Today's Treamo Business Consulting newsheet contained some important information on current EMIR progress.

ESMA – Level 2 validations

The details of the Level 2 validations are becoming clearer with a spreadsheet, issued by ESMA, which contains a comparison of the various fields on the basis of Level 1 and Level 2, see.

The level 2 validations rules have to be implemented by the trade repositories by the end of October 2015. Apparently ESMA have told the trade repositories, from this point in time that trade reports which do not comply with these rules have to be rejected by the trade repositories. Unfortunately this was also the case with Level 1, but was not implemented, according to Treamo who often see from the mismatch reports of our clients.

ESMA – commodity trades / clarification

Treamo have found similar behaviour has been exhibited in commodity trades, where there have been different and deviating interpretations in certain EU Member States (e.g. Great Britain, Luxembourg and Denmark), particularly with regard to the relevant national interpretations of MiFID I.

ESMA has now issued a guideline in which it is unambiguously clarified that such deviating interpretations are contradictory to both the spirit and the objectives of EMIR and are therefore not permitted.

This clarifies the position with regard to FX forwards and swaps for which there were also inconsistent EU-wide interpretations and opinions. 

The ESMA guideline, which will come into force on August 7, 2015, can be downloaded here.

FinfraG – premature celebration?

Treamo report that, “The Swiss standard FinfraG, initially saw some simplifications for corporates in the version already promulgated by the Swiss National Council. However, it appears that the Swiss Council of States will not support the Swiss National Council. Based on the argument that they aim to achieve the greatest possible degree of harmonization with EMIR, it can be assumed that transactions between NFCs, i.e. also group-internal hedges, will also have to be reported.”

They also report that, “The one-sided reporting obligation for corporates regarding trades concluded with Swiss banks at first glance appears to be advantageous, but there are still two aspects to consider:  

1. Transactions with non-Swiss banks will have to be reported to FinfraG by corporates themselves
2. It will be necessary for (treasury management) systems to make a differentiation between trades with Swiss and non-Swiss banks in order to be able to technically decide which trades have to be reported by corporates themselves and which not. Taking a close look, therefore, this doesn't really look like the simplification that had been hoped for.”

The Swiss Council of States will discuss FinfraG on June 2, 2015.