Finmatek Ltd

Requirement to Notify the Competent Authority

As per Article 9(1)(a) of the ITS, the entity responsible for reporting should promptly (as soon as it becomes aware of them) notify its competent authority and, if different, also the competent authority of the reporting counterparty of any of the following instances:

  1. any misreporting caused by flaws in the reporting systems that would affect a significant number of reports,
  2. any reporting obstacle preventing the report submitting entity from sending reports to a Trade Repository within the deadline set out in the Article 9 of EMIR,
  3. any significant issue resulting in reporting errors that would not cause rejection by a trade repository in accordance with the RTS on data quality.

The notification should indicate at least the basic information on and identification of the notification, ERR and RSE(s), the scope of the affected reports, the type of the errors or omissions, the reasons for the errors or omissions, steps taken or planned to resolve the issue, the date of the occurrence, and the timeline for resolution of the issue and data submission or correction. The entity responsible for reporting should provide the notification in a common template published on ESMA website.

Calculating significant number of reports

Significant number of reports should be assessed separately for each of the following categories:

  • Category 1 – reports with action types ‘New’, ‘Modify’, ‘Correct’, ‘Terminate’, ‘Error’, ‘Revive’, ‘Position component’
  • Category 2 – reports with action type ‘Valuation’
  • Category 3 – reports with action type ‘Margin update

If the number of reports affected by the reporting issue is significant in at least one of the categories, the competent authorities should be notified of the reporting issue.

Number of reports affected by misreporting is significant if it exceeds the following threshold:

NumOfAffReports / AverageMonthNum > Y% and NumOfAffReports > X

i.e. NumOfAffReports >= Threshold = max {X; Y% of AverageMonthNum},

where X and Y are calibration constants, and AverageMonthNum is the average monthly number of submissions calculated on the day of assessment as

 

(NumOfReportsMonth-12 + NumOfReportsMonth-11 + … + NumOfReportsMonth-2 + NumOfReportsMonth-1) / 12 = NumOfReportsLast12Months / 12 using the actual numbers of reports submitted during the last 12 months.

Below are the buckets and thresholds provided by ESMA

 

Average monthly number of submissions (AverageMonthNum)

 

0<=A<100,000

100,000<=A<1 000 000

1 000 000>=A

X

100

20,000

1,500,000

Y%

20%

15%

10%

 


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