Treamo Business Consultancy, a leading supplier of EMIR reporting services, report that they have on-boarded 60 corporates and several hundred subsidiaries which are now 'live' and fully meeting their reporting requirements. Nevertheless, there are still remaining problems with EMIR.

Remaining problems

One problem is how to deal with the responses from your trade repository. The sending a file or an XML message to a trade repositoryEMIR Compliance - smooth start to reporting, but reconciliation is a farce is a relatively simple task, but the processing of Trade Registry (TR) responses can be more of a challenge. 

Based on Treamo’s experience to date, problems can occur when the transaction is more than a simple forward transactions, for example:

• trades with a third party
• when trades don’t fit into the fields prescribed by ESMA, the TR refers you to the relevant national competent authority (NCA) in order to clarify with this body how such an option needs to be reported correctly

The reconciliation and ESMA letter farce

EMIR requires both parties to a derivative transaction to report the trade. If one corporate reports the trades concluded with banks itself, then the reports of both parties have to be reconciled. Clearly this reconciliation wasn’t going to work as there was no clarity on the specific types of trades have to be reported. Other obvious examples include: banks reporting spot legs of FX swaps, which are not even subject to obligatory reporting; or incorrect buyer/seller legs; or if clients report incorrect LEIs or UTIs, or neither of them

Sadly the reality is much worse, Treamo reports:

• a forward transaction concluded via a trading platform, the execution time stamp of which deviated by just two seconds, as a result of which the trade couldn't be reconciled.

The farce of the ESMA writing letters to EU Commission is continuing, e.g. the one two days after the reporting obligation came into force asking ‘what exactly the maturity in days of a spot transaction is?’ Another letter was about the country variations in how they are applying the regulations, e.g. in the UK forward trades with a local counterparty and a hedging character would not actually be subject to the reporting obligation which was not actually what was originally intended.

Treamo conclude their latest newsletter with “If you now think that, under these circumstances, nothing of any value is going to come of the reconciliation or anything else, then you are completely right.”

UK sets date when corporates have to be EMIR compliant

The UK financial regulator FCA, which is responsible for EMIR enforcement in the country, has set a definite date by when it expects corporate treasurers to be in compliance with the EU’s derivatives regulations:  30 April. “The FCA expects that [EMIR] plans will be completed and implemented by 30 April 2014 and that firms will be able to demonstrate compliance after that date,” the agency said in a press release published on its website. 

CTMfile take: This UK date is almost three months after the official start date for derivatives reporting under EMIR, which began on 12 February. Surely other national authorities will announce similar extensions, BUT don’t forget there will be an end date EMIR compliance in all countries…….. eventually. Unless the whole bonkers (to use Peter Matza’s word) regulation is scrapped.