Four months after the introduction of the new European regulatory reporting standards known as EMIR Refit, firms are reporting in line with the new validation rules but they need to focus on data quality, an expert has suggested.

Also, firms that trade British-based derivatives are (or at least should be) putting their finishing touches to preparations for the equivalent UK rules one month from now.

The European Market Infrastructure Regulation (EMIR) Refit rules, which took effect on April 29, increased the number of reporting fields to 203 from the 129 mandated by the first version of the regulation that took effect in early 2014.

Tim Hartley, the director of EMIR Reporting at Kaizen, a reporting specialist, said the industry has done a good job of getting trades into trade repositories in accordance with the updated validation rules.

“While the first week had a few teething issues, firms were able to get something into the trade repository with relative success,” said Hartley.

“Four months in, I’d say we are into what I call the day-two book of work which is looking more at data quality and what other things need to be taken into account. They’ve got the data across the line but is that data fit-for-purpose? That’s a bigger challenge, so firms are looking at what things are wrong and need changing.”

Hartley cited the example of the buy-sell indicator in the new regulatory reporting template and whether firms are using that correctly. “At the moment, the answer is not necessarily. This is expected but it is a lot of work for firms to get to that point.”

While some firms are fine-tuning their European reporting, many are also having to prepare for the UK version of the reporting rules that take effect on September 30 though there are similarities between the two regimes.

Hartley said: “There should be economies of scale for firms that have been through mill with EU Refit in their preparations for UK Refit. The validation rules are very similar and the joint Q&A from the Bank of England and the Financial Conduct Authority (FCA) do not contain any show-stoppers. There are things to be taken into account but there shouldn’t be a heavy impact on EU firms impacted by UK EMIR.”

Also, the post-implementation work on EMIR Refit currently underway will also benefit firms when they reach the same stage with the UK regulation, particularly because the European rules “are more extensive”.

Hartley added: “The guidelines from the FCA are currently smaller but they will increase in time.”

Firms bound by both regimes also have six months from when the regulation takes effect to convert any legacy contracts to the new reporting format unless the derivative expires before that six months is up.

Reflecting on the work that has been done, Hartley said the industry is getting much better at collaborating, discussing the regulatory changes and reaching a consensus about the things they don’t understand. “Firms working with the trade associations are getting efficient at identifying the grey areas and things that look like they won’t work, and going back as a group to the regulator for clarity.”

And that collaboration will be tested before long as the next jurisdictions update their reporting standards. Hartley said: “The Monetary Authority of Singapore (MAS) and the Australian Securities and Investments Commission (ASIC) are changing in October and they are currently going through their re-write process.

“This year we’ve also Commodity Futures Trading Commission (CFTC) reporting changes and Hong Kong Monetary Authority (HKMA). Next year, we are probably going to see changes in Switzerland and to Mifid reporting.

Hartley concluded: “Most of the major regimes are going through changes either this year or next year. For global firms operating in multiple jurisdictions, there is a significant regulatory burden to keep reporting and adhere to the new changes.”