Executive Summary
EMIR Refit Reconciliation Phase II significantly tightens EU trade reporting controls. Trade repositories (TRs) will expand the number of reconcilable fields from 87 to 148, adding 61 Table 2 data points and increasing the importance of daily valuation data.
ESMA’s framework also requires TRs to:
- Reconcile only the latest end-of-day trade state
- Assess valuation reconciliation separately from general reconciliation
- Maintain independent lifecycle flags, including Revived and Further Modifications
The combined effect will likely include:
- Higher break rates
- Greater visibility into counterparty inconsistencies
- Reduced scope for post-submission manual corrections
For many firms, this shifts reconciliation from a periodic control to a continuous test of data accuracy, where discrepancies are systematically surfaced rather than absorbed within tolerances or overlooked through sampling.
Changes in Scope
ESMA does not publish a standalone list of the 61 additional Phase II fields. Firms must derive them from the reconciliation start date column in ESMA’s validation rules. However, TR documentation confirms their inclusion, including valuation-related fields.
These additional fields can be grouped as follows:
- 2 identifier/link fields:
- Prior UTI
- Subsequent Position UTI
- 11 underlying, basket, and valuation fields
- 11 price, package, and payment fields
- 25 spread, FX, and commodity delivery fields
- 12 option and credit fields
Valuation-related additions include:
- Valuation Amount
- Valuation Currency
- Valuation Method
- Delta
ESMA requires consistent valuation methodologies and links non-CCP valuations to specific Table 2 fields.
In practice, this introduces not just more data, but greater interdependency between fields. As scope expands, inconsistencies previously outside reconciliation are now brought into scope, requiring firms to maintain alignment across:
- Identifiers
- Valuations
- Lifecycle data
on both sides of the trade.
Status Model and Stricter Matching
ESMA introduces valuation reconciliation as a separate reporting dimension alongside:
- Reporting Type
- Pairing
- Reconciliation
- Revived
- Further Modifications
Valuation reconciliation outcomes include:
- RECO (Reconciled)
- NREC (Not Reconciled)
- NOAP (Not Applicable)
Importantly:
- NOAP should not be treated as a defect
- It commonly applies to ETD position-level reporting or NFC- exemptions
Lifecycle flags such as Revived and Further Modifications operate independently. This means:
- A trade may reconcile successfully
- Yet still require lifecycle follow-up
Matching requirements are stricter:
- 39 additional fields require exact matching with no tolerance
- 22 fields allow defined tolerances
Common reconciliation breaks include:
- Altered or truncated UTIs
- Incorrect trade direction reporting
- Formatting inconsistencies (e.g., basket constituents)
- Missing or mismatched currencies
- Incorrect delta precision
- Valuation discrepancies outside tolerance thresholds
Valuation tolerances include:
- ±2.5% for MTMA
- ±5% for MTMO or mixed methods
- Opposite-sign requirement
A trade may reconcile on core data yet still fail valuation reconciliation.
As tolerances tighten and more fields require exact matching, reconciliation increasingly exposes inconsistencies that validation frameworks were not designed to detect, particularly in:
- Valuation logic
- Lifecycle interpretation
- Counterparty alignment
Remediation and Operational Impact
Remediation extends beyond data cleansing and requires cross-functional alignment:
- Front Office:
Align trade economics, lifecycle interpretation, and valuation methodologies
- Middle Office:
Strengthen UTI governance, lifecycle controls, and valuation completeness checks
- Operations and Technology:
Update field mappings, process enhanced XML outputs, and automate break management
Governance requirements are also tightening. Firms must:
- Incorporate reconciliation feedback into control frameworks
- Evidence how breaks are identified and resolved
Regulators have emphasized these expectations ahead of Phase II.
Data quality remains a key concern, particularly:
- Missing valuations
- Outdated valuations
This reinforces the need for:
- Robust valuation controls
- Clear ownership of exceptions
Firms relying on fragmented controls or post-reporting reviews will find it increasingly difficult to keep pace. Breaks are no longer isolated events, they reflect underlying data misalignment that must be identified and resolved at the source.
What This Means in Practice
Phase II is not simply an expansion of reconciliation scope, it fundamentally changes how firms approach reporting quality.
The focus is shifting:
- From submission to alignment
- From validation to reconciliation
- From periodic checks to continuous assurance
Firms that can:
- Trace their data
- Test it
- Explain it across its lifecycle
will be better positioned to adapt.
Those that cannot will likely face:
- Recurring reconciliation breaks
- Increased operational strain
- Heightened regulatory scrutiny
How Reg-X Can Help
As firms prepare for Phase II, the challenge extends beyond understanding the rules to demonstrating that reported data is complete, aligned, and continuously reconcilable.
Reg-X supports over 100 financial institutions globally in addressing these challenges, helping firms move beyond validation toward confidence in reporting accuracy and consistency.
Through the RegAssure platform, firms can:
- Test reported data at field level across full populations, not samples
- Identify and investigate reconciliation breaks before regulatory exposure
- Validate valuation consistency and methodology alignment
- Compare reported data against source systems to ensure completeness
- Gain clear visibility into data lineage and lifecycle events
This approach enables a shift from reactive issue resolution to a controlled, structured reporting environment aligned with Phase II expectations.
Not sure if you’re ready for Phase II? Identify your gaps and take the first step, contact us today using the form below.
