On 24 February 2023, the Bank of England (BoE) and the FCA jointly published Policy Statement 23/2 Changes to reporting requirements, procedures for data quality and registration of Trade Repositories under UK EMIR – feedback on CP21/31 and final rules and guidance (PS23/2).
In November 2021, the FCA and the BoE jointly published Consultation Paper 21/31: Changes to reporting requirements, procedures for data quality and registration of trade repositories under UK EMIR (CP21/31) which set out proposals to amend the framework for derivatives reporting under the UK version of the European Market Infrastructure Regulation (UK EMIR). The proposals sought to align the UK derivatives reporting framework with international guidance issued by the Committee on Payments and Market Infrastructures and the International Organisation of Securities Commissions (CPMI-IOSCO), where appropriate to ensure a more globally consistent dataset.
In CP21/31 the BoE and FCA consulted on three key proposals:
1.Amendments to the framework for derivatives reporting under Article 9 of UK EMIR. The FCA and BoE consulted on changes to the framework for derivatives reporting which apply to all counterparties. The FCA and BoE will rely on their respective powers to make, amend and revoke technical standards as set out under Article 9(5) and 9(6) UK EMIR and section 138P of the Financial Services and Markets Act 2000 (FSMA). Among other things the FCA and BoE proposed:
- Amendments to the table of reportable fields in the relevant technical standards under UK EMIR, primarily so it aligned with international guidance issued by CPMI-IOSCO.
- Notifications and reconciliation processes for counterparties.
- Specific requirements for the mandatory delegated reporting requirements under UK EMIR in the relevant technical standards. The proposals set out the arrangements the financial counterparty should put in place for the timely provision of relevant information by the non-financial counterparty.
- That counterparties should use standardised XML schemas when submitting details of their derivatives trades to a trade repository (TR).
- Specific requirements for the use of global identifiers, including the use of Legal Entity Identifiers, Unique Trade Identifiers and Unique Product Identifiers.
2. Amendments to the registration process for TRs. With this proposal, the FCA sought to streamline the process for TRs that are already registered or recognised under the Securities Financing Transactions Regulation (SFTR) and incorporate the payment of the relevant registration fees. The changes were aimed at aligning the registration processes under UK EMIR and UK SFTR. The FCA would rely on its power set out in Article 56(3) UK EMIR and section 138P FSMA to amend technical standards.
3. Requirements for TRs to establish procedures and policies. The FCA sought to improve data quality with this new proposal by ensuring that there are procedures and policies in place for the effective reconciliation of data between TRs, to verify that the reported data is complete and correct and the transfer of data between TRs is orderly. This would result in new rules for TRs which the FCA proposed to include in a new specialist sourcebook. The FCA would rely on its rule making power in Article 78(10) UK EMIR (as inserted by Section 40 of the Financial Services Act 2021).
In PS23/2 the BoE and FCA summarises the feedback received to their proposals and set out their response. It also sets out the final rules and approach to the supporting guidance.
In response to feedback received to CP21/31, the BoE and FCA are introducing the new requirements largely as consulted on.
In relation to proposal 1, as noted in CP21/31, the FCA has implemented this by introducing the EMIR Technical Standards on the Minimum Details of the Data to be Reported to Trade Repositories 2023 and EMIR Technical Standards on the Standards, Formats, Frequency and Methods and Arrangements for Reporting 2023. In line with its proposals, consequential amendments are being made to UK versions of Commission Delegated Regulation (EU) No 149/2013, Commission Delegated Regulation (EU) No 151/2013 and Commission Delegated Regulation (EU) No 2016/957.
In relation to proposal 2, as noted in CP21/31, the FCA has implemented this by amending the UK versions of Commission Delegated Regulation (EU) No 150/2013 and Commission Implementing Regulation (EU) No 1248/2012.
In relation to proposal 3, the FCA has implemented this by introducing a new sourcebook in the FCA Handbook, called the European Market Infrastructure Regulation Rules, or EMIRR for short.
The BoE and FCA have made the following additional changes in response to consultation feedback to further enhance implementation and provide additional clarifications:
- The introduction of a new reportable field to permit the reporting of an ‘Execution Agent’ where counterparties choose to make use of one;
- The amendment of the time by which TRs are to provide the information necessary for specified parties to review their UK EMIR reporting submissions from 06:00 UTC to 09:00 UTC.
- A clarification that a TR may generate a unique transaction identifier (UTI) as part of the UTI generation waterfall process.
- An amendment to Article 3 of the Technical Standards on the Standards, Formats, Frequency and Methods and Arrangements for Reporting so to include central counterparties.
The requirements set out in PS23/2 will come into effect on 30 September 2024, except for certain amendments which relate to the format and details of applications for registrations of TRs, which come into force immediately.