Under the European Markets Infrastructure Regulation (EMIR) both counterparties to a trade if they are an EU or EEA counterparty are required to report to an ESMA approved Trade Repository (TR). Also part of the EMIR reporting requirement, COMMISSION DELEGATED REGULATION (EU) No 150/2013 Article 19 is the Inter-TR reconciliation, this is where one counterparty to the trade has submitted the trade to one TR and the other counterparty has submitted to another TR, a reconciliation between the two TRs must occur to ensure the accuracy of the data submitted, this is known as “the pairing of trades”.
It is important to note that the inter-TR reconciliation is a regulatory requirement under EMIR and all EMIR trade repositories are required to conduct reconciliations by ESMA. However, responsibility for ensuring that data is agreed and reported correctly under EMIR remains with the relevant counterparties to the trade. The Inter-TR Reconciliation performs the pairing of trades, however as per EMIR The Reporting Party (who has the obligation to report), is responsible for resolving/amending any trade breaks with their counterparty.
The CME European Trade Repository in line with EMIR and after notifying ESMA has begun undertaking the Inter-TR reconciliation and the distribution of the Inter-TR Reconciliation files will begin on Monday 24th February.
Inter TR – Reconciliation work flow*
· Each Trade Repository compiles a population of one-sided trades (trades where both counterparties to the trade have a reporting obligation under EMIR).
· Step 1 of Inter-TR Reconciliation - Reporting Party/non Reporting Party LEIs and the UTI are securely exchanged between all Trade Repositories.
· Step 2 of Inter-TR Reconciliation - Where a “Pair” has been found at another TR then further data fields are exchanged securely with that individual TR. If a TR does not have a pair then they will not receive any further data for that trade.
· Step 3 of Inter-TR Reconciliation - Paired trades will then be reconciled, using a subset of reportable economic fields.
· Exception Management Process - CME ETR will notify its client of any exceptions.
*Note – CME ETR will also reconcile trades where both sides of the trade have been reported to CME ETR.
CME ETR will email registered users a high level summary of their trade breaks via a CSV file. The mismatching data will be shown within a spreadsheet as follows –
CME ETR users via our web based GUI will be able to view Inter-TR reconciliation results using the Reconciliation Report function, available in the CME ETR User Interface.
This report will allow clients to view field specific breaks i.e. if the mismatched field in the CSV file that has been emailed states Notional, users will be able to view their submitted value and that of the other counterparty, for example 5.4m vs 5.41m.