With ESMA publishing documents faster than it’s possible to read them, we ‘welcome’ another EMIR Q&A today. The good news for reporting is that it mainly impacts clearing and there are only two amendments in the trade reporting section.
The first of these comes in TR Question 36 – the reporting of OTC derivative notations. This is a simple clarification from ESMA, stating that:
“For reporting purposes, only instances where a counterparty (being a CCP or another counterparty) steps into the derivative contract and becomes a new counterparty to the derivative contract should be reported with Action Type “New”. For the original report relating to the existing transaction derivative, counterparties should send a termination report marked as ’C= Early termination’, completing the field “Termination date”. The remaining counterparty and the new counterparty should then send a new report with action type “New” relating to the new transaction derivative.”
So, there’s some new words in TR Question 36, but no change to reporting.
The second change impacts TR Question 42 – population of ‘Clearing Obligation’ and ‘Cleared’ (fields 2.34 & 2.35) – and this marks a welcome simplification with the new instructions becoming applicable from 17 June 2019. The implementation of EMIR Refit removes obsolete references to frontloading leaving the remaining instructions far more digestible:
“The field [Clearing Obligation] should be populated in following way:
- The field is not applicable to the transactions executed on a regulated market and should be left blank
- In the case of cleared trades, the field “Clearing obligation” should be populated with “N” and the field “Cleared” – with “Y.”
Even with the Q&A, understanding how to trade report correctly under EMIR can be a complicated and perplexing task. At Kaizen, we find many of the mistakes firms make with their reporting stem from a basic misunderstanding of the requirements.
If you want to unravel the mysteries of EMIR trade reporting and avoid the potential pitfalls leading to breaches, why not attend one of our CPD and CISI accredited courses. In our experience, a small investment in training can help avoid costly remediation at a later stage.