EMIR REFIT RTS Final Report Reveals Changes in Store for the Regulation

EMIR Update Brings Changes to Margin Reporting in March

In terms of the future of EMIR Reporting, the REFIT is slated to bring a major update to the technical standards in Q4 2022 or Q1 2023 (more on REFIT). Before those big changes take place, a smaller update is scheduled for next month.

Affecting both the EU and UK version of EMIR, ESMA introduced validation updates to the regulation last September (link to validations). The changes go into place on March 8th, and are focused primarily on Margin and Collateral fields as well as historical dates available in timestamps.

Collateral/Margin updates

Based on how transactions are collateralized between counterparties, EMIR requires different margin information to be submitted. With the changes in March, new validations are being put in place toward information that previously was optional and now becomes conditions.

The conditions are based on how collateral is classified. Under EMIR, there are four Collateralization options, and Initial and Variation Margin. The Collateralizations fields are as follows:
U = uncollateralized
PC = partially collateralized
OC = one way collateralized
FC = fully collateralized

Starting on March 9th, in Collateral Messages, new validations go into effect for the three Margin fields.

Initial Margin Posted (Field 1.24)

  • If collateralization is populated with “OC” or “FC”, this field shall be populated (Previously the field was Optional) .
  • If collateralization is populated with “U” or “PC”, this field shall be left blank. (Previously EMIR allowed values to be entered in Initial Margin for Partial and Uncollateralized reports. The new validations will now trigger a rejection as the field should remain blank).

Initial Margin Received (Field 1.28)

  • If collateralization is populated with “FC”, this field shall be populated (Previously the field was Optional) .
  • If collateralization is populated with “OC”, this field shall be left blank. (The new validations will now trigger a rejection as the field should remain blank).

Variation Margin Posted (Field 1.26)

  • If collateralization is populated with “PC”, “OC” or “FC”, this field or Field 1.30, Variation Margin Received (below) shall be populated with the other field left blank (Previously the field was Optional).
  • If collateralization is populated with “U” this field shall be left blank. (Previously EMIR allowed values to be entered for Uncollateralized reports. The new validations will now trigger a rejection as the field should remain blank).

Variation Margin Received (Field 1.30)

  • If collateralization is populated with “PC”, “OC” or “FC”, this field or Field 1.26, Variation Margin Posted (above) shall be populated with the other field left blank (Previously the field was Optional).
  • If collateralization is populated with “U” this field shall be left blank. (Previously EMIR allowed values to be entered for Uncollateralized reports. The new validations will now trigger a rejection as the field should remain blank).

Backdated Timestamps

Going forward, the update introduces validations to historical Timestamps. As a result, fields for Reporting Timestamp, Valuation, Maturity Date, Settlement and Termination Date must be equal or later than February 12th 2014.

 

 

Ron Finberg
About the author: Ron Finberg
Ron is a Product Specialist Director at Global Regulatory Reporting Solutions, S&P Global Market Intelligence 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.