UK and EU transaction reporting

It finally happened, we no longer need to discuss preparing for the April 29th EMIR REFIT go-live and can finally breathe a little as we are past that date. With more than a month since the go-live, it now provides a period to reflect and review how it went and what can be learned for the future (I'm talking to you, UK REFIT, ASIC and MAS).

Teething issues

For many, the first week was rough. Issues faced by firms included Trade Repositories (TR) not processing data or sending ACK/NACK data in time, files that worked in UAT being rejected in production, and the initial day 1 problem of tracking all open UTIs being updated. By week two, most of these problems had been solved, and ACK rates had returned to close to pre-REFIT levels.

The takeaway is not to judge performance in the first week. While everyone wants to go directly to 100% ACKs, it is more likely that you need to hit 60% to 80% rates and then proactively make adjustments and quickly scale to the high 90s. Even for firms that were late in their preparation, there was a benefit to getting a small subset of their transactions over the line on the first week as it provided real production messages and experience to leverage when preparing the rest of their reporting.

UPIs

With the introduction of Unique Product Identifiers (UPIs) by the CFTC in January of this year, the new fields proved difficult for many reporting firms due to a lack of available UPIs being created ahead of the go-live. There were worries that such challenges would affect the April EMIR REFIT start date as well. Overall, except for a number of specific product types that are covered in more detail in the newsletter's section on UPIs, rejection rates due to incorrect UPIs were at much improved rates than that of the CFTC.

Porting and Backloading Challenges

One of the lessons learned that perhaps is the most relevant to keep in mind with future regulatory go-lives later this year was handling backloading of historical trades that were never reported or needed to be corrected and porting data when changing trade repositories. On a practical level, there was a view that if a firm was already reviewing its data to align with the REFIT, then it could use that opportunity to simultaneously prepare for backloading or moving TRs. In practice, this work became more challenging to accomplish as focus was required on getting over the line for the REFIT which made it more difficult to put resources and time on other tasks. In addition, due to the complexity that existed for TRs to enable their systems for the go-live, they limited dates available for firms to port data before and after the April 29th start date.

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.