EMIR Rejected Reports

With the entry into force of EMIR REFIT reporting on 29 April 2024, and in particular with the application of RTS 2022/1858, Trade Repositories’ role in ensuring data quality expands. This new technical standard sets into law the controls that Trade Repositories are required to perform as well as the end-of-day response mechanisms to the relevant parties involved in the reporting chain. In this context, Trade Repositories are requested to provide to entities as well as to national competent authorities a set of new reports¹, including the rejection report. This information aims at enriching the awareness of counterparties and relevant stakeholders of the quality of their EMIR transaction reporting, and facilitates the monitoring of their compliance with their reporting obligations.

With the press release 22/33 published on 21 December 2022, the CSSF has already informed all counterparties involved in derivatives transactions, before the entry into force of EMIR REFIT reporting, about changes introduced in the EMIR reporting and about the increased controls implemented by Trade Repositories to ensure data quality under RTS 2022/1858.

Furthermore, the CSSF reminds all counterparties involved in derivatives transactions that for a report to be considered valid, it must be accepted by the Trade Repository².

The CSSF, in the context of its supervisory activities of derivative transactions reported by or on behalf of counterparties falling under its supervision, monitors rejected reports and expects re-submission for any rejected report to ensure the compliance of the derivative transaction with the reporting requirement introduced by Article 9 of EMIR.

Having analysed the rejection reports received between the entry into force of EMIR REFIT reporting and 31 December 2024, the CSSF has identified the most frequent types of errors and encourages entities to consider the following practices when reporting their derivatives to their respective Trade Repositories:

• A derivative report must include the action type ‘New’ or ‘Position Component’ for a derivative that has not previously been reported.
• A derivative or margin report with action type other than ‘New’ or ‘Position Component’ relates to an already reported derivative.
• A derivative or margin report shall not attempt to modify any immutable fields of a previously reported transaction. For example, a derivative report shall not attempt to modify the details of fields ‘Counterparty 1’, ‘Counterparty 2’ or ‘UTI’.
• A derivative or margin report has a valid ‘Reporting Timestamp’ completed with a timestamp on or after 29 April 2024. The ‘Reporting Timestamp’ shall be consistent with the date of reception of the report by the TR.
• A derivative or margin report has an ‘Event date’ that is equal or prior to its ‘Reporting Timestamp’. For all action type except ‘Revive’, the ‘Event date’ shall be prior to or equal to the ‘Expiration Date’, and if populated, the ‘Early Termination Date’ of the report.
• For a derivative report that has been reported as cancelled with action type ‘Error’, the subsequent report shall be a report with action type ‘Revive’. A derivative report with a different action type value than ‘Revive’ will be rejected by TR.

By reviewing their internal controls, and implementing the improvements mentioned above, entities will reduce their rejection rate of transactions reported under Article 9 of EMIR.

The CSSF takes this opportunity to remind entities that:

• in accordance with Article 9 of the Implementing Technical Standards on reporting (ITS 2022/1860), an Entity Responsible for Reporting pursuant to Article 9(1a) to (1d) of EMIR established in Luxembourg is required to notify the CSSF of any significant reporting issues. The notification process includes the submission of the “Notification on Data Quality issues and other errors or omissions” as outlined in the communiqué of 29 April 2024.
• EMIR 3 entered into force on 24 December 2024. EMIR 3 introduces additional powers for National Competent Authorities to impose administrative penalties or periodic penalty payments for non-compliance with the reporting obligation of EMIR. These administrative penalties or periodic penalty payments shall be imposed when the details reported by the participants repeatedly contain systematic manifest errors.