The FCA has published a new web page following its review of firms’ preparations for the EMIR derivatives contracts reporting obligation and the EMIR collateral and valuation reporting obligation which came into effect on 12 February 2014 and 11 August 2014 respectively.
The FCA reports that, overall, the vast majority of derivatives contracts are being reported. However, there are some issues with the quality of some of the reports and some areas where there are continuing uncertainties about reporting.
The FCA reports that the first phase of backloading is complete and that the second phase will continue until 2017. Some firms are considering making use of position-level reporting for the second phase.
Whilst the FCA has found that the majority of reporting is correct it has discovered certain issues including:
- counterparties had difficulty taking some relevant information into account in time for the start of the EMIR reporting obligation. However, some counterparties have since made changes to their reporting systems to take into account the updated Q&As from ESMA, although some are still to make more changes;
- there are some data quality issues where counterparties have not completed the reports according to the specifications set out in the EMIR technical standards. An example of a data quality issue includes incomplete specification of the product traded, for example not identifying equity for an equity derivative; and
- some firms are making use of the ability to enter reports at position level. The FCA has seen good practice here where both counterparties agreed to report in this way as it maximised the matching rate between their pairs of reports.
In relation to preparing for the reporting of collateral and valuation updates the FCA notes the following questions that have been raised by counterparties so far:
- how to calculate the updated valuation, particularly where a mark-to-model approach is in use or where delegated reporting is in use; and
- what collateral should be included in a report and how it should be reported?
View EMIR reporting – is the industry ready?, 21 August 2014