PwC: Trade repositories authorised - countdown to EMIR reporting begins
27/11/2013 17:35
The European Securities and Markets Authorities has recently announced that under the European Market and Infrastructure Regulation (EMIR), the first trade repositories will need to begin EMIR reporting for all derivative counterparties in February 2014.
As a result, any derivative counterparty in the European Economic Area (EEA) that is subject to EMIR, including corporates and other unregulated market participants, will be required to provide complex reports for transactions in all derivative asset classes (interest rates, foreign exchange, equity, credit and commodities) and for both over-the-counter (OTC) and exchange-traded derivatives from 12 February 2014.
The new reporting obligation will be in addition to the current reporting of Cyprus Investment Firms and banking institutions to the Cyprus Securities and Exchange Commission through the Transaction Reporting Exchange Mechanism (TREM). Also, corporates and unregulated counterparties which currently have no reporting obligations must build or delegate reporting to meet this new requirement.
George Lambrou, Advisory Services Partner at PwC Cyprus said:
“Firms only have a few months to get to grips with this new regulation and there are significant risks to getting it wrong. It may seem fairly straightforward, but the extent of the data required is troubling many in the market and experience shows that it doesn’t take much to get this reporting wrong, with significant consequences.
“The internal system interactions can be complex and vulnerable to corruption from direct and contingent system changes. As such, reporting parties need to ensure that there are control processes to identify errors. Also, where you plan to delegate the reporting function to a third party, this does not delegate the responsibility of getting it right.
“Our work in the market over the past few years with clients demonstrated the critical importance of ensuring correct transaction reporting; fines for incorrect reporting can be substantial, but the remediation costs and management time associated with these issues can result in costs that are many multiples of the fine.”
As a result, any derivative counterparty in the European Economic Area (EEA) that is subject to EMIR, including corporates and other unregulated market participants, will be required to provide complex reports for transactions in all derivative asset classes (interest rates, foreign exchange, equity, credit and commodities) and for both over-the-counter (OTC) and exchange-traded derivatives from 12 February 2014.
The new reporting obligation will be in addition to the current reporting of Cyprus Investment Firms and banking institutions to the Cyprus Securities and Exchange Commission through the Transaction Reporting Exchange Mechanism (TREM). Also, corporates and unregulated counterparties which currently have no reporting obligations must build or delegate reporting to meet this new requirement.
George Lambrou, Advisory Services Partner at PwC Cyprus said:
“Firms only have a few months to get to grips with this new regulation and there are significant risks to getting it wrong. It may seem fairly straightforward, but the extent of the data required is troubling many in the market and experience shows that it doesn’t take much to get this reporting wrong, with significant consequences.
“The internal system interactions can be complex and vulnerable to corruption from direct and contingent system changes. As such, reporting parties need to ensure that there are control processes to identify errors. Also, where you plan to delegate the reporting function to a third party, this does not delegate the responsibility of getting it right.
“Our work in the market over the past few years with clients demonstrated the critical importance of ensuring correct transaction reporting; fines for incorrect reporting can be substantial, but the remediation costs and management time associated with these issues can result in costs that are many multiples of the fine.”
3287.99
1275.09
