522. As ESMA indicated in the Consultation Paper, the lack of initial specification of the reconciliation process by ESMA, due to the absence of legal mandate, led to (i) inconsistent reconciliation procedures, (ii) inconsistent reconciliation timings, (iii) tolerances and categorisation of fields decided by TRs, (iv) lengthy change request implementation times. This situation, together with specific discretionary issues of particular TRs, resulted in accumulation of significant number of non-reconciled trades and required the implementation of costly ad-hoc processes at authorities (ESMA included) and counterparties to understand the extent of the problem, to put in place solutions, to monitor the subsequent evolution of the reconciliation rates and to assess the suitability of the proposed solutions. Low reconciliation rates and the lengthy process to increase them put at stake any reporting regime.

523. To address these issues, ESMA proposed that once the data is validated by the TRs, the TRs should reconcile the details of the two sides of the derivative that are reported. This results from the legal basis in Article 78(9)(a) EMIR, as amended by EMIR REFIT which provides that the TR shall establish "procedures for the effective reconciliation of data between trade repositories". Furthermore, Article 78(10)(a) EMIR, as amended by EMIR REFIT mandates ESMA to develop RTS specifying those procedures.

524. Therefore, building on the EMIR experience, ESMA indicated that: