UPI: A new data element for OTC derivatives reporting



One of the many changes that EU’s EMIR REFIT usher in is the UPI, or Unique Product Identifier. The UPI will be deployed across many jurisdictions including, but not limited to, Australia, Singapore, Europe (the EU and the UK) as well as the USA.

The road towards a globally endorsed UPI

The UPI was introduced under EMIR version 1, but at the time Securities Commissions/Central Banks and other interested parties had yet to agree on a global standard. In fact, in the current EMIR RTS under Product classification, pundits will notice that the UPI exists as an option but as per the specs “For products for which ISIN or AII are not available, endorsed Unique Product Identifier (UPI) shall be specified. Until UPI is endorsed those products shall be classified with CFI code.

At an international level, the International Organisation of Securities Commissions (IOSCO) and the Committee on Payments and Market Infrastructures (CPMI) set to work on the UPI and in 2017, they published the Technical Guidance (to authorities) on the Harmonisation of the Unique Product Identifier. The Financial Stability Board (FSB) following the issuance of the aforesaid guidance assigned the Derivatives Services Bureau (DSB), a subsidiary of the Association of National Numbering Agencies (ANNA), as the sole issuer of the UPI codes, while the Regulatory Oversight Committee (ROC) was appointed as the International Governance Body for the UPI Standard.

See below a brief video prepared by ANNA DSB on the UPI

When do you need a UPI in the EU?

With the advent of EMIR REFIT and given that the preparatory work was finalised for the adoption of a global UPI standard, UPIs will be required for instruments which do not have an ISIN and are not listed on an EU Trading Venue (meaning a Regulated Market, Multilateral Trading Facility, or Organised Trading Facility) or, not executed with a Systematic Internaliser (SI) or, not listed on third country organised trading platforms.

The new rules are very specific that instruments should be identified either with an ISIN or with a UPI (there will not be a situation where both identifiers will be required). However, as mentioned in ESMA’s validation rules, ISINs are required where the Venue of Execution data field is populated with a MIC code of EU Trading Venues, or SIs, or with the value XOFF. XOFF signals that the instrument in question is listed on a Trading Venue but the transaction did not take place on said venue, or with an SI or, on organised trading platforms outside the EU.

We should note here, that all instruments listed on EU (and UK) trading venues are required to be identified with an ISIN since 2018, with the advent of MiFID II/ MiFIR package and more specifically, mandated under Regulation EU 2017/585 supplementing MiFIR.

Moreover, for instruments listed on third country venues exclusively (which should be identified in the EMIR REFIT report with their MIC code, where the said execution took place on the third country venue) and where those third country venues do not identify their instruments with an ISIN, both the ISIN and UPI field can be left blank (UPI in this case is marked as optional).

Invariably, from the above it is evident that the following classes of non-listed derivatives are likely to be captured by the UPI requirement, the below list is not exhaustive:

  • Forward contracts (e.g. NDFs on various assets traded between FCs and/or NFCs, Virtual Power Purchase Agreements between Wholesale Energy Producers – Consumers);
  • Options (e.g. Stock option programmes some firms offer as part of employee remuneration packages, digital or binary options);
  • Contracts for Difference;
  • Swaps (e.g. Total Return Swaps, Fixed-For Floating Swaps, Currency Swaps);
  • Etc.

In our next blog post on the UPI, we will deep dive into the technical documentations of the UPI code, in order to assist the market participants understand how to generate or retrieve the UPI as necessary.

How is MAP FinTech going to assist?

MAP Fintech offers the UPI Link Service that helps retrieving companies match their products’ attributes precisely to those already issued UPIs, ensuring that reporting companies use the correct UPI Code.

MAP FinTech’s UPI Link Service boasts essential functionalities, including:

  • Automated identification of UPIs using reference data provided by the reporting entity and the latest issued UPIs supplied by the ANNA-DSB.
  • UPI enrichment of reported files prior to submission to the TR.
  • Error identification where UPIs cannot be mapped against the ANNA-DSB’s issued UPI records.
  • Inline editing capability for on-the-fly amendments on the UPI.
  • Advanced search function from within Polaris portal which can pinpoint the exact UPI based on enhanced search criteria.

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