With the 12 February deadline for the start of trade reporting under the European Market Infrastructure Regulation (EMIR) fast approaching, 65% of respondents to a recent Reval webinar poll of 300 finance professionals said they expect the European Commission (EC) to provide corporates with “a relief mechanism”. Over half (58%) said they wouldn’t be ready for the start of EMIR reporting next week.
Respondents to the Reval webinar poll held on 28 January are perhaps expecting an EMIR reporting compliance delay, as has recently happened with the single euro payments area (SEPA) harmonisation project, giving treasurers more time, but there is no guarantee this will happen. Other aspects of the EMIR rules are due to come into effect later in the year but the commencement of trade repositories and reporting obligations is the immediate deadline facing financial market participants.
“Companies seem to be expecting that they will receive some kind of relief from complying with the EMIR deadline next week,” says Guenther Peer, regional vice president of Reval’s solutions consulting unit in Europe, Middle-East and Africa (EMEA), and one of the speakers during the webinar looking at Dodd-Frank and EMIR. “With SEPA’s extended transition period and the issuance of No-Action relief letters from the Commodity Futures Trading Commission (CFTC) in the US, regarding various derivative-related rules coming into effect under the Dodd-Frank Act, it seems that companies have become accustomed to shifting dates for regulatory compliance. This could be the reason why many companies report that they are not ready to comply with EMIR reporting.”
Under EMIR, financial and non-financial counterparties must report on a daily basis all derivatives, including intragroup transactions, to one of the six registered trade repositories. Aside from the reporting obligation, EMIR requires central clearing for certain classes of over-the-counter (OTC) derivatives for financial institutions and complex corporates, and the application of risk mitigation techniques for non-cleared transactions.
Key findings from the straw poll include:
• 58% of finance professionals say that they are either not yet ready to comply with EMIR or do not expect to be ready for three to four months.
• 65% said they are definitely not ready for the start of EMIR reporting obligations next week.