EMIR REFIT Preparation: Reconciliation, Data Quality and the Errors & Omissions Form

A key part of the new EMIR REFIT technical standards is the goal by ESMA to improve data quality of submitting entities. One way of doing this is through the expansion of reconcilable fields between counterparties.

Upon data being submitted, part of the work of Trade Repositories (TR) is to review for pairing and matching of details between counterparties. This includes reviewing that in cases where both counterparties have an obligation to report under EMIR, they are using the same Unique Trade Identifier (UTI) for their submissions. If UTIs are matching for the same trade, this is listed as a paired trade. Otherwise, it gets flagged as an unpaired UTI.

For paired trades, the TRs then compare the detailed fields reported by each counterparty to review for any differences. When each side is submitting similar data, the trade is marked as matched. Otherwise, it is listed as paired with field breaks.

Currently, in addition to the base UTI and LEI of counterparties, there are 53 reconcilable fields that the TRs check for. They include product details like CFI code and contract type along with economic details such as price, notional currency, maturity date, and fixed rate details. To improve data quality, the REFIT expands the number of fields being compared (including counterparty and UTI data) to 149 reconcilable fields.

Reporting Breaks

Once the data is analyzed by the TRs, firms that are a reporting entity or responsible for reporting on another firm’s behalf, can download this information. As the reports show details on data reported by each side, firms can use this information to spot errors in their submissions to improve their reporting quality. In addition, ESMA has put in place guidelines for companies to notify their National Competent Authority (NCA) of errors that took place and remedies being made.

The notification template, when to make an errors and omissions report and information to be submitted are covered in section 4.29 of the Guidelines for Reporting Under EMIR (link). The section is part of ESMA’s aim to standardize how companies can check for data quality errors, apply fixes, back reporting and notifying NCAs. ESMA directs firms to create internal validation rules to check for reporting issues and to download and review TR reconciliation reports. The information is then logged, fixed and if found to be meaningful, notified to the NCA
Notified Data.

The guidelines instruct reporting firms to notify NCAs of issues related to misreporting, late reporting and significant errors in submitted data that was accepted by the TR. ESMA provides a list of issues considered significant including (see page 187 of the Guidelines for a full list):

    • Under/Over reporting of derivatives
    • Incorrect or inconsistent fields being reported
    • Incorrect trade details
    • Incorrect product information
    • Errors related to valuations

Standardizing how notifications are reported, ESMA has created a template and instructions. The template is included in the Excel file of EMIR REFIT validation rules (link). As per the template, firms are to include details on the number of reported errors, average monthly reports, explanation of the issue, and resolution plans.

Reporting with Cappitech: For assistance on any REFIT reporting needs and to learn more about how Cappitech’s platform can be used to view Pairing and matching Reconciliation data and filling out the errors and omissions forms, Contact Us

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Ron Finberg
About the author: Ron Finberg
Ron is Executive Director, Product Specialist at S&P Global Market Intelligence Cappitech and helps customers with their compliance of EMIR, MIFIR, SFTR, MAS and ASIC derivative reporting. Ron is an ongoing contributor of regulatory focused content and webinars and leverages his over 20 years’ experience in the financial industry. He was also awarded the Editor’s Recognition Award for Best RegTech Vendor Professional in the RegTech Insight Europe Awards 2021.