Circular C593: New reporting standards under Regulation (EU) 648/2012 on OTC Derivatives, Central Counterparties and Trade Repositories, as amended (‘EMIR’)

On August 3rd, 2023, the Cyprus Securities and Exchange Commission (the “CySEC”) issued Circular C593 on New reporting standards under Regulation (EU) 648/2012 on OTC Derivatives, Central Counterparties and Trade Repositories, as amended (‘EMIR’) (the “Circular”).

Via the issuance of the Circular, CySEC wishes to highlight new reporting requirements under the European Market Infrastructure Regulation (the “EMIR”), which will become applicable on the 29th of April 2024.

Please find below, in summary form, some of the main points to which CySEC refers under the Circular:

  1. Amended Regulatory Framework
  1. Analysis of main changes
  • Reporting in ISO 20022 XML
  • ISO 20022 XML formats are required for communication between trade repositories (the “TRs”) and entities and from TRs to authorities.
  1. Content of the reports
  • In respect to the content of the report, it is noted that the number of reportable fields increases from 129 fields to 203, which include inter alia, derivative based on crypto-assets, event type that provides more granularity, Unique Product Identifiers (UPI) issued by the Derivatives Services Bureau (the “DSB”), Post Trade Risk Reduction ID, entity responsible for reporting of an OTC derivative.
  • Further to the above, it is noted that some of the fields being reported under EMIR are abolished, e.g., Beneficiary and Trading Capacity.
  1. Unique Trade Identifier (UTI)
  • Other critical points of consideration are in respect to the UTI for which timely generally and provision is necessary to enable both counterparties to use the same UTI, the verification of completeness and correctness of data reported, as well as the notification of significant reporting issues to competent authorities, pursuant to Article 9(1) of the Regulation (EU) 2022/1860.

Further to the above, counterparties to derivatives or entity responsible for reporting (ERRs), where applicable, should review the implication of the new rules and take necessary action in order to ensure compliance with EMIR. They are advised to, among others:

  • Ensure that all fields, relevant to the derivative reported, are populated, irrespective of whether said fields are noted as optional in the ESMA Validation Rules.
  • Ensure that they monitor their compliance with their reporting obligations under EMIR.
  • Ensure that they have adequate arrangements in place with their counterparties in order to ensure alignment of data reported by the two sides of each report in order to avoid reconciliation breaks.
  • Ensure that they have adequate procedures in place to promptly identify and notify to the CySEC any significant reporting issues in accordance with article 9(1) of Regulation (EU) 2022/1860.

From the 29th of April 2024, all reports submitted to TRs should comply with the new requirements. Notwithstanding the aforementioned, regarding outstanding derivatives (i.e., reported before the 29th of April 2024 and not terminated by the said date), will need to be updated pursuant to the new reporting requirements no later than 180 calendar days from the reporting start date (with a few exceptions).

Regulated entities are advised to examine the content of the Circular and urged to ensure that the data reported are complete, accurate, consistent, timely and not duplicated.

Should you require any further assistance and/or clarification in respect to the abovementioned, please do not hesitate to contact us.