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EMIR, Mifid

Reporting changes afoot?

Last year, the result of the EMIR review led to the recommendation of several changes by ESMA and others. Some of the recommendations resulted in a new EMIR Regulatory Technical Standard (RTS) document being issued by ESMA, relating to a new format for trade reporting. The rules apply from nine months after the RTS is adopted, although such adoption has not yet taken place. The start is likely to be in Q3 next year.

EMIR is one of several financial regulations that require reporting, which also includes SFTR and MiFID II. Many have complained that having three different sets of rules covering trade reporting leads to confusion, duplication and unnecessary spend. As a result several are looking to reduce the requirements, most recently as outlined in this article on the Markets Media web site. The article reports that Valdis Dombrovskis, the EU Commissioner for financial services, recently stated that the reporting burden should be reduced. This follows similar statements from others.

The financial rules (as well as REMIT) contain several provisions to avoid double reporting. In addition, ESMA’s EMIR response did propose a small compromise, proposing that when an FC transacts with a “small NFC” (not to be confused with an NFC-), the FC should be obligated to provide delegated reporting to the small counterparty, i.e. to report the trade for them. This falls short of the reduction proposed by others to move to “single sided reporting”.

The article quotes Steven Maijoor, chair of ESMA, as agreeing in principle with the reduction of the burden, especially across regulations, but that since the fields in the rules are different, removal of different requirements across regulations in totality will not be possible.

It will be interesting to see whether a genuine reduction will be affected, rather than an “in principle” rule change which in practice still leads to multiple requirements. In the end, in all likelihood, service providers are likely to fill the gap to offer “one destination” reporting.

About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on the regulation of the commodity, energy and financial markets. He has more than 23 years of experience in the financial, energy and commodity markets, covering regulatory compliance, credit, risk and financial technology. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy and Commodity Regulation. Before that, he founded Coherence, a consulting firm specializing in credit risk in commodity and energy trading as well as software product management. The credit practice ultimately became part of Sirius Solutions, where he was the Managing Director of Europe. He has also held management roles at KWI and Iris Financial, among other organizations. Mr. Handler holds a degree in computer science from Imperial College, University of London.

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