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:
Implementation dates are subject to change depending on the progress of EU implementation.
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 email@example.com.
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 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.
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. (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.
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.
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.
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 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.
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.
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.
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.
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.
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.
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.
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:
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.
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.
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:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 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.
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.
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.
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.
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.
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.
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.
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