling and grammar mistakes, and to enhance readability (e.g. by reordering some provisions). However, there are a few changes to the originally consulted version we find worth noting:
– the addition of a new data field in the related delegated regulations to permit the reporting on an „execution agent“, if a counterparty chooses to use one and
– the FCA has moved the time by which trade repositories must make available information to counterparties about their reporting submissions to 9:00 UTC.
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