CBI Fines Global Reach, Highlighting Key Lessons for EMIR Compliance
The Central Bank of Ireland (CBI) has reprimanded and fined an investment fund for failing to report derivatives trades to a trade repository in breach of its reporting obligation under the European Markets Infrastructure Regulation (EMIR). The fine was imposed on November 30, 2023, and is the first time the CBI has fined an investment fund. This is the first monetary penalty imposed on an investment fund by the Central Bank to date.
The CBI found that the fund failed to report thousands of derivatives trades between 2018 and 2020. The fund only notified the CBI of the failure to report in March 2021, after the CBI had initiated an investigation. What is more interesting is that the firm may have delegated its reporting to a counterparty that is why the regulator mentioned delegation specifically in the notification.
The CBI said that the failure to report derivatives trades was a serious breach of EMIR reporting, which is designed to improve transparency in the derivatives markets. The CBI said that the fine was necessary to deter other investment funds from breaching their reporting obligations under EMIR. This case highlights the importance of timely and accurate data reporting.
The CBI’s action is a reminder to investment funds that they must comply with their EMIR reporting obligations. Failure to do so could result in a significant fine. This may be the first of the fines issued by regulators for EMIR.
Key Points :
- Firms must comply with their EMIR reporting obligations. EMIR is a European Union regulation that requires firms to report ETD and OTC derivatives trades to a trade repository. Failure to comply with these reporting obligations can result in significant fines.
- Regulators are serious about enforcing EMIR. The CBI’s fine is the first time the regulator has fined an investment fund for breaching EMIR. This shows that the CBI is serious about enforcing the regulation and that firms should take their reporting obligations seriously.
- Investment funds should take steps to improve their reporting procedures. It seems the firm in question only notified the CBI of its failure to report derivatives trades after the CBI had initiated an investigation. This suggests that the fund’s reporting procedures were not adequate. Investment funds should take steps to improve their reporting procedures to ensure that they are complying with EMIR.
- Accurate, Complete and Timely reporting responsibility is with the firm that has reporting obligation. This obligation cannot be passed on via delegation.
- Cost of compliance is much lower than the fines and reputational damage.
In summary, CBI fines Global Reach for EMIR reporting violations, signaling regulators’ seriousness, emphasizing the need for accurate, timely reporting and proper compliance.