Executive Summary
A leading Luxembourg‑based asset management firm engaged our team to conduct an independent review of its EMIR Refit delegated trade‑reporting framework. Through a structured reconciliation of firm‑side and Trade Repository (TR) data, we identified critical reporting gaps, strengthened oversight of delegated counterparties, and delivered actionable insights that improved regulatory compliance and operational resilience.
Client Background
The client is one of Luxembourg’s largest asset managers, overseeing a multi‑jurisdictional portfolio across equities, fixed income, derivatives, and alternative instruments. Due to the scale and complexity of its operations, the firm relies on delegated reporting arrangements with multiple counterparties and service providers. Ensuring complete and accurate regulatory reporting is essential to maintaining compliance under European trade‑reporting regimes.
Engagement Objective
The client sought an independent assessment to:
- Validate whether all eligible trades were reported accurately and on time.
- Identify under‑reported, over‑reported, and misreported transactions.
- Assess the effectiveness of delegated reporting controls.
- Recommend improvements to strengthen governance and reduce regulatory risk.
Scope of Work
Our review covered the full reporting lifecycle:
- Firm‑side data collection: Aggregated trade data from all execution venues, custodians, and portfolio management systems.
- TR‑side data extraction: Retrieved all reported records from relevant Trade Repositories.
- Eligibility assessment: Applied regulatory criteria to determine which trades should have been reported.
- Full reconciliation: Matched firm‑side and TR‑side records to identify discrepancies.
Methodology
We categorized discrepancies into three major groups:
1. Under‑Reports
Trades present in firm‑side data but missing in TR submissions.
Common causes included:
- Missing delegated reports due to counterparty oversight.
- Data‑transmission failures between systems.
- Incorrect eligibility tagging at the source.
Impact:
Under‑reports pose significant regulatory risk, as they represent non‑compliance with mandatory reporting obligations.
2. Over‑Reports
Trades reported in the TR that did not exist in firm‑side records.
Typical drivers:
- Counterparties reporting trades on behalf of the wrong entity.
- Spot trades incorrectly classified as forwards.
- Exempt trades reported due to misinterpretation of rules.
Impact:
Over‑reports distort regulatory submissions and may trigger unnecessary regulatory queries.
3. Misreports (Advanced Category)
Trades reported with incorrect attributes such as:
- Wrong UTI pairing
- Incorrect product classification
- Inaccurate notional amounts or counterparties
Impact:
Misreports reduce data quality and weaken the firm’s regulatory posture.
Counterparty Outreach & Coordination
Effective delegated reporting requires not only internal controls but also structured engagement with external reporting agents. As part of our review, we established a formal counterparty‑communication workflow to ensure that all discrepancies identified during reconciliation were addressed directly with the responsible reporting entities. This step was essential because counterparties are independent legal entities with their own obligations, systems, and reporting processes
Purpose of Counterparty Engagement
Our outreach served three core objectives:
- Clarify reporting responsibilities and confirm whether trades were reported under delegated or bilateral arrangements.
- Resolve data breaks such as missing UTIs, mismatched product classifications, or incomplete submissions.
- Assess counterparty controls, including their validation checks, escalation paths, and reporting timelines.
Structured Communication Process
To ensure consistency and auditability, we followed a standardized communication protocol:
- Identification of relevant counterparties using the client’s contract‑management records and reporting agreements
- Preparation of discrepancy packs, including trade‑level evidence, timestamps, and TR‑side extracts.
- Formal outreach via email and scheduled calls, clearly stating the issue, expected correction, and regulatory implications.
- Follow‑up tracking, documenting responses, commitments, and timelines for remediation.
- Escalation, where required, to senior counterparty representatives when delays or repeated errors were observed.
This structured approach aligns with best practices in counterparty management, where each external party is treated as a distinct legal entity with its own obligations and contract history
Key Insights from Counterparty Interactions
Our outreach revealed several important themes:
- Inconsistent UTI‑sharing practices across counterparties.
- Variations in eligibility logic, especially for complex derivatives.
- Gaps in counterparty oversight, including missing internal quality checks.
- Dependency on manual processes, increasing the likelihood of reporting breaks.
These insights allowed us to refine the client’s oversight framework and recommend targeted improvements.
Business Impact of Counterparty Coordination
By directly engaging with counterparties, we delivered measurable benefits:
- Faster resolution of reporting breaks, reducing regulatory exposure.
- Improved data quality, as counterparties corrected historical submissions.
- Strengthened governance, with clearer accountability across the reporting chain.
- Enhanced transparency, enabling the client to monitor counterparty performance more effectively.
Key Findings & Metrics
Across the full dataset reviewed:
- 3.8% of eligible trades were identified as under‑reported.
- 2.1% of TR‑reported trades were classified as over‑reports.
- 5.4% of matched trades contained attribute‑level misreporting.
- Two delegated counterparties exhibited recurring reporting inconsistencies.
- Three internal systems required data‑quality enhancements to reduce breaks.
Outcome & Business Impact
Our independent review delivered measurable improvements:
- Strengthened oversight of delegated reporting arrangements.
- Enhanced internal controls and data‑quality checks.
- Reduced regulatory exposure by identifying and remediating gaps.
- Improved transparency across the reporting chain.
- Provided a clear roadmap for ongoing monitoring and governance.
Is Your Delegated Reporting Under Control?
Delegating EMIR Refit reporting doesn’t delegate the responsibility. Missing reports, over-reporting and attribute-level errors often sit undetected with counterparties until a regulator or Trade Repository query brings them to light. Without regular reconciliation between your own records and TR data, you can’t be sure what’s been reported on your behalf.
Reg-X can give you that certainty. Our regulatory specialists reconcile firm-side and TR data, identify under-reports, over-reports and misreports, and work directly with your counterparties to resolve breaks and strengthen oversight across the reporting chain.
Speak with our experts using the form below or email us at [email protected]. Tell us how your delegated reporting is set up today, and we’ll show you where the gaps are and how to close them.
