European Market Infrastructure Regulation (EMIR)

This post discusses regulatory reporting for EMIR and the solution DEX Regulatory Suite offers for this regulation.

The European Market Infrastructure Regulation (EMIR) is a body of legislation for over-the-counter (OTC) derivatives, central counterparties and trade repositories. EMIR was introduced by the European Union (EU) as implementation of the G20 commitment to reduce systemic, counterparty and operational risk, and increase transparency in the OTC derivatives market. It was also designed as a preventative measure to avoid fallout during possible future financial crises similar to the collapse that followed the Lehman Brothers bankruptcy in 2008.

EMIR establishes common rules for central counterparties, which interpose themselves between involved parties in a contract to serve as the focal point of each trade, and trade repositories, which collect and maintain all records of trades. EMIR requires the reporting of all derivatives, whether OTC or exchange traded, to a trade repository. EMIR covers entities that qualify for derivative contracts in regards to interest rate, equity, foreign exchange, or credit and commodity derivatives. It also outlines three sets of obligations, including the clearing, reporting and risk mitigation of applicable products.

EMIR's set of obligations were designed to take effect on a phased basis over a period of several years.

ESMA has developed detailed rules and guidance on reporting, registering, and accessing data.

When reporting, counterparties should take also into account the validation rules applied by TRs to ensure that reporting is performed according to the EMIR regime, including the specifications of the Technical Standards.

DEX Data Explorers has included EMIR reporting in DEX Regulatory Suite.

In order to support the ESMA processes DEX Data Explorers offers DEX Regulatory Suite for ESMA. DEX RS generates regulatory reports using the ESMA specifications.

DEX Regulatory Suite for ESMA generates the XML messages that are used in the EMIR processes. These XML messages are based on the same ISO 20022 message standards that also are used for SFTR and MiFID ii transaction reporting.

DEX Regulatory Suite offers the following functionality for Reporting entities:

• Reports generated according to the latest standards
• Analysis tools for mapping of own data sets with the ESMA model
• Validation of the data according to the validation rules defined by ESMA; this gives you the possibility of validating the reports before you send them in
• XML generation in accordance with the standards of ESMA
• Processing of the feedback of ESMA
• Automatically generated documentation
• Workflow support

Below an example of an EMIR report generated by DEX RS is shown.

DEX Data Explorers maintains the definitions of the reports according to the regulator standards. When updates to the standards are submitted, you as a customer will receive an update on the set of reporting definitions.

ESMA has defined a set of validation rules which are used to check whether the submitted data is correct. The rules are in the DEX RS datapoint model, so you can check if the data is correct before you submit it to the regulator. Below an example of a validation report is shown.

DEX RS offers stores the full lineage of the values in the reports. This means that you can trace back the values of the reports to the original source data records that constitute a value in the report. This is a very useful feature which enables you to analyze the reported values. Below an example of the lineage of a value is shown. The report shown is a DGS-report. The sum of the values marked blue is the value in the report.

DEX RS generates the interfaces required by the regulator. In the example below an example of an XML-interface for EMIR, as required by ESMA, is shown.

DEX RS offers workflow integration. The DEX RS functionality has been integrated with workflow systems. Users are guided through the regulatory process; manual steps are integrated with automated steps. All actions are logged.

On top of delivering the required regulatory reports DEX RS offers you the possibility of designing you own reports. This way you can reuse the data you use for regulatory reports for e.g. internal reports. Below the design screen is shown. You can add you own columns, or create a copy of an entire report and change it for internal use.

You can also add your own validations.

DEX Regulatory Suite supports the following regulations:

1. EMIR
2. SFTR
3. MiFID ii
4. CRD iv (COREP, FINREP, Funding Plans, Asset Encumbrance, Supervisory Benchmarking Portfolio)
5. AnaCredit
6. Residential Real Estate
7. Deposit Guarantee Scheme
8. Social Economic Reports
9. Dutch Digital Reporting (DRA)
10. Solvency
11. IORP ii
12. Country Risk
13. Financial assessment scheme (FTK)
14. Premium pension institutions (PPI)
15. Tax reporting (VIA, Fatca)

Addition Knowledge House and DEX Regulatory Suite

Addition Knowledge House (www.addition.nu) is a reseller of DEX Regulatory Suite. Addition Knowledge House delivers the following services with regards to DEX Regulatory Suite:

• implementation support
• maintenance
• business process outsourcing