The Cyprus Securities and Exchange Commission (‘CySEC’) recently carried out a series of reviews on the quality of data reported to Trade Repositories, under Article 9(1) of EMIR by Regulated Entities (‘the Reviews’). The purpose of the Reviews was to assess the quality and timeliness of data reported by Regulated Entities to Trade Repositories.
Here we list the observations published by CySEC and the solutions Point Nine has in place to ensure the transaction data reported on behalf of our clients under EMIR is complete, timely, accurate and of a high quality:
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CySEC Circular C545 in relation to EMIR Reporting 2022
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Point Nine Solution
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- Misreporting of details of derivatives contracts – a number of reports contained contradictory erroneous details in relation to the derivative contracts that were reported
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- The P9 validation engine cross checks the asset class and contract type fields in the transaction report against CFI codes to prevent these type of errors
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- Incorrect status of derivative contracts – derivative contracts were not properly terminated with the Trade Repositories by Regulated Entities
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- With the P9 trade state machine, status of trades both the current and historical status is recorded. Our clients also have a clear view of the status of their trades through the client portal.
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- Collateralisation – Several Regulated Entities reported client (mostly retail client) trades as Partially Collateralised
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- The P9 validation engine includes rules to cross check the collateralisation type versus the other counterparty field in the transaction report.
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- Definition of “working day” for the purpose of determining the deadline for reporting- Regulated Entities should follow the relevant calendar of the Republic of Cyprus to determine whether a given day is a working day or holiday in accordance with the clarification provided in the ESMA Questions and Answers on Implementation of EMIR.
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- The P9 platform is always available irrespective of a public holiday and adequate staff is available to support our customers. At P9 we also recommend to our customers to submit their data even on public holidays.
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- Rejections – Delegation of Reporting – Regulated Entities should ensure that EMIR provisions are respected at all times (i.e. timely and accurate reporting, etc.) and the Regulated Entities remain liable for any misreporting by third entities they rely upon.
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- The P9 client portal with its trade and reconciliation blotter provides our clients with the required transparency to their reported trades. In case of rejections, customers will additionally receive an automated email report with the details of the rejected trades. The exception management blotter on the client portal also helps client monitor the status of any items pending resolution.
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- Reconciliation of reports – Regulated Entities were facing pairing and/ or matching issues between their reports and those of their reporting counterparties.
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- The P9 reconciliation blotter on the client portal provides clients with a clear view of the pairing and matching status per UTI reported. Thereby enabling swift identification of breaks and their resolution.
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- Use of valid legal entity identifiers for counterparties that are legal entities – Regulated Entities were using internal client codes and not valid legal entity identifiers to identify counterparties that are legal entities, in accordance with Article 3 of Regulation (EU) No 1247/2012 as amended.
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- P9 validates the counterparty information provided by their clients against the GLEIF database.Thereby ensuring accurate reporting of legal entity identifiers of counterparties and distinguishing between individuals and legal entities.
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