FCA Launches Consultation Period to EMIR REFIT Q&A

Earlier this month, the Financial Conduct Authority (FCA), the United Kingdom’s (UK) financial supervisor released a call for feedback to Q&As they published on the upcoming update European Market Infrastructure Regulation (EMIR) REFIT set to go into effect September 30^th later this year.

The Q&As cover fifteen topics with the FCA using a three-phase approach of which the first five topics were issued on March 1st. The Q&A are based on additional questions the FCA has fielded following their initial consultation feedback paper published February of last year to provide guidelines on the REFIT. The initial five topics cover transactional arrangements, reconciliations, errors and omissions, derivative identifiers and actions and events with feedback available to be provided until March 28^th.

The publishing of the FCA’s answers to REFIT questions occurs as European Securities and Markets Authority (ESMA) issued an initial list of Q&As regarding the REFIT that goes live next month in the EU on April 29^th. Currently there is much aligned between the UK and EU versions of the two EMIR frameworks with validations and reported fields nearly identical. For their part, in their 2023 REFIT guidelines, the UK also referred to a desire to align with EMIR of the EU to reduce challenges to comply with the 2024 updates.

Nonetheless, as UK and EU regulators issue their own Q&A statements, this increases the likelihood of divergence between the two versions of the regulation. We have already seen small examples of differences between ESMA and the UK in other regulations. Notably, under Securities Financing Transactions Regulation (SFTR), the FCA removed from scope non-financial counterparties (NFC).

Within EMIR, the FCA widened the scope of exemptions for reporting intragroup transactions and added an additional field of Execution Agent after taking into account industry feedback on the benefits of this field. They are minor examples, but show precedence among EU and UK regulators to apply their own views to regulation which should increase as the FCA and ESMA continue to publish updates to their EMIR Q&As.

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About the author: Ron Finberg

Ron is Executive Director, Product Specialist at S&P Global Market Intelligence Cappitech and helps customers with their compliance of EMIR, MIFIR, SFTR, MAS and ASIC derivative reporting. Ron is an ongoing contributor of regulatory focused content and webinars and leverages his over 20 years’ experience in the financial industry. He was also awarded the Editor’s Recognition Award for Best RegTech Vendor Professional in the RegTech Insight Europe Awards 2021.