RegTech Intelligence 
With trade repositories expected to be registered by ESMA soon, the date at which trade reporting becomes mandatory is not far off. However, many parties to derivatives trades are still unsure about the finer details of how they will meet this mandate.
7 November is the date by which ESMA expects to have a trade repository registered, meaning the reporting obligation is expected to kick in February of next year. Many of the buy-side and corporates, recently brought into the regulatory compliance game by EMIR, will be turning to vendors, the sell-side and delegated reporting to comply. But delegated reporting is no panacea; what difficulties will they face?
As stated in the Regulation, reporting has to occur ‘no later than the working day following the conclusion, modification or termination of the contract.’ However, this leaves firms with very little time in which to validate the data, leading some to hope that validation can be carried out at the trade repository. But ESMA’s previous emphasis on accuracy and firm responsibility makes it unlikely such an approach will receive regulatory approval.
This leaves firms with the unenviable prospect of having to build validation infrastructure into their reporting process, unless they can find some sort of alternative. One option might be to have default data stored with the trade repository, and individual fields updated when necessary. This overcomes issues such as the fact that some information is not available at the moment of execution and so may miss the T+1 window. As such, trade repositories are looking into which data items would be possible to submit in this way and which would require refresh for every trade. However, again, ESMA will be unlikely to endorse any approach which dilutes firms’ liability for their own reports.
Finally, some firms are looking at combining their EMIR reporting with MiFID reporting to minimise the amount of resource that needs to be kept in-house. However, there are two main issues with this: Firstly, where EMIR reporting is T+1, MiFID reporting has to be done in real-time; secondly, firms will be reporting out of multiple parts of the business, possibly to multiple recipients. Both of these factors create operational complexity for firms seeking to implement reporting systems.
Ultimately, ESMA is unlikely to compromise with firms on the accuracy of the data reported to trade repositories or the timeframe in which it has to be reported. Therefore, firms and their service providers have little room to manoeuvre when designing an effective and compliant system for EMIR trade reporting.