Practical Advice – EMIR Reporting Q&A
Posted on 3 Feb 2014
Laven Partners answers your questions on EMIR reporting ahead of implementation on 12th February
On 12th February 2014, the reporting requirements introduced by the European Market Infrastructure Regulation (“EMIR”) come into force. The requirements are imposed on all types and sizes of entities that enter into any form of derivative contract, including those not involved in financial services.
Do I need to report?
If you are based in the EU and you are trading derivatives, are counterparty to derivatives transactions (ie. a participant in a derivatives contract), or are a central counterparty authorised under EMIR (“CCP”), then you must report derivatives transactions. All entities trading OTC derivatives will be classified under EMIR as one of the following:
- Financial Counterparties (“FCs”) – includes Markets in Financial Instruments Directive (“MiFID”) firms (eg. EU broker-dealers), banks, pension funds, UCITS funds, alternative investment funds whose manager is authorised under the Alternative Investment Fund Managers Directive (“AIFMD”)
- Non-Financial Counterparties (“NFCs”) – entities established in the EU which are not Financial Counterparties, eg. non-UCITS fund managers where the manager is not yet authorised under AIFMD
- Third Country Entities (“TCEs”) – entities established outside the EU which would be FCs or NFCs if they were established in the EU.
Can I delegate the reporting to someone else?
You may delegate the reporting responsibility to a firm capable of fulfilling the reporting obligation, such as a service provider, dealer, exchange or CCP. However, the compliance responsibility with respect to EMIR reporting remains with you as delegating firm, and therefore you should conduct appropriate checks to ensure that accurate and timely reports are submitted.
Which transactions should I report?
You must report all ‘derivatives contracts’. EMIR takes its definition of ‘derivatives contract’ from MiFID, which includes:
- exchange traded derivatives
- OTC derivatives
- lifecycle events, such as give-ups and partial terminations
- modifications to any reported items
- cancellations arising from errors
- terminations on a date other than the expected termination date
- valuation updates and updates to posted collateral (this obligation will be effective from 12th August 2014)
How soon after trading do I need to report?
Reports must be made no later than the working day following the derivatives trade. The report may, of course, be made on the same day as the trade is executed – the T+1 rule indicates the latest time at which the report should be made.
Who do I report to?
You should make reports to a registered (EU) or recognised (non-EU) trade repository (“TR”). To date, 6 TRs have been registered, and others may be in the future. It is entirely your choice as to which of the TRs you report. Details of the TRs registered to date are available here: http://www.esma.europa.eu/page/Registered-Trade-Repositories.
You do not have to use the same TR for every trade – you can use a different TR for different trades, however where you are reporting and update or amendment to a trade, you must use the same TR through which the initial report was made.
You do not have to use the same TR as the other counterparties to a particular trade.
What does the report need to include?
The report is comprised of Table 1: own information, and Table 2: common information. There are over 80 fields to be completed in the report, but some may not be applicable to every type of transaction.
I’ve heard about LEIs – what are they and do I need one?
A Legal Entity Identifier or LEI is a unique code that identifies the parties in a derivatives transaction. You must have an LEI if you have a reporting obligation under EMIR, else you will not be able to submit reports. Eventually, all parties to derivatives transactions will need to have an LEI as all parties to derivatives transactions are detailed in the reports.
It will take a few days for the application for an LEI to be processed by the relevant provider, therefore we strongly recommend that applications are submitted now, so that you are able to begin reporting in line with the 12th February implementation date.
LEIs are available from the following providers (note that the list is non-exclusive):
CICI utility: https://www.ciciutility.org
London Stock Exchange:https://www.lseg.com/LEI
Irish Stock Exchange: https://www.isedirect.ie/
Finnish PRH: http://www.prh.fi/en/uutislistaus/2013/P_1048.html
Russia NSD: https://www.nsd.ru/en/services/lei/
Poland KDPW: http://www.kdpw.pl/en/business/LEI/Pages/default.aspx
Dutch KvK: http://www.kvk.nl/english/how-to-register-deregister-and-report-changes/legal-entity-identifier-lei/
I’m not based in the EU – how does EMIR affect me?
Generally, funds incorporated outside the EU are classified as TCEs and therefore fall outside of the reporting obligations under EMIR.
However, if you are a fund incorporated outside the EU and you have a manager authorised as an Alternative Investment Fund Manager (“AIFM”) under AIFMD, you and all funds managed by that AIFM will be classified as FCs for the purpose of EMIR, even if all the funds it manages are incorporated outside the EU. All FCs have the reporting obligation detailed above.
For more information, please contact Lucy Balicki at [email protected] or call on +44 (0)20 7838 0010