ISDA Recommends Steps to Comply with EMIR Refit Reporting Requirements

ISDA recommended several steps for financial counterparties ("FCs") and their non-financial counterparties ("NFCs") to take in order to comply with the European Markets Infrastructure Regulation ("EMIR") Refit requirements.

In its report, ISDA offered suggestions for compliance with EMIR Regulatory Fitness and Performance ("Refit") requirements by proposing that FCs and NFCs:

• use the default value of a "Beneficiary ID" as the ID of the respective NFC (in order to address the issue that data provided by an NFC-client to an FC is not required to be validated);

• mandate that a valid legal entity identifier ("LEI") be a data item provided by an NFC-client to their respective FC (in order to address the issue that an FC is unable to report on their NFC-client trades without a valid LEI);

• verify the scope of reporting lifecycle events (to address the issue that the scope of reporting for FCs on behalf of their NFC-clients is not "clear-cut");

• communicate classification changes, to ensure that an NFC (i) advises its FC ahead of an upcoming classification change and the date of the anticipated change, (ii) agrees with its respective FC on voluntary delegated reporting of a classification change, and (iii) clarifies with its respective FC on the unique trade identifiers ("UTIs") of the NFC's existing live positions and which trade repository ("TR") holds them (to address the issue of liability for an NFC client's OTC derivative contract non-reporting if its respective FC is unaware of the classification change);

• assign the responsibility of reporting the classification of accredited investment fiduciaries ("AIFs") and undertakings for the collective investment in transferable securities ("UCITs") to their respective fund manager (to address the issue that the reporting of the classification of AIFs and UCITS as generally FCs is unclear);

• bilaterally designate terms of legal liability for an NFC that opts to report its own OTC derivative contacts; and

• interpret reporting requirement for FCs - on behalf of themselves and their respective NFC-clients - to not apply to third country FCs.