Fund managers could face regulatory sanctions over EMIR

Tim Thornton, Chief Data Officer, Mitsubishi UFJ Fund Services, says fund managers could face regulatory sanctions over EMIR…

The reporting of over-the-counter derivatives and exchange traded derivatives as mandated under EMIR has been in place for a year. While a number of managers have overcome some of the initial teething problems they had with reporting to trade repositories, challenges do remain. Errors and mistakes during the reporting process are still common. Regulators have indicated they intend to clamp down on firms submitting inaccurate data, but fund managers have onerous reporting obligations, which require processing significant quantities of data.

The requirement under EMIR that financial institutions including asset managers clear their over-the-counter derivatives transactions through CCPs is likely to come into force in August 2015.  EMIR also imposes stringent risk mitigation procedures on firms’ un-cleared OTC transactions including timely confirmation, dispute resolution, portfolio compression, daily valuation and recordkeeping. These rules are extra-territorial so firms must check as to whether they are ensnared. The deadline is fast approaching and fund managers must ensure they are well prepared to deal with these rules, or risk facing regulatory sanctions.

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