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CySEC Identifies Deficiencies in EMIR Reporting

Cyprus Securities and Exchange Commission (“CySEC”) has published a compliance review of EMIR reporting.

As a result, Cyprus Investment Firms (“CIFs”) should:

  1. Undertake a full review of their EMIR reporting policies and arrangements – see below a summary of CySEC’s findings which should assist with this review;
  2. Nominate someone to monitor trade reporting – this person should be within the CIF and be responsible for the daily monitoring of EMIR reporting in order to ensure issues or failures are rectified.

CySEC has warned that CIFs who fail to comply with the regulatory requirements will face enforcement action. Please don’t hesitate to contact us to discuss any of the issues raised by CySEC below.

1. Incorrect outstanding positions

A number of positions were incorrectly recorded as outstanding. Some CIFs were not updating positions in accordance with the technical standards that came into effect in November 2017 (Commission Delegated Regulation (EU) 2017/ 104 and Commission Delegated Regulation (EU) 2017/ 105). The review has shown that CIFs were not updating positions when they were terminated and no reconciliations were performed between the outstanding position in the CIF’s records and Trade Repositories’ (“TRs”) records to highlight possible failures.

2. Rejected reports

A number of reports submitted to TRs were being rejected. The most common reasons for rejection were inconsistent formats, use of non-compliant identifiers and missing information from mandatory fields.  Further, rejected reports were not subsequently resubmitted within two weeks from the rejection date.  

3. Unpaired/Unmatched trades

When both counterparties to a trade have an obligation to report, they must submit the reports with the same Unique Trade Identifier (“UTI”) in accordance with the requirements set out in Article 1 of Commission Delegated Regulation (EU) 2017/ 105. However, there were many cases where this was not done and the trades were unpaired.  When trades were paired, many of the associated reporting fields were not consistent between the two reports.

4. Monitoring

CySEC observed that CIFs did not adequately monitor their arrangements in order to ensure full compliance with EMIR trade reporting. In particular, CIFs did not take immediate action to rectify any issues, or identify the causes of the issues to prevent their reoccurrence.

5. Use of intermediaries – reporting/submitting firms

When CIFs were using an intermediary to submit transaction reports to TRs, no proper communication between the parties took place which resulted in failures not being rectified.

How can TRAction assist you to stay compliant with EMIR reporting?
We provide ongoing support to our clients and make sure they are informed in respect of their EMIR reporting obligations. If you would like to know more about our services, please contact us.

Quinn Perrott

Quinn Perrott

Quinn has an extensive background in IT starting as the IT Manager for City Index. Quinn then went on to be co-founder and General Manager of AxiTrader, one of Australia’s largest Margin FX providers.