This article summarises changes to the UK’s EMIR trade reporting regime proposed in Consultation Paper 21/31 (“CP21/31”) that are of most operational relevance to investment firms.

Why are the Bank of England (“BoE”) and Financial Conduct Authority (“FCA”) making these proposals?

• To align UK EMIR trade reporting with CPMI-IOSCO efforts to improve the usefulness of risk monitoring in the G20 jurisdictions.
• To iron out some inconsistencies and reduce confusion in the process.

Will there be much divergence from the EU’s EMIR trade reporting regime?

• The BoE and FCA have expressly stated that they are trying to avoid creating operational headaches for firms by radically diverging from the EU EMIR trade reporting regime. However, regulators believe that some minor departures are necessary.

How many new fields are the BoE and FCA proposing?

• The BoE and FCA are proposing 89 new reporting fields in CP21/31.
• This may sound intimidating. However, most of the proposed fields employ formatting that will already be very familiar to most regulatory reporting professionals. For example, LEIs, ISO 4217 and 8601 codes feature prominently.
• Some notable additions include:
  • ‘PTRR ID’ and ‘type of PTRR technique’: to help regulators monitor all post trade risk reduction (“PTRR”) activities;
  • ‘Subsequent position UTI’: to enable regulators to make connections between trade and subsequent position level reports; and
  • ‘Derivative based on cryptoasset’: to indicate whether a derivative is based on a cryptoasset.
• In addition to the above, some fields will only be relevant to certain types of trades such as currency swaps.
• The biggest challenge in implementing the new fields will probably be ensuring the relevant static data has been correctly sourced and indexed. However, this should not prove to be a major problem if a firm establishes a steering project and engages with its trade repository at an early stage.
• There are additional roles for unique trade identifiers (“UTI”) which many firms have grappled with in the past.

How many fields are the BoE and FCA proposing for amendment?

• The BoE and FCA are proposing 104 fields for amendment.
• Many of the changes the BoE and FCA are proposing are to names and definitions. However, the BoE and FCA have also proposed several format changes. Some standout ones are:
  • ‘Venue of execution’ field: MIC codes to be required for multi-lateral trading facilities (“MTFs”), organised trading facilities (“OTFs”) and systematic internalisers (“SIs”); and
  • ‘Confirmation timestamp’ and ‘confirmed’ fields: change to definition to make clear that these fields only need to be populated for non-cleared over-the-counter (“OTC”) derivatives and not for exchange-traded-derivatives (“ETDs”).

How many fields are the BoE and FCA proposing for deletion?

• The BoE and FCA are proposing the deletion of 15 fields. This includes the ‘beneficiary ID’ and ‘trading capacity’ fields.
• A summary table of these can be found on page 79 of CP21/31.

What process changes are the BoE and FCA proposing to introduce?

• The mandatory notification of errors and omissions as soon as an issue has been identified, using the template form already available on the BoE’s and FCA’s websites.
• Requirements that counterparties have processes in place to:
  • resolve reconciliation breaks as soon as practicably possible;
  • obtain, where not already known, the following details from NFC-s as soon as possible after an OTC derivatives trade to ensure reporting occurs within T+1:
    • broker ID
    • clearing member ID
    • confirmation with the trade is for hedging purposes, i.e. commercial activity or treasury financing
  • ensure their NFC- clients renew their LEIs;
  • follow a UTI generation waterfall that will be aligned with the CPMI-IOSCO approach, with deadline of provision of UTIs to the other counterparty by 10:00am UTC the next day at the latest; and
  • use an ISO 20022 standardised XML schema in submitting reports to their trade repositories.

What are the next steps?

• The BoE and FCA are taking comments on the proposals until 17^th February 2022.
• The BoE and FCA will submit updated technical standards to HM Treasury for approval after they have worked through the responses received.

Would you like some help?

If you would like help with your trade reporting programme, A.C.Culley & Co. can assist. Please contact us today using the link below or at enquiries@acculley.com for a free one-hour consultation.

References

2021. CP21/31: Changes to reporting requirements, procedures for data quality and registration of Trade Repositories under UK EMIR, Bank of England and Financial Conduct Authority. Available: https://www.fca.org.uk/publication/consultation/cp21-31.pdf (last accessed 1st December 2021).

DISCLAIMER: All information and materials in this circular are provided on an ‘as is’ basis and are not intended in any way to be comprehensive. Anyone making use of this material does so at their own risk. The materials and opinions in this circular do not constitute advice. A.C.Culley & Co. accepts no responsibility and gives no representations or warranties, express or implied, that any of the information and materials in this circular are complete, accurate or free from errors or omissions. A.C.Culley & Co. reserves the right to update any of the documents, data and other information on in this circular at any time without notice. A.C.Culley & Co. is not a law firm and does not offer legal services.