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European Energy Market Regulations V3.1

Issues being encountered
This section outlines some issues being encountered in the market by those implementing trade
reporting solutions. Updates will be issued regularly.
LEIs (Legal Entity Identifiers)
An LEI is a globally unique identifier for counterparty. The LEI initiative also arose from G20 desires
after the banking crisis, to create a globally uniform mechanism to identify an entity in a transaction.
This eventually led to the Financial Stability Board (FSB) issuing a paper and outline for how such a
database could be constructed and governed. The global database is not yet ready, but a “pre LEI”
database is being formed, and others already exists in the absence of a final global version.
EMIR will require the use of LEIs, or pre LEIs upon go live, although they have not yet been defined
for all entities.
Market participants will need to:
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Add facilities in place to map their existing entity Ids to LEIs
Add facilities so that it is possible to store an LEI for each entity going forward.

The UTI (Unique Trade Identifier)
Trades sent to EMIR repositories need to contain a 52 character UTI. Under EMIR, both sides of the
trade must send in a deal with the same UTI. The generation of this ID and the workflow around are
leading to a great deal of uncertainty at the time of writing. In particular:
Generation of the UTI – There is no mandatory mechanism for the generation of the UTI, which has
been left by ESMA to “the industry”. An ISDA working group is currently attempting to provide for a
recommended solution although this is not yet final or accepted by all in industry. A UTI generation
facility has also been launched by TriOptima.
The commonly accepted approach depends on whether the trade is executed on a platform or not. If
it is, then the platform should generate the ID for both parties.
For bilateral trades, the consensus is that the seller should generate the ID and provide it to the
buyer. However until this is agreed, the resolution is as yet unknown.
Workflow around the UTI – However the UTI is generated, it needs to somehow make it into one or
both party’s ETRM systems, and be sent to a repository.
If the trade is executed on a trading platform, it will be necessary to extend the interface between
the platform and the ETRM to capture the UTI before the trade is sent to ESMA.
For bilateral trades, the capture of the ID is harder: the generating party must find a way of
providing it to the other side, and this will need to be electronic since manual entry of a 52 character
code is not an option. The new facility from TriOptima will facilitate such exchange.
An obvious place for the code to come in is on the trade confirmation. However, that may not arrive
until after the trade must be reported to ESMA.
The solution to the issue will need to evolve over the next months.
Which rules apply to a trade?
It is important to have a granular and flexible mechanism to ensure that trades get “routed” to the
correct place under the right rules.
Firstly, the definition of a derivative under EMIR is not always straightforward and subject to change.
The rules as outlined in the “threshold calculation” section require:

© Commodity Technology Advisory LLC and ETR Advisory Ltd, 2013, All Rights Reserved.

v3.1

November 13th, 2013

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