EU EMIR Refit – What Additional Reporting Information Do You Need From Me?

With the EU EMIR Refit go-live date set for 29 April 2024, the most common question raised by Reporting Counterparties is – what new information is required in EMIR Refit?

The upcoming changes will require firms to adapt to new reporting solutions and processes ahead of the go-live date. By approaching the new requirements strategically now, firms can ensure readiness in the reports submitted to ESMA.

As TRAction submits the trades on your behalf to the Trade Repository, firms will need to provide us with the necessary data to meet the new requirements. We have listed the new information required in relation to counterparty, UPI and Option fields.

Counterparty Details

Previously, there were some fields that were only required for the reporting entity.  However, they are now being introduced for counterparty 2. These fields are outlined in the table below.

Firms will need to obtain the data from their counterparty or customers. We recommend firms begin including these fields in the registration form or questionnaire upon onboarding new customers.

The following are new counterparty fields required.
EMIR Refit Field NameWhat It MeansWhat You Need To Do
Entity responsible for reporting*   * This field is applicable only to OTC derivatives  Usually this will be the same as the Reporting Entity unless the Financial Counterparty (FC) is reporting on behalf of a Non-Financial Counterparty (NFC).  As long as trades requiring delegated reporting are identified in the data you provide to TRAction, this field will be calculated and no additional flag is required.
Nature of the Counterparty 2F = Financial Counterparty
N = Non-Financial Counterparty
C = Central Counterparty
O = Other
Where an LEI exists, you will need to flag the nature of the entity (F, N or O).
Corporate sector of the Counterparty 2The corporate sector has been expanded to FC and NFC which can be found in Annex Table 1 on the Final Report.A’ – Agriculture, forestry and fishing;
‘B’ – Mining and quarrying;
‘C’ – Manufacturing;
‘D’ – Electricity, gas, steam and air conditioning supply;
‘E’ – Water supply, sewerage, waste management and remediation activities;
‘F’ – Construction;
‘G’ – Wholesale and retail trade, repair of motor vehicles and motorcycles;
‘H’ – Transportation and storage;
‘I’ – Accommodation and food service activities;
‘J’ – Information and communication;
‘K’ – Financial and insurance activities;
‘L’ – Real estate activities;
‘M’ – Professional, scientific and technical activities;
‘N’ – Administrative and support service activities;
‘O’ – Public administration and defence; compulsory social security;
‘P’ – Education;
‘Q’ – Human health and social work activities;
‘R’ – Arts, entertainment and recreation;
‘S’ – Other service activities;
‘T’ – Activities of households as employers; undifferentiated goods – and services – producing activities of households for own use;
‘U’ – Activities of extraterritorial organizations and bodies.
Where more than one activity is reported, list the codes in order of the relative importance of the corresponding activities. Leave blank in the case of CCPs and other type of counterparties in accordance with Article 1(5) of Regulation (EU) No 648/2012.
Clearing threshold of Counterparty 2Report as ‘TRUE’ if the counterparty is above the clearing threshold and ‘FALSE’ if below the threshold.Check every year if your customer is still under the clearing threshold in gross notional value:
– 1 billion Euro (Credit or Equity derivative contracts)
– 3 billion Euro (FX or Interest Rate derivative contracts)
– 4 billion Euro (Commodity derivatives contracts and others)
according to Article 10 of Regulation (EU) No 648/2012
Reporting obligation of the Counterparty 2Report as ‘TRUE’ or ‘FALSE’. For example,
– where the counterparty 2 is an NFC-, the value should be ‘TRUE’ regardless if the NFC- decides to report itself.
– for non-EEA entity or natural person, the counterparty 2 is not subject to reporting obligation and hence reported as ‘FALSE’.
TRAction can calculate this from the existing data.

There is currently no centralised platform where firms can obtain each customer’s reference data. As this process will be reliant on firms submitting the information themselves and customer information being publicly available on a centralised platform, this will not be a workable solution.

ISDA has updated the ISDA Master Regulatory Disclosure Letter to include the new Counterparty 2 fields. This letter is meant for market participants to exchange information regarding counterparty status required in EMIR and UK EMIR.

Unique Product Identifier (UPI)

The role of the UPI is to uniquely identify an OTC derivatives product. A unique UPI code signifies a collection of specific values on the reference data elements which resides in the UPI Reference Data Library on ANNA-DSB.

If a UPI code exists, firms will have to obtain the UPI code from the UPI Library.

If a UPI is not available on the UPI Library, firms will have to provide ANNA DSB with a set of reference data elements values which represent a unique combination of characteristics related to the OTC derivative product.

When EMIR Refit goes live, ESMA has confirmed the UPI will have to be updated to outstanding OTC derivatives, even if previously they were identified with an ISIN.

EMIR Refit Field NameWhat It MeansWhat You Need To Do
Unique Product Identifier (UPI)*   * This field is applicable only to OTC derivatives.A code which outlines the nature of the product being reported as they relate to reference data elements .Obtain UPI from the UPI Library maintained by ANNA DSB.

Unique Trade Identifier (UTI)

Reporting counterparties have to pair each unique transaction between trading parties using the UTI. Firms are expected to refer to the UTI waterfall on which firm should generate the UTI for different situations. However, firms with sizeable trades will likely have a ‘bilateral agreement’ on UTI generation with their counterparties.  The requirements are outlined in Article 7 of the Official Journal.

Options Related Fields

As part of harmonising the data elements according to the CDE Guidance, there are a number of new option-specific fields being introduced.

The following are fields applicable to Options and Swaptions only.
EMIR Refit Field NameWhat It MeansWhat You Need To Do
DeltaThis a valuation field which must be reported on a daily basis by FC and NFC, according to Annex Table 2 of Official Journal.Calculate the ratio of the change in price of a derivative to the change in price of the underlying.
Option premium amountThe monetary amount paid by the option buyerTRAction will reach out to you to update the necessary required information.
Option premium currencyThe currency of the option premiumTRAction will reach out to you to update the necessary required information.
Option premium payment dateThe date on which the option premium is paid.TRAction will reach out to you to update the necessary required information.

The changes in EMIR Refit aim to align the regime with agreed upon global standards and to improve data quality. Should you need further clarification on how EMIR Refit will affect your business operations or if you are overwhelmed by the additional requirements outlined, please get in touch with us.

 

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