UK EMIR trade reporting: common errors and remediation
The revised UK EMIR trade reporting standards, which took effect on 30 September 2024, represent the most significant update to the UK derivatives reporting regime since EMIR was first implemented. The revised standards align the UK framework more closely with the international technical standards developed by CPMI-IOSCO, expanding the number of reportable fields from 129 to 203, introducing new requirements for life-cycle event reporting, and mandating the use of ISO 20022 XML format for new trade reports. Firms that had invested in systems and processes calibrated to the pre-September 2024 requirements faced a material transition challenge, and early supervisory data suggests that compliance rates in the first months of the new regime were lower than the FCA expected.
Common errors in UK EMIR trade reporting fall into several categories. First, counterparty identifier errors: reports must include the correct LEI (Legal Entity Identifier) for both counterparties, and firms with complex group structures frequently report under the wrong LEI or fail to ensure that their LEIs are current and validated. Second, product classification errors: derivatives must be reported using the correct product classification (UPI — Unique Product Identifier — and the associated ISIN where applicable), and misclassification results in reports that cannot be matched against the other counterparty's report. Third, life-cycle event errors: amendments, terminations, compressions, and novations must each be reported using the correct action type, and the sequence of reports must reflect the actual life-cycle of the derivative accurately.
Delegation of reporting — where one counterparty delegates its reporting obligation to the other, or to a third-party reporting service — does not transfer the regulatory obligation. The counterparty remains responsible for the accuracy and timeliness of reports submitted on its behalf. Firms that delegate reporting must have contractual arrangements that define responsibilities clearly, must have a process for monitoring the quality of delegated reports, and must be able to investigate and remediate errors promptly when they are identified. The FCA has found that many firms that delegate reporting have little visibility of what is actually being reported and have no process for reviewing report quality.
Reconciliation — the process of comparing a firm's own trade data against reports submitted to the trade repository, and against the matching reports submitted by the other counterparty — is a mandatory quality assurance step that many firms do not perform adequately. Where a report cannot be matched against the counterparty's report, the trade repository will return an error code, and the firm must investigate and resolve the discrepancy. High rates of unmatched reports are a supervisory red flag and have been identified as a trigger for FCA enforcement engagement.
Backloading and corrections
Firms that identified systematic errors in their reporting under the previous standards should have completed a backloading exercise to correct historical reports before the September 2024 transition. Firms that have not done so, or that identified new errors following the transition, should prioritise a systematic review of their reporting data and submit corrections through the appropriate trade repository mechanism. The FCA has indicated that it expects firms to self-report material reporting failures under SUP 15 and will take a more favourable view of firms that have proactively identified and remediated issues than those where failures are discovered through supervisory data analysis.