A year of regulatory developments, possible deviations, and certain delays

While 2021 hasn’t been the busiest year for regulatory reporting startup implementation, important developments have crystallized. Among the most significant of these developments is the publication of a series of advisory papers and updates to regulatory and/or industry technical specifications, including the draft ESMA Guidelines for EMIR reporting, the FCA’s EMIR Consultation Paper, and the draft XML Schema ISO20022.

With many upcoming global regulatory reports being redrafted and rewritten to later dates, there is still a lot of uncertainty around timelines and requirements as we look to 2022.

Pushing towards global standards is causing delays

One of the main factors contributing to the delay was the desire to accommodate global standards, driven primarily by the Commission on Payments and Market Infrastructure (CPMI) and the International Organization of Securities Commissions (IOSCO).

Implementation of new domestic rule sets before the international standards are fully established will drive additional operational burdens and additional implementation phase expenditures on reporting firms, report providers and commercial repositories. Meanwhile, long delays to compliance deadlines continue to constrain regulators’ ability to efficiently monitor systemic risks in the markets.

Industry pressure may delay major implementations until 2023

The Critical Data Elements (CDE) Technical Guidelines were released in April 2018 and are relatively well understood by industry participants. However, there is still much work to be done before the requirements are fully included in the ISO 20022 schema and the entire Unique Product Identifier (UPI) is used by the industry.

The ISO 20022 generic scheme is expected to be approved by industry bodies including ISO and SWIFT sometime in the first quarter of 2022, although industry groups are pushing for a minimum 18-month lead time between each jurisdiction that places Finalizing the outline and accompanying compliance date. Additionally, the approximate earliest date for a Derivative Services Bureau (DSB) to enable UPI is expected sometime in the third quarter of 2022.

Postponing the rewriting of the CFTC live broadcast start date could cause problems

The CFTC is expected to be the first driver to implement the new requirements in 2022, although the compliance date of May 25 is in doubt, with many market participants already requesting a delay. The question is how long should this delay be?

It is widely expected that any delay will last between six months to a year. Although this will enable reporting entities and data exchange repositories to better prepare for the new requirements, it will not be long enough to accommodate ISO and UPI, which means that additional implementations will be necessary within a year or two. If the delay
Not Approved, expect some mayhem.


Europe’s timetables appear to have been further considered. The European Commission (EC) has committed an implementation date of 18 months from the date of approval of the EMIR REFIT and the Financial Conduct Authority (FCA) is expected to closely align with its timeframe. With the European Commission expected to approve technical standards in the first quarter of 2022, the compliance date for the transfers is likely to be in the third quarter of 2023.

The silver lining to these important structures is that there appears to be sufficient time to accommodate the requirements of ISO 20022 and UPI. Therefore, companies that start preparation early can begin to build more strategic operating models as the possibility of more turnovers in the near future is remote.

The biggest concern about EMIR REFIT is the possibility that we will see a discrepancy in requirements between ESMA and FCA. In the first big test since Brexit, if the Financial Conduct Authority (FCA) decides on even minor deviations from ESMA requirements, companies will need to split their operating model with the inevitable increases in both risk and cost.

Changes in APAC and other regulations could add more burdens

APAC jurisdictions are also expected to see fundamental change in 2022 and beyond with the rewriting of the Australian Securities and Investments Commission, the Monetary Authority of Singapore, the Japan Financial Services Agency and the Hong Kong Monetary Authority, in the next two years.

Although not technically rewritten, there are other significant changes to come in the UK and Europe regarding SFTR reporting with modifications to the ISO schema, validation rules and TRACE improvements.

To add another layer of complexity to the mix, while the FCA granted the industry its request to delay the start-up date until April, ESMA rejected it and sticks to the original end-January deadline.

Already under pressure to set a target date for January, several companies may now have to support two different operating models for a while. And for good measure, we saw in late November that the European Commission publishes a draft legislative proposal for MiFIR, which indicates that there is a need for further development of transaction reporting in the future.

There are a lot of regulatory reporting changes on the horizon to mention here but one thing is for sure: Regulatory and compliance teams will need to monitor changing timeframes and requirements closely and change/operating teams are likely to become minimally compressed.

Moreover, regulators are actively increasing oversight and beginning to issue fines for non-compliance, so complete, accurate and timely reporting has never been more important.


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