1 November 2015 marks the end of the period where trade repositories verified the completeness and accuracy of EMIR trade reports submitted by market participants using relatively less elaborate checks.
The first level validation, which is already in place since 1 December 2014, consisted in determining by trade repositories, which fields are mandatory in all circumstances and under what conditions fields can be left blank or include the Not Available (NA) value.
In turn, the second level validation, which will be mandatory as from the end of October 2015, will refer to the verification that the values reported in the fields comply in terms of content and format with the rules set out in the technical standards.
In the latest edition of the Q&A the European Securities and Markets Authority (ESMA) modified the rules for EMIR reporting validation tables to be used by trade repositories.
The question specifically referred to the expected scope of the trade repositories' verification of the completeness and accuracy of the reports submitted by the reporting entities (TR Answer 20b).
Reporting counterparties or submitting entities are generally required to comply with the reporting requirements specified in the ESMA's Validation Table.
The second level validation binding as from end October 2015 will apply to all the reports, irrespective of the action type, relating to the trades reported with Action type "New" upon this validation coming into force. Updates to the reports of the transactions reported before the start date of the second level validations should not be subject to this validation.
It needs to be recalled trade repositories must reject the reports which are not submitted in line with the reporting requirements specified in the Validations Table in order to be in compliance with the requirements of Article 19 of the Commission Delegated Regulation 150/2013).
Hence, the probable effect of implemented modifications will be the increased scope of rejected reports. Market participants need to take account of this risk.
For more information on the modified EMIR validation regime see the the EMIR reporting page (heading Validation Table).