The Association of European Financial Markets (AFME), Future Industry Association (FIA), International Capital Market Association (ICMA), International Swaps and Derivatives Association, Inc. (ISDA) and the International Securities Lending Association (ISLA) have published a new agreement to facilitate reporting on various regulatory systems in the European Union. While Bayley says all necessary technology updates will depend on how existing corporate reporting systems and processes are implemented, UnaVista`s Talks says the development of legal technology solutions to support the deal will depend on the industry adopting the framework. MRRA establishes common conditions for the mandatory and delegated reporting of derivatives transactions under Operation EMIR, consistent with the amendments introduced by EMIR Refit and securities financing transactions under the SFTR. The agreement was also drawn up to ensure that these conditions remain effective after Brexit. Some say the standard format of the contract will facilitate agreements. Others believe that the document is too complex and too long to be widely adopted. But the councillor says that delegated report agreements are usually between two and four pages long. Emir Refit was created to reduce the burden that reciprocal relationships place on non-financial counterparties that are covered by the clearing thresholds (FNN). Instead of declaring an NFC report on the OTC trading page, responsibility is now transferred to its financial counterparty as of June 18. While the existing reporting agreement concerned the possibility for a counterparty of a derivative instrument to delegate its EMIR reporting obligations, the EMIR-Refit Regulation and the SFTR require that, if one of the counterparties of the transaction concerned is a financial consideration (FC) and the other part NFC4, the CF is responsible for itself, its counterparty and a legal liability , and to ensure the accuracy of the reported data5 (obligation).
The modular approach of the MRRA allows contracting parties to agree on different annexes (and to add new regulatory deadlines) to meet their requirements, whether mandatory or delegated. The Master Regulatory Reporting Agreement (MRRA) gives market participants the opportunity to use a single model to help them manage regulatory obligations and provide reporting services under the European Market Infrastructure Regulation (EMIR) and the Securities Financing Transactions Regulation (SFTR). “It`s a way to document [delegated reporting agreements] in a standard format, so you don`t have to redevelop new documents on a bilateral basis and there`s no huge legal burden on production, but it goes and is pretty close to the criteria of the settlement,” Talks says. As noted in the Webinar, ISDA and other professional organizations had written to the AEMF requesting leniency under the law with respect to the start of the obligation to notify financial counterparties by the NFC on June 18. The webinars were recorded prior to the AEMF response. “If you`re a non-financial company that pays under Emir, you`ve already gone through this testing process and this overload and the operational aspect of resourcing to support regulation,” says Catherine Talks, product manager at UnaVista. “If we just stick to the binding regulations, much of this reporting framework becomes obsolete and much more committed to a vision of reconciliation.