Firms should consider in advance whether they will need to make notifications or apply for an exemption.
We are currently updating the EMIR Web Portal to reflect the temporary derogation wording in Article 3(2) of the Commission Delegated Regulation (EU) 2015/2205 of 6 August 2015 supplementing EMIR with regard to Regulatory Technical Standards on the Clearing Obligation. In the meantime, Firms should use the existing application form on the EMIR Web Portal. If you have any queries please contact firstname.lastname@example.org.
Counterparties should use the EMIR web portal to electronically submit notifications for disputes (article 15(2) of the OTC derivative technical standards); the intragroup exemption from the clearing obligation (article 4(2) EMIR); and non-financial counterparties exceeding the clearing threshold (article 10(1) EMIR). Submissions for the intragroup exemption from the clearing obligation are only being accepted for transactions between two entities in the same group which are both established in the UK at this time.
To submit these notifications, counterparties must be registered to use the portal. You will need to create at least one super user who must give us the following information:
Each counterparty can only be registered on the web portal once. The first person to register a counterparty will be a ‘super user’ for the account and will be able to create new users to act on behalf of the counterparty as necessary.
Once the counterparty has been successfully registered, the super user must activate their account via a URL link which we will send by email. Once the account has been activated the super-user must create a new password and can then make notifications on behalf of the counterparty. Before submitting any notifications, the super user will need to add the details of at least one person of appropriate seniority who will be responsible for declaring any submitted notifications. To add a person of appropriate seniority the super user must provide this person’s name, position and contact details.
Once registered to an account a super user will also be able to add additional counterparties. This will allow them to make notifications from one account on behalf of multiple counterparties. To submit a notification for any counterparty within an account you must have also assigned at least one person of appropriate seniority to that counterparty.
Please read the following section for information on the notifications and applications under EMIR which are currently active. If you have questions which are not answered here then please contact the EMIR team by email.
Since 15 September 2013, financial counterparties have been required to report any disputes between counterparties about 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 (article 15(2) EMIR).
When to report a dispute: The FCA requires financial counterparties to ensure that by the 15th of each month any disputes outstanding in the previous month have been reported. Any disputes reported in the previous month still open should be updated by the 15th of each month; you do not need to submit a new report each month. A nil return is not required if there are no disputes to report in any particular month.
How to report a dispute: financial counterparties must be registered on the FCA EMIR web portal and fill in the correct notification to provide the following information:
* The amount or value of outstanding disputes should be calculated and reported on a trade-by-trade basis whenever possible. However, you may use a portfolio basis if the disputed valuation or collateral, for example initial margin, is calculated at the portfolio level.
Under some circumstances your firm may be exempt from the clearing obligation. For instance:
We are currently accepting notifications for an exemption from the clearing obligation in respect of transactions between two entities in the same group which are both established in the UK.
We are also, in principle, able to accept notifications for an exemption from the clearing obligation regarding transactions between a UK entity and another EU (but non-UK) entity. However, such notifications require the joint approval of the FCA and the other relevant EU national competent authority (NCA).
Therefore, firms should check whether the other relevant NCA is also in a position to accept notifications before notifying the FCA. The ESMA EMIR Q&As (OTC Question 6(a)) indicate that these notifications will generally be accepted when the first Regulatory Technical Standards (RTS) on the clearing obligation comes into force.
In relation to exemptions from the clearing obligation in respect of transactions between a UK counterparty and a third country entity, we will only accept applications once the first RTS on mandatory clearing comes into force (provided the final RTS are in the form endorsed by the Commission).
Your firm must be registered on the FCA EMIR web portal and you must fill in the correct application, including the following information:
For more information on what to include in an application, please visit our EMIR Portal Q&A pages.
We have 30 calendar days to consider notifications and applications to use the intragroup exemption from the clearing obligation (article 4(2) EMIR). Within the 30 day period, we will email you to confirm whether you can use the exemption.
We will notify you in advance if we expect to oppose your use of the exemption. In this instance, we will give you a short period of time to provide any relevant additional information before a final decision is made and may choose to withdraw your application.
EMIR provides for the obligation of counterparties to clear over-the-counter (OTC) derivative contracts that have been declared subject to the clearing obligation. Under Article 89 of EMIR, some pension scheme arrangements may benefit from a temporary exemption (currently to 16 August 2017) from the clearing obligation for their OTC derivative contracts that are objectively measurable as reducing investment risks directly related to their financial solvency.
Pursuant to Article 89(2) of EMIR, listed below are types of pension scheme entities and arrangements which have been granted an exemption from the clearing obligation. This follows, and takes into account, the publication of opinions by the European Securities and Markets Authority (ESMA), which in turn reflect ESMA’s consultation with the European Insurance and Occupational Pensions Authority (EIOPA).
The entities and arrangements below have been assessed by the FCA as complying with Article 2(10)c or d of EMIR, and as encountering difficulties in meeting the variation margin requirements. The list does not include pension scheme arrangements under Article 2(10)a and b of EMIR, which automatically qualify for the temporary clearing exemption.
Before using an exemption, pension scheme arrangements and entities must carry out a self-assessment to ensure compliance with one of the approved types listed below, as well as the relevant criteria set out in EMIR. Such assessments should be properly documented, made available to the competent authority upon request, and reviewed on an ongoing basis to ensure they are updated to reflect any changes in circumstances. Pension scheme arrangements and entities should, in addition to notifying their counterparties of the eligibility of the transaction for a clearing exemption under EMIR, also notify their counterparties of any changes to their exemption status.
See a list of pension scheme arrangements which benefit from a temporary exemption from the clearing obligation (pursuant to Article 89(1) of EMIR).
Since 15 March 2013 a non-financial counterparty that enters into positions in over-the-counter (OTC) derivatives contracts that exceed the clearing thresholds specified by ESMA under article 11 of the OTC derivative technical standards must notify its competent authority under Article 10(1) of EMIR.
Non-financial counterparties established in the UK must notify the FCA if they have exceeded, or are subsequently no longer exceeding, the clearing threshold. Further information on the procedure for notification and calculation of the clearing threshold and the obligations for non-financial counterparties.
How to submit a notification: Non-financials exceeding (or no longer exceeding) the clearing threshold must register on the FCA EMIR web portal to submit a clearing threshold notification. These notifications must be submitted by a person with appropriate seniority, for example; an executive director, company secretary, or head of compliance.
Non-financials who submitted notifications for exceeding (and no longer exceeding) the clearing threshold using a previous system who subsequently go under or over the threshold again may need to re-submit their notifications. If you have any questions please contact the EMIR team for further information.
Financial counterparties must have procedures in place to report on a monthly basis the number of unconfirmed OTC derivative transactions that have been outstanding for more than five business days. This requirement is derived from article 12(4) of the OTC derivative technical standards.
Financial counterparties will be contacted individually to request that a report is submitted. Financial counterparties do not need to submit a report unless it has been requested, but must have procedures in place to do so when requested.
In general, a counterparty wishing to use the exemption from margin requirements for transactions with an affiliate established in a Member State or outside the EU, must first apply to its competent authority under Article 11 of EMIR with evidence that it meets the relevant criteria.
In the case of non-financial counterparties transacting with an affiliate that is either: (i) a non-financial counterparty; or (ii) a financial counterparty established outside the EU, the counterparty must notify its competent authority under Article 11 of EMIR that it intends to use the exemption, with evidence that it meets the relevant criteria.
As laid out under Article 11(5) of EMIR, intragroup transactions, entered into by counterparties established in the same Member State, are automatically exempt from the margin requirement.
Copyright © 2016 FCA. All Rights Reserved.