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Are you ready for EMIR trade reporting?

    • Financial services and markets regulation - EMIR
    • Financial services and markets regulation - UCITS V
    • Financial institutions


    The reporting obligations under the European Market Infrastructure Regulation (“EMIR”) come into effect on 12 February 2014. From this date parties that enter into any new over-the-counter (“OTC”) derivatives or exchange traded derivatives, amend the terms of their derivatives transactions or terminate derivatives transactions early will be required to report certain terms to a trade repository. Details of derivatives transactions that were outstanding on 16 August 2012 will also need to be reported, although not all will need to be reported on 12 February 2014.

    Who has to report?

    The rules will affect all counterparties to transactions in all classes of derivatives (as defined in the Markets in Financial Instruments Directive), irrespective of whether the parties are regulated or unregulated, and irrespective of whether the transactions are exchange-traded or OTC. 

    Counterparties to derivative transactions and central counterparties must ensure that the details of any transactions they have concluded and any modifications or termination of that transaction are reported to a trade repository registered or recognised under EMIR.

    Both counterparties must report each trade, although by prior arrangement one party can report on behalf of them both.  ISDA and the FOA have published a standard form reporting delegation agreement to assist counterparties in meeting their reporting obligations.  In practice, counterparties will either have to establish delegated reporting arrangements or set up direct links with a trade repository, for example, UnaVista Limited or CME Trade Repository Ltd. 

    The details of a trade must be reported no later than the working day after the conclusion, modification or termination of the transaction.  All counterparties must also keep a record of any derivative transaction they have concluded, and any modification to it, for at least five years after the transaction has been terminated.

    The reporting requirements will prove challenging for the buy-side of the market, and establishing delegated reporting arrangements or setting up direct links with a trade repository may add an additional cost to trading although most banks will report on their counterparties’ behalf as part of the service they provide.

    What needs to be reported?

    Data in respect of all derivative transactions outstanding on or entered into on or after 16 August 2012 will need to be reported, even if the relevant transaction has terminated prior to the reporting start date of 12 February 2014. 

    The Financial Conduct Authority (“FCA”) and the European Securities and Markets Association (“ESMA”) disagree on the transactions that should be reported (in particular whether this covers forex forwards, non-deliverable currency forwards and spot transactions for forex and commodities done for commercial purposes).  ESMA believes that such transactions must be reported.

    Grace periods apply to reporting certain derivative transactions entered into prior to the reporting start date:

    • there is a three year grace period (until 12 February 2017) for transactions outstanding on or entered into after 16 August 2012 but which terminated prior to the reporting start date (being 12 February 2014); and
    • there is a 90 day grace period for transactions outstanding on 16 August 2012 and still outstanding on the reporting start date (being 12 February 2014).

    Under EMIR, any modification or termination of the transaction must be reported.  There is however no guidance in EMIR as to the types of modification that would trigger a new report to be made.  In December 2013, the FCA indicated in a trade reporting presentation that modifications in respect of the following should be reported:

    • modifications to any of the reported items;
    • cancellations arising from errors;
    • termination (unless on the expected date);
    • compressions;
    • valuations and collateral (only financial counterparties and non-financial counterparties that exceed the clearing threshold); and
    • other events.

    ESMA has provided some guidance on reporting termination of a transaction in its “Questions and Answers on the implementation of EMIR”.  It advises that where termination takes place in accordance with the original terms of the transaction, it can be assumed that such termination was originally reported, provided that the trade report adequately identifies the termination date.  Therefore, only earlier termination would trigger an additional reporting requirement.

    Fines and periodic penalty payments

    ESMA is consulting on the procedural rules in respect of fines and periodic penalty payments for breaches of the new rules. 

    What should you be doing?

    You will need to put arrangements in place to report all derivative transactions.  As mentioned above, it is possible to appoint agents to report the details of derivatives transactions on your behalf.  If you wish to delegate you should consider:

    • entering into a delegated reporting agreement with your counterparties, so that they will report on your behalf.  As mentioned above, ISDA and the FOA have published a standard form reporting delegation agreement to assist counterparties in meeting their reporting obligations, and many of the banks have developed their own form of agreement;
    • if you have an investment manager (if you are, for example, a pension scheme, common investment fund for pension schemes, or an investment fund (such as UCITS, NURS, QIS and hedge funds)), appointing your investment manager to do this on your behalf.

    How we can help

    Eversheds’ derivative team is advising our counterparty clients on EMIR, advising clients on how they are affected and on their documentation with their counterparties.  We can help you put in place your delegated reporting agreements and amend your investment management agreements to ensure you are able to comply.

    For more information contact

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