As the UK prepares for the launch of the EMIR REFIT on September 30th, MAP FinTech hosted an informative webinar featuring key industry experts. The focus was on lessons learned from the EU EMIR REFIT rollout earlier this year and how these can be applied to ensure a smooth transition in the UK.
The webinar was hosted by Luis Parra, Director at MAP FinTech UK, with presentations from James Hardie, Director of Regulatory Reporting Product at the London Stock Exchange Group (LSEG), and George Markides, Senior Manager Market Infrastructure Reporting at ComplyMAP Group.
Luis Parra set the tone for the webinar by emphasising the importance of preparing for the UK EMIR REFIT, drawing on lessons from the EU experience. He highlighted that the FCA’s version of the regulation aligns closely with the EU’s, making the EU rollout a valuable reference for firms navigating the UK changes.
James Hardie: Lessons from the EU Rollout
James Hardie provided detailed insights into the EU EMIR REFIT experience, particularly focusing on Transaction Reporting Rejections. He noted that on day one of the EU rollout, 40% of trades were rejected, primarily due to schema and lifecycle issues. Within two weeks, this rate halved, and after one month, it fell to 9%, which was seen as acceptable by regulators.
Testing and Preparation: Hardie stressed that the high initial rejection rates were largely due to insufficient User Acceptance Testing (UAT). He expressed concern that UK firms were following a similar pattern, with lower UAT engagement than expected.
Rejection Reasons: He highlighted that the two main rejection reasons—schema errors and lifecycle issues—mirrored the EU experience. He emphasized the need for more comprehensive uplift testing, especially regarding XML schema and lifecycle transitions.
Reconciliation Breaks: Hardie also discussed reconciliation breaks, where firms failed to match transaction data across different platforms. He observed that while these issues were also prevalent in the EU, the UK is showing similar trends, signalling that more effort is required to resolve these problems ahead of the go-live date.
Hardie concluded by stressing that regulatory collaboration would be essential to reduce rejection rates and that pre-launch engagement with the FCA would be crucial.
George Markides: Practical Considerations for UK Firms
George Markides reinforced many of the points made by James Hardy but added further technical insight. His presentation focused on the complexities of schema validation and data dependencies that contributed to high rejection rates in the EU.
Schema and Validation Rules: Markides pointed out that firms struggled with increased dependencies between fields in the new schema. These challenges were compounded by discrepancies between what ESMA’s documentation stated and what was required in practice, particularly regarding fields like the strike price.
Unique Product Identifier (UPI) Issues: Markides delved into the confusion surrounding the use of UPIs, noting that firms often misapplied them in trade reports. He cautioned that this issue persists in both the EU and UK, with firms failing to accurately match UPIs to the correct instruments.
Cross-Border Reporting Challenges: Markides emphasised that while the UK EMIR REFIT schema is similar to the EU’s, subtle differences could lead to rejection of reports. He warned that firms relying on EU experience without understanding the nuances of UK-specific requirements could face significant issues.
Markides ended his presentation by urging firms to revisit the guidance provided by both the FCA and ESMA and to ensure that their systems are aligned with the latest schema updates to avoid validation issues.
Trust MAP FinTech as your RegTech Provider
To navigate the complexities of the UK EMIR REFIT, MAP FinTech offers the expertise, cutting-edge technology, and customized solutions needed for success. Our team provides expert guidance, helping you understand the regulatory implications while delivering advanced reporting solutions that ensure both accuracy and efficiency. With personalized support and ongoing assistance, we are equipped to help you adapt swiftly and confidently in this evolving regulatory environment.
Moreover, our extensive experience with the EU EMIR REFIT gives us a unique advantage. We have gained a deep understanding of potential challenges and best practices, enabling us to anticipate issues and provide proactive solutions. By leveraging our insights from the EU framework, we can help ensure a smoother, more informed transition for UK firms, minimising disruptions and enhancing compliance processes.
Contact our team of experts for more information or any assistance you may require.