Cates is keen to highlight that trade reporting is simply the first of many obstacles that firms will face in becoming fully EMIR compliant:
“Firms should have been proactive in their preparations for today’s derivatives trade reporting deadline. Companies should be ‘going live’ with the population of unique trade identifiers (UTI) and should have completed the backloading of all live trades from August 2012. On top of this data fields required to submit a fully compliant report to their registered trade repositories should have been populated for all FX Forwards, Exchange Traded Derivatives and OTC derivatives where the firm has traded either directly with an EU counterparty or in EU products. Yet this is just the tip of the iceberg.”
All firms touched by EMIR will have a lot of work to do over the coming months in order to ensure that they are fully compliant with the regulation.“For those who have successfully negotiated the first wave of reporting, they must now continuously report on a T+1 basis any changes to reported trades, for example if an FX spot rolls to a Forward," she notes.
"For those firms who have failed to meet today’s trade reporting deadline they now have a mountain to climb. They now face the dual obligation of meeting compliance whilst simultaneously attempting to complete the backloading in time for the deadline 90 days from now, which will be almost impossible. If by some miracle they can do that they then only have another 90 days before the reporting of the collateral associated with those trades also becomes mandatory.”
It’s clear that the battle for EMIR compliance is far from over, and firms that have failed to meet the trade reporting mandate will certainly find it particularly difficult to catch up with their competitors and to meet the next deadline, set to hit in 90 days. Whether or not such firms will succeed in catching up with the rest of the pack remains to be seen, but if they fail then they will be vulnerable to regulatory fines and sanctions.