European firms are “currently in the weeds” as they prepare for the next round of European reporting changes that take effect in three months and look likely “to be in different places come go-live”, a regulatory expert has said.

Speaking exactly three months before the European Market Infrastructure Regulation (EMIR) Refit rules take effect on April 29, Tim Hartley, a director of EMIR Reporting at Kaizen, said firms are making progress with their projects but they are focused on different specific challenges.  

“Firms are currently in the weeds with their EMIR Refit work. As we move towards the development date, firms still have a lot to do and they are now at the point where they are looking at the low level details, so the four or five things that they still have to do before the April deadline.”

Europe’s EMIR rules, part of that jurisdiction’s response to the last financial crisis, took effect in 2014, mandating all European firms to report their derivatives positions, and the latest round of changes are slated for April 29.

Hartley said: “What’s interesting about the changes under EMIR Refit is they’re not intellectually complex, indeed they are fairly straightforward, but there’s so many of them - it’s the wide array of changes that makes it difficult for firms.

“What surprises me is there’s not one trend for where firms are. Each firm we speak to is having their own challenges with different things, which could be changing to XML reporting, ingesting the UPI, or looking at the interpretation of the 203 fields. There is no one-size-fits-all here which is different from other regulatory deadlines. The variety of changes required suggests that firms are going to be in different places come go-live,” Hartley added.

The Kaizen director also said European firms should not rely on a grace period from regulators after the April 29 deadline, as is sometimes the case with major regulatory updates, but EMIR Refit is likely to be different.

Hartley said: “Firms have had at least 18 months to get up-to-speed with these changes, albeit there is a lot of them, so it is unlikely regulators are going to be lenient within the first few months if clients say, for example, they are unable to report.”

He added that clients will have to a report ready to file from April 29 while the period after that date will be focused on cleaning up the process by “starting to focus on the accuracy, completeness and timeline of their reporting”.

UK firms have until September 30 to comply with the British version of the rules, known as UK Refit, which adds more work for UK firms trading European derivatives.

Hartley said: “Those firms that have a reporting obligation in the UK and Europe will also need to be getting ready for the UK reporting requirement in September. Hopefully there will be lessons they can learn from the European process but they will still need to get that system ready. It is going to be a tough year for those firms.”

The head of the Swiss exchange group’s trade repository said at the start of this month EMIR Refit “is the largest regulation for derivatives reporting which will affect the full range of derivatives market participants, from large tier 1 banks to smaller corporate treasury teams at regional banks”.