EMIR - Financial Conduct Authority

European Market Infrastructure Regulation (EMIR) – what you need to know

Published: 07/08/2014
The European Union regulation on derivatives, central counterparties and trade repositories (EMIR) introduces new requirements to improve transparency and reduce the risks associated with the derivatives market. EMIR also establishes common organisational, conduct of business and prudential standards for CCPs and trade repositories.

Go straight to our latest EMIR updates

EMIR imposes requirements on all types and sizes of entities that enter into any form of derivative contract, including those not involved in financial services. It applies indirectly to non-EU firms trading with EU firms.

The new regulation comes into force during 2013 and 2014. It requires entities that enter into any form of derivative contract, including interest rate, foreign exchange, equity, credit and commodity derivatives, to:

  • report every derivative contract that they enter into to a trade repository;
  • implement new risk management standards, including operational processes and margining, for all bilateral over-the-counter (OTC) derivatives i.e. trades that are not cleared by a CCP; and
  • clear, via a CCP, those OTC derivatives subject to a mandatory clearing obligation.

  • EMIR entered into force on 16 August 2012, but most provisions only apply after technical standards enter into force.
  • The technical standards on OTC Derivatives, Reporting to Trade Repositories and Requirements for Trade Repositories and Central Counterparties entered into force on 15 March 2013.
  • Non-financial counterparties exceeding, the clearing threshold have been required to notify the FCA since 15 March 2013.
  • All legal and contractual terms of non-centrally cleared OTC derivative contracts must be confirmed between counterparties within specified timelines – from 15 March 2013
  • Risk management of non-cleared OTC derivatives through portfolio reconciliation, dispute resolution and trade compression – from 15 September 2013.
  • Details of all classes of derivative contract (both OTC and ETD) have been required to be reported to recognised trade repositories from 12 February 2014.
  • The first CCP was authorised under EMIR on 18 March 2014 - a consultation is expected during summer 2014 with the first wave of clearing obligations to be phased in from 2015.
  • The technical standards on the cross-border application of EMIR came into effect on 10 April 2014 - Article 2 however (which sets out which contracts have a direct, substantial and foreseeable effect within the EU) will only apply from 10 October 2014.
  • From August 11 2014, financial counterparties/NFC+s will be required to provide daily reports on mark-to-market valuations of positions and on collateral value. 
  • Margin requirements for non-cleared trades - variation requirements for non-centrally cleared trades will apply from 1 December 2015. Initial margining requirements will be phased in between 1 December 2015 and 1 December 2019

Implementation dates are subject to change depending on the progress of EU implementation.

EMIR is composed of a number of separate EU Regulations. The EMIR library includes links to the relevant EU regulation and technical standards under EMIR, as well as links to additional Q&As, domestic legislation and FCA presentations.

Market participants can register to receive email updates on the EMIR from the FCA. These include information on the implementation timetable, alerts when new documents or further guidance are published and further details about the process for apply for making notifications and applying for exemptions in the UK.

To register to receive updates please email you name and contact details (including email address) to EMIR@fca.org.uk. You can unsubscribe at any time by emailing unsubscribe and your name and email address to the same address. 

Before contacting the FCA please review the information included in these web pages and the EMIR library, we aim to include the answer to a lot of common questions here. If you still have questions in relation to EMIR and its implementation in the UK please contact emir@fca.org.uk.

Latest Updates 

July 2014

CME Clearing Europe authorised under EMIR

On 4 August CME Clearing Europe was authorised under the European Market Infrastructure Regulation (EMIR). Further information around the financial instruments the clearing house is authorised to clear is available on the ESMA Public Register under the post-trading section.

Consistent with the ESMA Q&As on EMIR (CCP Question 8(c)), the requirements on clearing members of CME Clearing Europe such as those in Articles 38 and 39 of EMIR came into force on 4 August 2014.

European Commission response to ESMA letter regarding frontloading requirement under EMIR

The European Commission’s response (dated 8 July 2014) to ESMA’s letter regarding frontloading under EMIR was published on the ESMA website. The letter from Michel Barnier, Commissioner for Internal Market and Services, agrees with the view that frontloading of OTC derivatives should be avoided in cases where it could undermine the overarching objective of the clearing obligation to reduce systemic risk. This stance is in part supported in light of the potential negative consequences on the market as a result of uncertainty stemming from any such requirement coming into force prior to the relevant RTS.

EMIR reporting advice for clearing member firms

The FCA has contacted a number of our Authorised firms identified as a clearing member and client of a Central Counterparty (CCP) to advise them that authorised or recognised CCPs under European Market Infrastructure Regulation (EMIR) are required to calculate hypothetical capital information. This information must be supplied by CCPs to their clearing members as well as to the competent authority of the clearing member.
We have advised our solo-regulated clearing member firms to let their CCPs know that:

  • the FCA is their competent authority, and
    the CCP should send the completed template to the FCA at ccpreturns@fca.org.uk

Firms that are part of a dual-regulated prudential group should note that the PRA are conducting a similar exercise for dual-regulated firms that are clearing members of CCPs.

A list of CCPs that are currently recognised or authorised under EMIR is available on the ESMA website.

If you are a clearing member firm and we have not contacted you directly (or if you feel you have been incorrectly contacted), please let us know at ccpreturns@fca.org.uk.

For further detail please read our statement.

ESMA seeks new members for Post Trading Consultative Working Group

The ESMA consultative working group (CWG) for post trading is a group of industry representatives which is consulted by ESMA on a range of post trading issues. The term of the current CWG has recently expired and ESMA is accepting applications from stakeholders to sit on the new group. If you are interested in applying, more details are available on the ESMA website.

Applications must be submitted by no later than 18 August 2014.

ESMA launches first round of consultations to prepare for central clearing of OTC derivatives in the EU

The European Securities and Markets Authority (ESMA) has launched a first round of consultations to prepare for central clearing of OTC derivatives within the European Union. The two consultation papers, released on 11th July, seek stakeholders’ views on draft regulatory technical standards (RTS) for the clearing of Interest Rate Swaps (IRS) and Credit Default Swaps (CDS) that ESMA has to develop under EMIR.

ESMA has analysed the classes from several CCP notifications and has determined that some IRS and CDS classes should be subject to the clearing obligation. Following the difference in timing of the corresponding CCP authorisations, the IRS and CDS classes are covered in two separate papers and consultation periods, with a large overlap between the two to give the opportunity to stakeholders to review them and provide feedback at the same time. These two consultation papers may be followed by one or more on other asset classes.

The IRS Consultation Paper is open for feedback until 18 August 2014 and the CDS Consultation Paper until 18 September 2014. ESMA will use the answers received to draft its final RTSs on the clearing obligation for IRS and CDS and send them for endorsement to the European Commission. The clearing obligation will take effect following a phased implementation, with the current proposal ranging from six months to three years after the entry into force of the RTS, depending on the types of counterparties concerned.

All contributions should be submitted online via the ESMA portal.

Updated EMIR FAQs from the European Commission

The European Commission updated its FAQs on EMIR (Part IV) on 10th July to include clarity around segregation requirements for non-EU clearing members of EU CCPs.

Updated EMIR implementation Q&As

The European Securities and Markets Authority (ESMA) issued updated Question & Answers (Q&As) on 10th July on the implementation of EMIR. The new set of Q&As include information on pension scheme exemptions as well as segregation requirements for non-EU clearing members of EU CCPs.

Keler CCP authorised under EMIR

On 4 July Keler CCP was authorised under the European Market Infrastructure Regulation (EMIR). Further information around the financial instruments the clearing house is authorised to clear is now also available on the ESMA Public Register under the post-trading section.

Consistent with the ESMA Q&As on EMIR (CCP Question 8(c)), the requirements on clearing members of Keler CCP such as those in Articles 38 and 39 of EMIR came into force on 4 July 2014.

June 2014

Updated EMIR implementation Q&As

The European Securities and Markets Authority (ESMA) issued updated Question & Answers (Q&As) on 23rd June on the implementation of EMIR. The new set of Q&As primarily cover the reporting of collateral and valuation.

LCH.Clearnet Ltd authorised under EMIR

On 12 June LCH.Clearnet Ltd was authorised under the European Market Infrastructure Regulation (EMIR). Further information around the financial instruments the clearing house is authorised to clear is now also available on the ESMA Public Register under the post-trading section.

Consistent with the ESMA Q&As on EMIR (CCP Question 8(c)), the requirements on clearing members of LCH.Clearnet Ltd such as those in Articles 38 and 39 of EMIR came into force on 12 June 2014.

European Commodity Clearing authorised under EMIR

On 11 June European Commodity Clearing (ECC) was authorised under the European Market Infrastructure Regulation (EMIR). Further information around the financial instruments the clearing house is authorised to clear is now also available on the ESMA Public Register under the post-trading section.

Consistent with the ESMA Q&As on EMIR (CCP Question 8(c)), the requirements on clearing members of ECC such as those in Articles 38 and 39 of EMIR came into force on 11 June 2014.

May 2014

LCH.Clearnet SA authorised under EMIR

On 22 May LCH.Clearnet SA was authorised under the European Market Infrastructure Regulation (EMIR). Further information about the financial instruments the clearing house is authorised to clear is available on the ESMA Public Register under the post-trading section.

Consistent with the ESMA Q&As on EMIR (CCP Question 8(c)), the requirements on clearing members of LCH.Clearnet SA such as those in Articles 38 and 39 of EMIR came into force on 22 May 2014.

CC&G authorised under EMIR

On 20 May the Bank of Italy authorized Cassa di Compensazione e Garanzia S.p.A. (CC&G) to operate as a central counterparty under EMIR. On the same date, the Bank of Italy approved the interoperability arrangement between CC&G and the French central counterparty LCH.Clearnet SA. A press release is available on the Bank of Italy’s website and details are also available from the post-trading section of the ESMA Public Register.

Updated EMIR implementation Q&As

The European Securities and Markets Authority (ESMA) issued updated Question & Answers (Q&As) on the implementation of EMIR.. Areas covered by the updated questions include:

  • the application of EMIR to Alternative Investment Funds (AIFs);
  • intra-group exemptions;
  • treatment of non-EU non-exempt central banks;
  • segregation and portability and CCP organisational requirements.

ESMA informs European Commission of its intention to ease certain frontloading requirements under EMIR

On 8 May 2014 ESMA sent a letter  to the European Commission proposing to limit the scope of the frontloading requirement under EMIR. The frontloading requirement imposes an obligation on counterparties to clear OTC derivative contracts which have been executed after the notification pursuant to Article 5 of EMIR and before the entry into force of the clearing obligation. In the letter, ESMA observes that the frontloading procedure creates uncertainties for OTC derivatives end-users because counterparties will not know that they are subject to the frontloading requirement until classes of OTC derivatives subject to the clearing obligations are specified. This could have adverse impacts on risk hedging and financial stability. ESMA informs the European Commission that it intends to establish the frontloading requirement in a manner that will minimise uncertainty.

April 2014

Draft RTS on margin for non-cleared trades - ESAs publish joint Consultation Paper

On 14 April 2014, the European Supervisory Authorities (ESAs) published a Consultation Paper on draft Regulatory Technical Standards (RTS) on the risk management procedures for counterparties in non-centrally cleared OTC derivatives (which will include mandatory exchange of initial and variation margins), the criteria concerning intragroup exemptions and the definitions of practical and legal impediments. The consultation will allow the ESAs to gather public views on how to ensure a proportionate implementation of the requirements, as well as any other specific aspects that need discussion. The ESAs invite comments on this consultation by 14 July 2014 (comments can be sent by clicking on the "send your comments" button on EBA's consultation web page).

KDPW_CCP and Eurex reauthorised under EMIR

KDPW_CCP was authorised under the European Market Infrastructure Regulation (EMIR) on 8 April 2014. Eurex Clearing AG followed suit on 10 April 2014. Further information about the financial instruments both clearing houses are authorised to clear will be available on the ESMA Public Register under the post-trading section in due course.

Consistent with the ESMA Q&As on EMIR (CCP Question 8(c)), the requirements on clearing members of both KDPW_CCP and Eurex such as those in Articles 38 and 39 of EMIR came into force on 8 April 2014 and 10 April 2014 respectively.

European Commission Consultation on FX financial instruments

On Friday 11 April, the European Commission published a consultation on the treatment of FX financial instruments. On its consultation webpage, the Commission states that concerns have been raised about the lack of harmonisation between the EU Member States on where the boundary lies between what is an FX financial instrument and a spot FX contract, and that the Commission therefore seeks stakeholders’ input on where they consider this boundary should be set. The Commission invites responses by 9 May 2014 and the responses will provide important guidance to the Commission when preparing a formal Commission proposal on this issue.

As previously stated, the FCA intends to engage closely with the Commission and ESMA on these issues as their work progresses, and will update market participants on any significant developments relating to these issues via the FCA EMIR web pages and these regular ‘EMIR updates’ emails. In the meantime, and until further notice, the UK regulatory position (as set out on the FCA’s EMIR web pages) remains the same.

European Central Counterparty N.V. reauthorised under EMIR

European Central Counterparty N.V. (ECCP) was authorised under the European Market Infrastructure Regulation (EMIR) on 1 April 2014. Further information about the financial instruments ECCP is authorised to clear is available on the ESMA Public Register under the post-trading section.

Consistent with the ESMA Q&As on EMIR (CCP Question 8(c)), the requirements on ECCP's clearing members such as those in Articles 38 and 39 of EMIR came into force on 1 April 2014.

March 2014

Final cross-border technical standards published in the EU Official Journal

The final EMIR regulatory technical standards on contracts with a direct, substantial and foreseeable effect within the EU and to prevent evasion of rules and obligations have now been published in the EU Official Journal. They set out the circumstances in which the EMIR clearing obligation, risk mitigation techniques and margin requirements will apply to contracts between two non-EU entities.

The technical standards enter into force on 10 April 2014 (twentieth day following their publication in the Official Journal, which was 21 March) but Article 2 (which sets out which contracts have a direct, substantial and foreseeable effect within the EU) only applies from 10 October 2014.

Updated EMIR implementation Q&As

On 20 March 2014 the European Securities and Markets Authority (ESMA) issued updated Question & Answers (Q&As) on the implementation of EMIR. These updated Q&As clarify issues relating to the reporting of various fields to trade repositories (TRs), the scope of Article 11 and offer further clarity around the intragroup transaction (IGT) exemptions process among other things.

European Commission response to ESMA on the classification of financial instruments as derivatives

On 20 March 2014 ESMA published a letter (dated 26 February 2014) from the European Commission (EC) in response to ESMA’s letter (dated 14 February 2014) to Michel Barnier, Commissioner for Internal Market and Services, regarding the classification of financial instruments as derivatives. In its letter, the EC states that it shares the view in favour of a fully consistent transposition of the relevant MiFID provisions (and consequently EMIR) throughout the Union and invites ESMA to provide further insight on certain areas.

As per our previous EMIR Update on this topic, we intend to engage closely with the Commission and ESMA on these issues as their work progresses, and we will update market participants on any significant developments relating to these issues via our EMIR website and our regular ‘EMIR updates’ emails. In the meantime, and until further notice, the UK regulatory position remains the same. For further information please refer to the domestic legislation section of our EMIR library.

NASDAQ OMX - first European CCP reauthorised under EMIR

Nasdaq OMX became the first European CCP to be reauthorised under the European Market Infrastructure Regulation (EMIR) on 18 March 2014. In accordance with the procedure laid out under Article 5(1) of EMIR, the European Securities and Markets Authority (ESMA) was notified by the Swedish national competent authority (Finansinspektionen) on 18 March 2014 of Nasdaq OMX’s reauthorisation and of the classes of financial instruments Nasdaq OMX was authorised to clear. Further information around Nasdaq OMX and the financial instruments it is authorised to clear was published yesterday by ESMA and is available on their Public Register under the post-trading section.

In line with the clearing obligation procedure set out in Article 5(2) of EMIR, ESMA now has up to six months from the time of the notification to decide whether to recommend a clearing obligation for any of the classes of OTC derivative cleared by Nasdaq OMX. Any recommendation to impose a clearing obligation would be subject to a public consultation by ESMA. If any clearing obligation is imposed, frontloading could apply as set out in Article 4 of EMIR depending on the minimum residual maturity of the relevant derivative contracts.

Consistent with the ESMA Q&As on EMIR (CCP Question 8(c)), the requirements on clearing members of Nasdaq OMX (e.g. those in Articles 38 and 39 of EMIR) also came into force on 18 March 2014.

MIFID Transaction reporting requirements

Following the start of EMIR reporting to trade repositories on 12 February 2014, we would like to remind firms that their MiFID transaction reporting obligations remain unchanged and they are expected to continue transaction reporting as per current arrangements. Reporting to trade repositories under EMIR does not replace any transaction reporting obligation under MiFID and firms should continue to submit their transaction reports using an Approved Reporting Mechanism (ARM) in accordance with SUP 17 of the FCA Handbook.

For further information on the MiFID transaction reporting requirements please visit the Transaction Monitoring Unit pages.

February 2014

Supervisory approach to risk mitigation requirements for non-cleared trades relating to portfolio reconciliation, dispute resolution and compression

In line with our supervisory approach, the FCA expected firms which were unable to comply with risk mitigation requirements for non-cleared trades relating to portfolio reconciliation, dispute resolution and compression to have a detailed and realistic plan to achieve compliance within the shortest time-frame possible. The FCA expects that such plans will be completed and implemented by 30 April 2014 and that firms will be able to demonstrate compliance after that date. For more information please refer to our FCA supervisory priorities in relation to EMIR.

ESMA letter to the Commission on the classification of financial instruments as derivatives

On 14 February 2014, ESMA published a letter to the Commission, in which ESMA invites the Commission to adopt an implementing act under Article 4(2) of MiFID (or any other measure that the Commission considers appropriate) to clarify the definitions of (1) currency derivatives and (2) commodity forwards that can be physical settled, in order to bring consistency to the application of EMIR across Member States. We intend to engage closely with the Commission and ESMA on these issues as their work progresses, and we will update market participants on any significant developments relating to these issues via our EMIR website and our regular "EMIR updates" emails. In the meantime, and until further notice, the UK regulatory position remains the same. For further information please refer to the domestic legislation section of our EMIR library.

Updated EMIR implementation Q&As

The European Securities and Markets Authority (ESMA) has issued updated Question & Answers (Q&As) on the implementation of EMIR. These updated Q&As clarify, among others, issues related to reporting to trade repositories (TRs) such as on how to construct and generate Unique Trade Identifiers (UTI), the reporting of empty/not available fields and the Unique Product Identifier (UPI) taxonomy. 

Results of the FCA EMIR implementation reviews on reporting and non-financial counterparties

The FCA plans to undertake a number of implementation reviews on key EMIR obligations, with pre-implementation reviews being conducted in advance of obligations taking effect, to assess readiness and establish any areas of concern, and post-implementation reviews conducted shortly afterwards. The results of the latest reviews which focused on firms’ readiness for reporting and non-financial counterparties that are part of a larger financial group have now been published.

European Market Infrastructure Regulation (EMIR) trade reporting start date

A reminder that the EMIR reporting obligation comes into force next week. From 12 February 2014, all counterparties will need to report details of derivative contracts (OTC and exchange traded) they have concluded, or which they have modified or terminated, to a registered or recognised trade repository (TR) in line with EMIR reporting requirements. For more information please go to the FCA EMIR reporting webpage.

FCA Handbook changes

On the 31 July 2013 a second EMIR Statutory Instrument  was laid before UK Parliament. The Statutory Instrument includes further supervisory and enforcement powers for the FCA, as well as providing for the operation of indirect client clearing within the UK. In Chapter 11 of CP13/9 Quarterly Consultation (No 2) (September 2013)  we consulted on a number Handbook provisions to reflect the FCA related changes in this second EMIR Statutory Instrument.  These Handbook changes have now been made, effective 31 January 2014.  The FCA instrument and Handbook Notice can be found at the following links:

December 2013

Updated EMIR implementation Q&As (including reporting of exchange traded derivatives)

ESMA has now published an updated version of the Questions & Answers on EMIR implementation. The table of questions on pages six and seven provides a record of which questions and answers are new or were updated on 19 December 2013. There are updates to the OTC questions, CCPs and reporting to trade repositories, including a Q&A setting out which parties have to report exchange traded derivatives.

Updated European Commission FAQs on EMIR, covering the meaning of "undertaking" and the application of EMIR to municipalities

The European Commission also updated its FAQs on 18 December 2013 (last updated on 8 February 2013), providing clarification on the concept of ‘undertaking established in the Union’ for the purpose of the definition of a non-financial counterparty and the circumstances in which EMIR could apply to municipalities.

ESMA approves ICE and CME Trade Repositories

The European Securities and Markets Authority (ESMA) approved the registrations of two further trade repositories (TRs) on 28 November under the European Market Infrastructure Regulation (EMIR). The newly registered TRs for the European Union (EU) are:

  • ICE Trade Vault Europe Ltd. (ICE TVEL), based in the United Kingdom; and
  • CME Trade Repository Ltd. (CME TR), based in the United Kingdom.

This means that they can be used by the counterparties to a derivative transaction to fulfil their trade reporting obligations under EMIR. The registrations will come into force on 5 December 2013. Following the registration of a first group of TRs on 7 November 2013, which became effective on 14 November 2013, the reporting obligation start date for all asset classes will begin on 12 February 2014. There are now six TRs registered in the EU, which can be used for trade reporting. ESMA registered DDRL, Regis-TR, UnaVista and KDPW on 7 November and has not received any further applications for registration.

November 2013

ESMA publishes final draft technical standards on the cross border application of EMIR

The European Securities and Markets Authority (ESMA) issued final draft regulatory technical standards (RTS) related to derivative transactions by non-European Union (EU) counterparties last week. The RTS provide more detail on the application of EMIR to transactions between non-EU counterparties with a direct, substantial and foreseeable effect within the Union and in relation to non-evasion. 

EMIR Counterparty Classification Tool

The International Swaps and Derivatives Association, Inc. (ISDA), The British Bankers Association (BBA), The Investment Management Association (IMA) and Markit announced the launch of the EMIR Counterparty Classification Tool. It is an online service that facilitates compliance with European Market Infrastructure Regulation (EMIR) requirements regarding classification of counterparties to OTC derivatives contracts and application of the relevant standards of the regulatory requirements. Additional information regarding the tool is available on ISDA’s EMIR Focus Page.

LEI ROC Endorsement of LSE

Please note that the London Stock Exchange (LSE) has now been globally endorsed as a provider of pre-LEIs (as of the 11 November).  Please see the LEI Regulatory Oversight Committee (ROC) website for the full note. The use of globally endorsed pre-LEIs is also referenced in the recently updated ESMA Q&As. This means that pre-LEIs issued by the LSE can be accepted for reporting under EMIR in the EU, Swap Data reporting in the US and also for other jurisdictions who mandate the use of the LEI for trade reporting and are members of the ROC Plenary. It is strongly anticipated that all pre-LEIs that are globally endorsed will transition into LEIs once the LEI governance structure is fully established.

Under the EMIR technical standards on format and frequency of trade reporting counterparties are expected to have an LEI for reporting to trade repositories from 12 February 2014.

Approved registration of first trade repositories

The first trade repository registration decisions have now been made. These registration decisions will take effect from 14 November 2013. On 12 February 2014 the EMIR requirement to report derivatives transactions to trade repositories will come into force. More information on these initial registrations can be found on the reporting to trade repositories page

Updated ESMA Q&As 

ESMA has now published an updated version of the Questions & Answers on EMIR implementation. The table of questions on pages six and seven provides a record of which questions and answers are new or have been updated.

List of non-EEA CCPs

EMIR requires all non-EEA CCPs offering clearing services to clearing members or trading venues in the EEA to seek recognition from ESMA. In order to continuing offering such clearing services, the non-EEA CCPs were required to apply to ESMA for recognition by 15 September. ESMA has published a list, which is not necessarily exhaustive, of non-EEA CCPs which have submitted an application.

October 2013

Results of the FCA’s first EMIR implementation reviews

The FCA plans to undertake a number of implementation reviews on key EMIR obligations, with pre-implementation reviews being conducted in advance of obligations taking effect, to assess readiness and establish any areas of concern, and post-implementation reviews conducted shortly afterwards. The results of the first reviews which focused on the risk mitigation techniques and non-financial counterparties under EMIR have now been published

Second set of advice to the EU Commission on equivalence of non EU jurisdictions

ESMA has published its second set of advice to the European Commission on the equivalence of non-EU jurisdictions with EMIR. Following a first set of advice published on 9 September 2013, ESMA has now published its equivalence assessments of the regulatory regimes of Canada, India and South Korea and supplements to its equivalence assessments for Australia, Hong Kong, Singapore and Switzerland.

FCA EMIR web portal available for intragroup clearing exemption applications

Submissions for exemptions for intragroup transactions from the clearing obligation are now being accepted through the FCA EMIR web portal. Please note that submissions are currently only being accepted for transactions between two entities in the same group which are both established in the UK. For more detailed information, please see the EMIR notifications and exemptions page.   

FCA EMIR web portal available for financial counterparties to make dispute notifications

Since 15 September 2013, financial counterparties have been required to  report any disputes between counterparties relating to an OTC derivative contract, its valuation or the exchange of collateral for an amount or a higher value than EUR 15 million and outstanding for at least 15 business days.

The FCA requires financial counterparties to ensure that by the 15th of each month any disputes outstanding in the previous month have been reported through the EMIR web portal. However the deadline for reporting disputes outstanding between 15 September and 30 September has been extended by one week to 22 October, to make sure there is enough time for counterparties to register. More information on dispute reporting and how to register to use the web portal.

September 2013

Hybrid systems trading physically settled gas and power forwards

The FCA has published a statement on hybrid systems trading physically settled gas and power forwards, clarifying that physically settled gas and power forwards traded on multilateral trading facilities (‘MTFs’) are ‘financial instruments’ for the purposes of MiFID and ‘OTC derivatives’ or ‘OTC derivative contracts’ for the purposes of EMIR. 

ESMA advises Commission on equivalence of non-European derivatives rules

ESMA has published its advice to the European Commission on the equivalence of the regulatory regimes for OTC derivatives clearing, central counterparties (CCPs), and trade repositories (TR) of non-EU countries with the European Markets Infrastructure Regulation (EMIR). ESMA has assessed the equivalence of the regulatory regimes of Australia, Hong Kong, Japan, Singapore, Switzerland and the US. Further details are available on the ESMA website.

FCA September Quarterly Consultation Paper

In Chapter 11 of September’s Quarterly Consultation Paper (QCP), a number of FCA Handbook changes are proposed in respect of EMIR.  These changes aim to reflect, and make firms aware of, the FCA’s powers set out in the domestic legislation that HM Treasury recently laid before Parliament.  This follows the changes to the FCA Handbook in April, which related to the first statutory instrument that was made by HM Treasury.

Margin Requirements for non-centrally cleared derivatives (final report published)

The International Organization of Securities Commissions (IOSCO) and the Basel Committee on Banking Supervision (BCBS) have now published the final framework for margin requirements for non-centrally cleared derivatives. See the press release and final report in the links below:

The final requirements have been developed taking into account feedback from two rounds of consultation (a July 2012 consultative paper and a February 2013 near-final proposal) as well as a quantitative impact study [text deleted].  Under the requirements, all financial firms and systemically important non-financial entities that engage in non-centrally cleared derivatives will have to exchange initial and variation margin commensurate with the counterparty risk arising from such transactions. The requirements will be phased-in over a four-year period, beginning in December 2015.

These requirements will be implemented in the EU through new binding technical standards under article 11 of EMIR. The European Banking Authority, in co-operation with the other European Supervisory Authorities, will consult on these rules in due course.

Financial Stability Board publishes update on global OTC derivatives reform

The Financial Stability Board has been tasked by the G20 with monitoring global progress in implementing agreed reforms to OTC derivatives markets. It has recently published a summary update on progress and a more detailed progress report.

August 2013

Reporting disputes and the FCA EMIR web portal

From 15 September 2013 financial counterparties must report any disputes between counterparties relating to an OTC derivative contract, its valuation or the exchange of collateral for an amount or a higher value than EUR 15 million and outstanding for at least 15 business days. We explain what financial counterparties must provide in these reports and give some further information on the process, including how firms must register on the FCA EMIR web portal to report these disputes.

ESMA publishes updated Q&A

The ESMA EMIR Q&A’s have been updated to provide further information for counterparties, CCPs and Trade Repositories on the interpretation and implementation of EMIR. Read the Q&A's on ESMA’s website.

Second EMIR Statutory Instrument laid before UK Parliament

On the 31 July 2013 a second EMIR Statutory Instrument was laid before UK Parliament. The Statutory Instrument includes further supervisory and enforcement powers indirect client accounts at a clearing member and the transfer of indirect client accounts when a client fails to provide indirect clearing services. An indirect client is a client of a clearing member’s client.