New ESMA Q&A’s Cover EMIR, REFIT and MIFIR Transaction Reporting Clarifications
On Friday, European Securities and Markets Authority (ESMA) released a new list of Q&A’s being made public (link). The Questions covered current European Market Infrastructure Regulation (EMIR), EMIR REFIT, Markets in Financial Instruments Regulation (MIFIR) and the new Markets in Crypto Assets Regulation (MiCA). For the REFIT, the Q&A’s focused on clarifications of a few specific areas before April’s go-live of the new regulation.
Brexit Clarification for MIFIR
Under the MIFIR Q&A’s (link), ESMA amended an open question regarding the reporting of personal identification information (PII) that is included in transaction reporting submissions. Annex II of RTS 22 defines the required PII details of each EU country such as a National ID, Tax ID, Passport number or concatenation (CONCAT) of first name, last name, and date of birth. For non-EU countries, a National Passport Number is required and if one doesn’t exist then a CONCAT.
Following Brexit, there was a question of how to report PII data for UK individuals as Annex II listed first a National Insurance Number and CONCAT as available values but not a passport number. Therefore, without specific guidance, there was a question of whether to continue to default to the text of Annex II or now define the UK as part of the ‘All Other Countries’ list and require a passport number. ESMA’s Q&A now amends Annex II to remove the UK from its list and thereby officially replaces national insurance with passport numbers as the correct topline PII to use for UK individuals.
The Annex II amendment also covered a change in Malta passports of which previously were limited to 7 numeric digits but now allow for the 2 letter and 6 number digit combination that went into effect as of November 2019.
EMIR REFIT Clarifications
As we get closer to the EMIR REFIT go-live date of April 23rd, ESMA aimed to cover a few questions related to reporting under the update technical standards. Questions covered in the Q&A included:
Portfolio Codes for Collateralise to Market (CTM) and Settle to Market (STM) models – To differentiate between these models, ESMA stated that firms should add a prefix of STM to the portfolio ID of STM model collateral such as STM12345 instead of its generic code of 12345.
Updating Client Codes – During the 180 day transition period, ESMA requires firms to update any client codes of open derivatives that aren’t compliant with the new standards.
Central Bank Counterparties – ESMA clarified that firms trading with Members of the European System of Central Banks (ESCB) and the Bank of International Settlements, should define these counterparties as ‘Other’ in field 11 of Financial or Non-Financial Counterparty field.
Porting of Schedules – As Trade Repositories are using current Trade State Report (TSR) data when porting details of current positions for the REFIT, reporting firms will need to report a modification that includes the complete schedule.
ESCB Supervisory of Subsidiaries – ESMA explained that ESCB members and other authorities under Article 2(11) and 2(13) of RTS 151/2013 can have access to review transaction data of derivatives of subsidiaries of reporting entities. Subsidiaries are defined using the relationship data in the GLEIF database.