The UK Financial Conduct Authority (FCA) has published Market Watch 84, sharing observations on the first year of UK European Market Infrastructure Regulation (EMIR) Refit implementation. The Refit, effective from 30 September 2024, made changes to the UK EMIR reporting regime aimed to enhance transparency and data quality in derivatives reporting. The FCA reports that by the end of the transition period on 31 March, 95% of reports were successfully uplifted, though some counterparties failed to meet the deadline. The FCA identified two main drivers for this: (i) inadequate resource planning, which led to delays in system testing, late discovery of issues and insufficient time for resolution. The FCA emphasises the need for firms to allocate appropriate resources to change management supported by clear policies, procedures and effective change-related documentation; and (ii) over-reliance on external vendors, who struggled to support clients due to limited capacity and competing priorities. The FCA reminds firms that while vendors may assist with reporting, the responsibility for data accuracy and completeness remains with the counterparty.
The FCA also raised concerns over the low volume of breach notifications received, suggesting underreporting of material issues. Firms are reminded of their obligation to ensure complete and accurate reporting, regardless of vendor involvement, and to notify the FCA promptly of any material errors. Looking ahead, the FCA's focus over the next 12 months will be on improving data quality, monitoring reconciliation rates and assessing firms' systems and controls. Counterparties should review their arrangements in light of these priorities.
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