As we approach the deadlines to apply the changes to EMIR reporting for the EU (April 29, 2024) and the UK (September 30, 2024), it is essential to understand these new requirements.
According to the EU’s Implementing Technical Standards and the UK’s EMIR Technical Standards, the specifics of a derivative contract under EMIR REFIT must be reported using a standardized XML (Extensible Markup Language) template following the ISO 20022 standard.
As the regulators state, this requirement aims to improve data quality and consistency while minimising data integrity risks. Also, by reducing the need for data cleaning and normalisation, it will make the utilisation of data easier for regulatory supervision and economic analysis.
Similarly, using this XML methodology and working with XML files entail certain challenges that are crucial for the reporting entities to consider:
- Complexity: XML files have a more complex structure than CSV files. Handling complex XML files can require more advanced parsing techniques and tools.
- Size: XML files tend to be larger in size compared to equivalent data stored, for example, in CSV format. This is primarily because XML includes additional metadata and self-describing information in the form of tags and attributes. As a result, processing large XML files can be more resource-intensive and time-consuming.
- Parsing Overhead: Parsing XML files requires more computational resources compared to CSV files. This overhead can impact performance, especially when dealing with large XML files.
- Readability and Editability: Manually navigating and modifying XML files can be time-consuming and prone to errors, especially when this interaction is frequent and for large or complex XML files.
- Cost of Expertise/Know-how: Someone must possess the relevant expertise to implement and maintain the XML methodology and work effectively with the XML files. Obtaining and maintaining such expertise entails the investment of time and financial resources.
If they haven’t done so already, companies should prioritise conducting an internal evaluation at this
critical stage. It is essential to assess how they will effectively meet the new reporting requirement of adopting the ISO 20022 XML methodology. However, carefully considering the challenges mentioned above is vital prior to reaching any decisions. In this regard, making informed choices holds the utmost importance for successful compliance.
At MAP FinTech, we possess extensive expertise in the XML methodology. We have used it for several years for similar regulatory reporting frameworks such as EMIR, SFTR, MiFIR, and others. Over the years, we have successfully submitted millions of transactions using this methodology.
Through our Polaris reporting platform, we offer clients the flexibility of providing us with CSV files, which we then convert into the appropriate XML format as required by the regulatory mandate before submitting them to the Trade Repositories (TRs). Similarly, when receiving feedback files from the TRs, which may be in XML or other formats, Polaris converts these into a more user-friendly and comprehensible format, such as CSV files, tables, and graphs that are presented within the portal. What is important to note here is that access to the original XML inbound and outbound files will always be available to the reporting entity, again via Polaris.
By partnering with MAP FinTech, reporting entities can confidently navigate the regulatory landscape and focus on their core business operations. Our team of experts is here to assist you with any questions or clarifications you may have. Contact us today!