Counterparty 2

ESMA

Implimentation Question

Counterparty 2 (1.9) for natural persons
Conditionality for this field includes “The value populated in this field when the trade is reported for the first time, shall not be modified in the subsequent reports.”. 
For a natural person, the technical standards state “The code identifying a natural person shall be composed by the LEI of counterparty 1 followed by a unique identifier assigned and maintained consistently by counterparty 1…”.
Under current EMIR, the technical standards for ‘ID of the other Counterparty’ simply has “Client code (up to 50 alphanumerical digits)” without a need for the Counterparty 1 LEI as the prefix.
Therefore, in order to meet the new EMIR Refit rules, the code used to identify a natural person will need to be updated by adding the Counterparty 1 LEI. This cannot be done prior to 29 April 2024 because the field is limited to 50 characters (rather than 72), but it is not clear if the Counterparty 2 validation rules would permitted updating the value of the field using the Update (‘UPDT’) Event Type.

Could you please advise how reporting entities are to update the ‘Counterparty 2’ ID to the new format for natural persons? 

Response

The client codes should be updated in line with the procedure set out in the Article 8 of the ITS on reporting. 
This issue was discussed also with the Trade Repositories which are aware of the expectations and should advise their clients on the practical details.
In the case of client codes longer than 30 characters the update can indeed be performed only after the REFIT go-live date.