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UK Pensions speedbrief : New reporting requirements apply from 12 February 2014 to derivatives entered into by pension plans and common investment funds

    • Financial services and markets regulation - EMIR
    • Pensions


    New reporting obligations under the European Market Infrastructure Regulation (“EMIR”) will apply from 12 February 2014 to derivatives entered into by pension plans and common investment funds. From this date, trustees will be required to report by the next working day to a so-called “trade repository” where they:

    • enter into any new over-the-counter (“OTC”) derivatives or exchange traded derivatives,
    • amend the terms of a derivative transaction, or
    • terminate a derivative transaction early.

    Derivative transactions that were outstanding on 16 August 2012 (i.e. transactions that had not been terminated or expired before that date) will also need to be reported, although not all will need to be reported on or before 12 February 2014 (see the table below).

    Who has to report?

    The reporting requirements apply to all counterparties to derivatives transactions, including trustees of pension plans and common investment funds. 

    Trustees of pension plans or common investment funds that enter into derivatives transactions must ensure that the details of any transactions they have concluded, and any modifications or termination of these transactions, are reported to a trade repository registered or recognised under EMIR, such as UnaVista Limited or CME Trade Repository Ltd.

    Both counterparties to a transaction must report each transaction, although by prior arrangement one party can report on behalf of both.  In practice, trustees will either have to establish delegated reporting arrangements with their counterparties or delegate this reporting obligation to their investment manager. This may add additional cost to trading. Most banks will report on their counterparties’ behalf as part of the service they provide. Some large pension plans may set up direct links with a trade repository. 

    The details of a transaction must be reported no later than the next 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.

    What needs to be reported?

    Details 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 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 foreign exchange (“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.

    The table below summarises the deadlines for reporting derivative transactions under EMIR:


    Reporting deadline

    Derivative contracts entered into on or after 16 August 2012 that remain outstanding on 12 February 2014.

    On or before 12 February 2014

    Derivative contracts entered into on or after 12 February 2014.

    By the next working day

    Derivative contracts entered into before 16 August 2012 that were still outstanding on that date and still outstanding on 12 February 2014.

    On or before 12 May 2014

    Derivative contracts outstanding on or entered into after 16 August 2012 but which terminated prior to 12 February 2014.

    12 February 2017

    Derivative contracts entered into before 16 August 2012 that were outstanding on that date but not outstanding on or after 12 February 2014.

    12 February 2017


    Modification or termination

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

    • modifications to any of the information that has previously been reported;
    • cancellations arising from errors;
    • termination (unless on the reported termination date).

    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, in these circumstances, only early 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 trustees be doing?

    Trustees of pension plans and common investment funds need to put arrangements in place to report all derivative transactions. As mentioned above, trustees can appoint agents to report the details of derivatives transactions on their behalf. Trustees wishing to delegate should consider:

    • entering into a delegated reporting agreement with the counterparty to any derivatives transaction, so that the counterparty will report on their behalf; or
    • appointing their investment manager to report on their behalf or to arrange for a suitable person to do this.

    How we can help

    Eversheds’ pensions and derivatives teams are working together to advise trustees on the EMIR reporting requirements and the other regulatory requirements under EMIR. In particular, we are advising clients on how they are affected by the EMIR requirements, what they need to do to comply, and on updating their documentation with counterparties and investment managers to ensure compliance.

    If you need any assistance with EMIR compliance please speak to your usual Eversheds’ adviser. 

    For more information contact

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