With ESMA’s open hearing and the FIA’s IDX in London behind us, it’s quite timely that we saw a new Q&A published across many of the regulations last week, including EMIR. At IDX, ESMA’s Natasha Cazenave delivered a keynote speech noting their approach for “less complexity, more effective” rules as part of their data-driven approach and ongoing review of the legislative frameworks. Unfortunately ESMA’s latest Q&As have not quite caught up with this approach and we see a common theme amongst them – a missed opportunity to provide the industry with increased clarity.
ESMA has provided the following brief updates as part of their latest Q&A.
TR Question 3b (f) – Reporting valuations
(f) *new* Should counterparties send valuation update on the last day of a derivative and for intraday derivatives? (i.e. derivatives that are concluded and terminated on the same day)?
TR Answer 3b (f)
(f) No, it is not required to send valuation and collateral data in those cases.
This isn’t anything new from ESMA under the reporting valuations section, as we know that Intraday reporting is mandatory under EMIR.
TR Question and Answer 40 – LEI changes due to mergers and acquisitions
A very brief update here, but hopefully nothing new in the world of reporting.
This section deals with the processes that Trade Repositories (TR) should follow and how firms should update their TR of a merger or restructuring where we see changes in the Legal Entity Identifier (LEI).
TR Q&A 40 can provide much confusion for the industry and many of us who have worked in reporting at either a TR or in the frontline at a firm have seen the issues that can arise, namely the expectations of the TRs and the requirements on the firm to communicate changes in a timely manner. As part of this update, ESMA provided the following:
“TR(s) should inform the relevant reporting counterparties, report submitting entities, entities responsible for reporting (to the extent that they are participants to the TR) as well as third parties which have been granted access to information under Article 78(7) of Regulation (EU) No 648/2012, as applicable, involved in the derivatives contracts concerned by the LEI change.”
Firms still need to not only continue to meet their obligations under EMIR Article 9, but effectively Article 78(7) which notes that a TR shall have objective, non-discriminatory and publically disclosed requirements. This is an obvious thing once you sign up be a TR participant and/or gain access to your relevant data, so with the above we’re not really seeing anything new or material from ESMA.
All in all, a very brief update to this version of the EMIR Q&A, but with ESMA’s keynote speech, fingers crossed we will truly see that effectiveness that ESMA speaks about in the not too distant future…