Top EMIR Refit Rejections
Key Takeaways
- Lifecycle Error Concentration: The leading EMIR Refit rejections are heavily linked to lifecycle events, reflecting stricter trade-repository sequencing controls under the revised framework.
- Sequence Discipline: NEWT or POSC must establish the record first, showing that action-type order is now a critical control point in lifecycle reporting.
- Timestamp Integrity: Event dates, valuation timestamps, and execution timestamps are all tightly constrained, making temporal consistency a frequent source of rejection.
- Conditional Field Logic: Rules around delta, valuation amount, and CCPV illustrate that field-level population now depends more heavily on contextual relationships.
- Preventive Controls: The article argues firms can avoid many common rejects by embedding lifecycle-event controls directly into their systems-and-controls framework.
On 12 June 2024, Lavinia Ponniah from DTCC Trade Repository shared the top rejections for EMIR Refit in the UK. Unsurprisingly, many of these rejections are associated with lifecycle events. This is due to Trade Repositories (TRs) implementing stricter rules and constraints on lifecycle and event sequences, as required under ESMA guidelines.
NEWT or POSC Must Be First: Firms are attempting to modify an existing report without first issuing a NEWT (New Transaction) or POSC (Position Component). Only one occurrence of NEWT or POSC is allowed per UTI.
Level Modification: Level can only be modified with Action Type CORR (Correction) or REVI (Revision).
Event Date Accuracy: Ensure the Event Date is on or after the Execution Timestamp date and prior to or equal to the expiration date (if populated) or if early terminated, the early termination date for that UTI.
Delta Field Population: Remember to populate the Delta field for Options and Swaptions with non-basket underlyings, as it is required when the valuation amount is populated. This confusion could be due to Delta being a new field.
Valuation Amount and Clearing Status: If field 2.21 Valuation Amount is populated and field 2.31 Cleared is marked with Y, field 2.29 (Clearing Counterparty Value) should be populated with CCPV (Central Counterparty Value). It is unclear why this valuation rule is being missed in submissions (EMIR-VR-2024-01).
Valuation Timestamp: The date part of the valuation timestamp must match the Event Date. Despite this being obvious, it is frequently incorrect (EMIR-VR-2023-06).
Execution Timestamp: The execution timestamp cannot be changed in a report with action type 'MODI' (Modification) (EMIR-VR-2042-03). For legacy outstanding positions where Execution Timestamp was never reported (i.e. Execution Timestamp was left blank when the position was originally reported because it wasn't required in the past), the TR will accept MODI with Execution Timestamp populated to support clients uplifting legacy outstanding positions to REFIT technical standards.
Reporting entities can avoid many of these issues by introducing controls for lifecycle events in their systems and controls frameworks.
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Frequently asked questions
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It identified lifecycle-event sequencing and lifecycle-field controls as the main source of top rejections. The article says this reflects stricter trade repository rules introduced under ESMA's EMIR Refit guidelines.
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It says NEWT or POSC must come first and only one occurrence of NEWT or POSC is allowed per UTI. The article presents that rule as one of the most common rejection triggers.
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It says the event date must be on or after the execution timestamp date and on or before the expiration date or early termination date where relevant. The article includes this as a core lifecycle-validation rule firms keep failing.
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It says firms often miss the need to populate Delta for options and swaptions with non-basket underlyings when valuation amount is populated, and to populate CCPV when valuation amount is reported and Cleared is marked Y. The article also highlights frequent errors where valuation timestamp dates do not match the event date.
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They should introduce stronger controls for lifecycle events in their systems and controls framework. The article says many of the listed rejects can be avoided through better sequencing and field-level validation controls.
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