UK EMIR: Update on Q&As for EMIR reporting

What are the Q&As about?

The derivatives reporting regime under UK EMIR is changing substantially from 30 September 2024. See our previous EMIR Refit reporting article for an overview. The Financial Conduct Authority (FCA) and the Bank of England (the Bank) have been asked to provide supporting guidance on these changes, which they are doing in the form of questions and answers (Q&As) on the following topics:

1. Transitional arrangements 

2. Reconciliations

3. Errors and omissions

4. Derivative identifiers

5. Action and Events

6. Venues

7. Exchange traded derivatives

8. Margin and collateral

9. Clearing

10. Position level reporting

11. Asset class and product specific 

In March 2024, a consultation on draft Q&As for topics 1 to 5 took place - see our article here. The finalised Q&As have since been published (and apply from 30 September 2024).   

The FCA and the Bank are now consulting on topics 6 to 11, as well as additional Q&As under topics 1, 4 and 5.  This second consultation will remain open until 12 June 2024.

What should you be doing?

If you are subject to UK EMIR reporting requirements (whether as a counterparty or because you are the entity responsible for reporting in respect of a counterparty - e.g. the AIFM of an AIF trading OTC derivatives), you are encouraged to review and engage with these Q&As. The first set of Q&As have been finalised and, while the second set are draft versions at this stage, they are indicative of the FCA's initial approach on these topics.

The Q&As provide detailed guidance on various aspects of reporting. They also set out the regulatory expectation that entities responsible for reporting should have systems and controls in place to ensure timely and complete reporting in accordance with Article 9 of UK EMIR, along with:

• effective governance to oversee their UK EMIR reporting;

• effective systems and controls to identify and remediate errors and omissions in their UK EMIR reporting, including the notification of any material errors and omissions to the FCA (or in the case of CCPs, to the Bank) - the materiality of such errors or omissions should be assessed based on the size, nature and complexity of the business; and

• arrangements with counterparties to address reconciliation breaks.

As we move closer to the go live date of the new reporting requirements, bear this in mind when considering whether your existing systems, controls and processes are sufficient or would benefit from some enhancements. 

If you are subject to EU EMIR reporting requirements (the changes to which went live on 29 April 2024 - some five months before the UK EMIR changes) then you will already have familiarised yourself with the guidance provided by ESMA in its final report on guidelines for EMIR reporting. In relation to the misreporting notification obligation, it is important to note that the EU EMIR requirements are much more detailed and granular (and the guidance on them runs to six pages in the final report). 

We are advising a number of clients on the new EMIR reporting requirements, including in the context of their delegated reporting arrangements and their misreporting notification obligations.   If you would like to discuss any aspect of the new reporting requirements with us, please do get in touch.