EMIR Refit: Information on regulatory updates
EMIR regulation has came into force in August 2012 and on 29 April 2024 EMIR Refit amendments will enter into force introducing a number of changes to the derivatives reporting requirements (standardisation to ISO 20022) and a significant increase in reportable fields to a Trade Repository.
We would like to inform on the following:
EMIR Refit amendments include an obligation to inform the relevant National Competent Authority (NCA) of certain data quality issues arising during the reporting process. For clients that are perceived as non-financial counterparties SEB will perform such notification, providing information on data quality issues which are found during the reporting process relating to client’s transactions and being above certain calculated thresholds.
Clients that are perceived as financial counterparties are treated as “Entity Responsible for Reporting” (ERR) are solely responsible and legally liable for their own reporting. EMIR Refit states that an ERR should have processes in place to be able to assess “at any time” significant identified cases of misreporting, and the ERR shall notify its NCA of any of the following instances when these are above a certain threshold:
- Any misreporting caused by flaws in the reporting systems that would affect a significant number of reports;
- Any reporting obstacle preventing the report submitter from sending reports to a Trade Repository within the reporting deadline (T+1);
- Any significant issue resulting in reporting errors that would not cause rejection by a Trade Repository.
SEB Bank will provide ERR who have delegated the reporting to SEB Bank with the notification about any data quality issues in reporting using a common template published on ESMA’s website. The notification includes the basic information on, and identification of, the misreporting e.g., scope of affected reports, type of errors or omissions, and the timeline for resolution of the issue. The notification should be further sent to the relevant NCA without undue delay by ERR itself. Please refer to SEB EMIR Refit Q&A below for more information.
Please note that all clients are responsible for ensuring that LEI code is renewed in a timely fashion during all lifetime of the transactions with derivatives to avoid issues with the reporting and rejections at the Trade Repository where transactions are being reported.
SEB EMIR Refit Q&A
Q) How will SEB inform you about data quality issues?
A) We will distribute information on data quality issues by email to the email address we have for you.
Q) What format will SEB use to inform ERRs about data quality issues?
A) We will use the ESMA template or similar to inform ERRs.
Q) When will SEB start distributing information on data quality issues?
A) The requirement to inform you about data quality issues comes into force on 29 April 2024.
Q) With what frequency will SEB inform you about data quality issues?
A) We are required to inform you of any relevant data quality issues affecting you “without undue delay”.
Q) How does SEB define data quality issues?
A) SEB will rely on guidance provided in the Final Report, “Guidelines for reporting under EMIR” (ESMA74-362-2281, §389, 396, 398). There is no simple definition, but a number of quantitative and qualitative criteria need to be taken into account, as set out in the Final Report.
Q) What actions are required after receiving information about data quality issues?
A) You will need to assess whether your total average monthly number of data quality issues exceed the set threshold (as defined below). If so, you are to inform your National Competent Authority.
Q) What is the threshold set for notifying a National Competent Authority?
A) Misreporting should be notified if it exceeds the following threshold:
- Number of affected reports > X
- Number of affected reports / Average Monthly Number > Y %
- “Average Monthly Number” is the average monthly number of submissions calculated on the day of assessment:
NumOfReportsMonth-12 + NumOfReportsMonth-11 + … + NumOfReportsMonth-2 +NumOfReportsMonth-1) / 12 = NumOfReportsLast12Months / 12
using the actual numbers of reports submitted during the last 12 months
Average Monthly Number of Submissions 0 <=A< 100 000 100 000 <=A< 1 000 000 1 000 000 <=A X 100 20 000 150 000 Y% 20% 15% 10%
