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FCA publishes findings of first EMIR implementation reviews

The Financial Conduct Authority (FCA) has conducted a series of implementation reviews in accordance with its European Market Infrastructure Regulation (EMIR) priorities.  The reviews involve a representative sample of firms which varies between reviews. Firms are asked about their compliance, or plans for compliance, with particular EMIR obligations, following which a summary of key findings will be

The FCA has published its first two factsheets which detail the findings which are designed to provide insight into common issues faced by firms in complying with the EMIR requirements.  The factsheets also highlight how those successfully
complying with the requirements are achieving this compliance.

The two factsheets set out FCA’s key findings in connection with:

  • financial counterparties (FCs) subject to the EMIR requirements for timely confirmation and bilateral risk mitigation. The key findings covered:
  • the use of electronic platforms for electronic confirmation helped FCs comply with the timely confirmation timeframes;
  • some FCs had, for bespoke OTC transactions, revised their processes to reduce timeframes for confirmation despatch, review and amendment;
  • products for which no standardised industry documentation posed a challenge;
  • FCs were engaging with their EU and non-EU counterparties on the arrangements for reconciliation, the reporting of disputes and the exchange of collateral; and
  • FCs were reviewing internal processes, including those for intra-group trades, to ensure compliance with their timely confirmation and bilateral risk mitigation processes; and
  • non-financial counterparties (NFCs) subject to EMIR - the FCA engaged in a review to understand how NFCs are defining their hedging activity and monitoring their status against the clearing threshold. 
         The key findings covered:
    • NFCs accurately classifying hedging and non-hedging transactions;
    • points on which some NFCs did not yet appear to be fully ready for compliance; and
    • other points of interest, including that NFCs had started to consider the
      options for trade reporting and had commenced implementing plans to  delegate or implement systems to meet the reporting requirement.

 The FCA will publish further factsheets as and when the reviews are completed.

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