EMIR REFIT signifies a major revision of EMIR regulation, bringing forth new reporting obligations designed to improve data quality. As a result, it is now more crucial than ever for reporting entities to closely monitor the accuracy of their reported data and conduct end-of-day reconciliations between their trading systems and the Trade Repository as poor data quality may lead to operational inefficiencies, potential regulatory penalties, and loss of Counterparty trust.
It is crucial therefore that Counterparties monitor the pairing and matching status of their reports. Continuous checks will ensure that data reported is complete, accurate, and consistent, while early detection of issues prevents larger problems (misbookings, incorrect reporting logic, incorrect static data, incorrect pricing of transactions etc.)
Furthermore, it is vital that Counterparties perform end of day reconciliations between their systems and the Trade repository. Comparing data reported ensures alignment with the firm’s systems, static data, counterparties and identifies any discrepancies reported. In addition, the reconciliation also serves as an audit trail for Compliance with the competent authorities.
In summary, reporting parties are required to have robust arrangements in place that include:
- Testing Reporting Processes: Firms must regularly test their reporting processes to identify potential errors.
- Regular Reconciliation: Firms should reconcile their trading records against submitted transaction reports to verify accuracy and completeness.
- Monitoring of Pairing & Matching Status: Firms should establish processes to promptly identify and rectify errors in transaction reports which is essential for maintaining regulatory compliance.