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Navigating EMIR Changes: Reporting Revisions and Counterparty Delegation

Ever since its inception in 2012, the European Market Infrastructure Regulation (EMIR) has undergone a gradual transformation. The primary objective of EMIR revolves around boosting transparency while keeping a close watch on derivatives markets—a step that empowers authorities to effectively monitor market activities and identify potential threats to the financial ecosystem at large.

As we approach 2024, market players are now preparing to accommodate significant changes in EMIR reporting requirements. These encompass the following major amendments:

  1. A shift in the reporting format to ISO20022 XML standards
  2. The addition of the latest Unique Product Identifiers (UPIs), in which OTC derivatives are identified with an ISO 4914 UPI code
  3. An expanded set of reporting fields, including “Event Type,” “Action Type,” and “Entity responsible for reporting” to identify (with the relevant LEI) the company responsible for the reporting, similar to the one under SFTR and new collateral fields

Whether firms manage reporting in-house or delegate it to a third party, adapting to these changes may seem daunting. Counterparty delegation, which occurs when one party transfers reporting responsibilities to another while remaining legally accountable for compliance, can be beneficial for companies with limited resources or specialized knowledge. But it often adds a layer of complexity, posing potential pitfalls such as accountability concerns, data quality consistency, and staying updated with regulatory changes.

Prior to the April 2024 deadline, organizations affected by EMIR must reconsider reporting capabilities and determine whether the current reporting model addresses all of the new requirements. It will also be crucial to ensure any delegate provides transparency and maintains a robust reporting infrastructure. Remember, non-compliance with EMIR transaction reporting directives can lead to financial penalties, reputational losses, operational disruptions, heightened regulatory scrutiny, lost business opportunities, and a surge in remediation costs.

Larger firms may consider investing in in-house reporting talent, but this requires significant resources. Alternatively, firms can join forces with third-party service providers who specialize in EMIR transaction reporting. Several service providers offer integrated solutions compatible with firms’ existing infrastructure.

It is also important to remember that gearing up for EMIR modifications also creates potential advantages. Specifically, implementing IVP Regulatory Reporting as a Service helps firms unlock several benefits. This fully outsourced engagement is designed to provide:

  • Efficiency and cost savings: Reducing the internal reporting burden gives firms the freedom to channel more resources toward core business functions.
  • Expert insights and best practices: Tapping into our expertise paves the way for superior reporting accuracy, reliability, and adoption of the latest industry best practices.
  • Scalability: Augmented reporting capabilities give firms more flexibility to scale up on demand.
  • Compliance risk reduction: Ensure proactive adherence to regulatory modifications.

Remember, IVP Regulatory Reporting as a Service gives your firm access to a team of experts who can help you navigate the complex and ever-evolving regulatory reporting environment.

Learn more about the IVP Regulatory Reporting as a Service or contact us to schedule a live or online demo.

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Regulatory Reporting as a Service is a streamlined outsourcing engagement. Our cross-functional support teams use digital-first technologies to manage your firm’s filings, disclosures, and trade reporting in the cloud.

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