Market Watch 84 Reveals Why Firms Are Still Falling Short on EMIR REFIT

In Market Watch 84, published one year after the regime went live, the FCA reveals that many firms are falling short of expectations despite a lengthy lead time and formal transition period. The regulator highlights persistent issues in data quality, governance, and operational readiness underscoring the regulator’s concern that foundational compliance gaps remain unresolved.

Persistent Failures

EMIR requires counterparties to report the details of over the counter and exchange traded derivative contracts that are entered, modified, or terminated to a trade repository (TR) on a T+1 basis.

The REFIT required wholesale changes to reporting as opposed to a mere update and increased the number of reportable fields from the original UK EMIR reporting requirements from 129 to over 200. It also requires an updated reporting format to align more closely with other reporting standards.

UK EMIR REFIT came into effect on 30 September 2024, with a six-month transition period for outstanding contracts ending 31 March 2025. This followed the EU’s EMIR REFIT which went live on 29 April 2024.

Since the go-live, all newly-entered or modified derivative trades must comply with the updated reporting standards. However, the FCA has observed:

• Incomplete remediation of legacy reports: At the end of the transition period, circa 5% of reports remained in the old reporting format and as of 1 April 2025, could no longer be reported resulting in a breach of the reporting obligation.
• Data gaps remain: Since the requirements took effect, 1.45% of UK reporting counterparties failed to report entirely.
• Implementation project failures: Firms struggled with vendor dependencies and resource shortages, resulting in delays to testing and poor identification of issues.
• Weak governance structures: Firms lacked senior oversight and failed to proactively engage with the regulator during implementation.
• Low-number and low-quality breach notifications: Breach notifications were often unclear and lacked actionable remediation plans, limiting their effectiveness as a regulatory tool.

Close the Gaps in Your EMIR Reporting Framework

The FCA has stated its priority for the next 12 months is to improve overall data quality. The cited issues undermine the regulator’s ability to monitor systemic risk and market stability. Firms that fail to meet expectations risk regulatory scrutiny, reputational damage, and operational disruption.

Firms should take decisive action to align with FCA expectations:

• Review and remediate legacy reports: Ensure all outstanding trades dated before 30 September 2024 are fully updated and in-line with the new reporting format.
• Strengthen project governance: Implement controls to manage change effectively, including the creation of relevant documentation and the development of arrangements to detect and promptly resolve issues.
• Involve senior leadership: Ensure that oversight of reporting, including vendor management, is assigned to a sufficiently experienced and senior individual and ensure documented decision-making with clearly defined escalation processes.
• Improve reconciliation processes: The FCA will be turning its attention to reconciliation rates and supporting the industry to achieve complete and accurate reporting. Reporting counterparties should seek to resolve data breaks promptly and ensure inter-TR reconciliation arrangements are robust.
• Submit high-quality breach notifications: Ensure proactive and timely notifications to the regulator and provide clear root cause analysis, scope, and remediation plans to demonstrate an understanding of the issues at hand.

Meet UK EMIR REFIT Requirements

EMIR REFIT compliance is not just a technical challenge; it is a strategic imperative. Firms that engage expert partners are better equipped to meet regulatory expectations and avoid costly missteps.

Firms that invest in structured, well-governed reporting frameworks are more likely to meet regulatory expectations and avoid the operational and reputational risks associated with non-compliance. With the FCA’s focus now shifting toward reconciliation and breach notification quality, external expertise and independent assurance can play a critical role in strengthening internal controls.

Request a complimentary review to discover how ACA can help you reduce operational risk, improve data quality, and stay compliant, no matter how often the rules change.