EMIR notifications and exemptions - Financial Conduct Authority

EMIR notifications and exemptions

Published: 28/10/2013
The main notifications and applications under EMIR fall into the following categories summarised below. More details are available from the relevant articles in the EMIR regulation and related technical standards, which are available from the EMIR Library.

Firms should consider in advance whether they will need to make notifications or apply for an exemption.

EMIR web portal - system update: Submissions for the intragroup exemption from the clearing obligation are now being accepted for transactions between two entities in the same group which are both established in the UK. All submissions should be made using the EMIR web portal.

The EMIR web portal is now available for counterparties 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 will need to give us the following information:

  • full name of the notifying counterparty
  • FCA Firm Reference Number (if applicable) and Legal Entity Identifier (if available)
  • registered address and postcode of the notifying counterparty; and
  • contact details for the first super-user (name, email and telephone number).

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 will then be able to make notifications on behalf of the counterparty. This super-user before submitting any notifications will need to add the details of at least one person of appropriate seniority who will be responsible for the declaration of 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 registered at least one person of appropriate seniority for that counterparty.

user guide for the web portal is available and we have also published some Q&As which may help when using the portal. 

Active notifications

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:

  • name of the other counterparty to the dispute, plus their Legal Entity Identifier (if available) and their country of establishment
  • details of the dispute: amount in €m and the basis on which it has been calculated (trade-by-trade, or portfolio)* along with an identifying code, if available
  • and the date the dispute was identified and when resolved (if and when it is resolved)

* 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.

A UK counterparty wishing to use the exemption from the clearing obligation in respect of OTC derivative transactions with an entity established in the EU belonging to the same group must notify the FCA (article 4(2)(a) EMIR). A UK counterparty wishing to use the exemption from the clearing obligation in respect of OTC derivative transactions with an entity established outside the EU belonging to the same group must make an application to the FCA (article 4(2)(b) EMIR).

At this time only notifications for exemptions in respect of transactions between two entities in the same group which are both established in the UK can be submitted. For more detailed information on when submissions will be accepted for transactions between UK and EU counterparties or UK and non-EU counterparties please visit our EMIR Portal Q&A pages.

Outline of the review process and timetable

The FCA has 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, counterparties will receive an email from the FCA confirming whether they can use the exemption, this email will be sent to the user who made the original submission and the person of appropriate responsibility selected in the application form.

Counterparties will be notified in advance if the FCA expects to oppose their use of the exemption. In this instance, the FCA will give counterparties a short period of time to provide any relevant additional information before a final decision is made and may choose to withdraw their application.  

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 have already submitted notifications for exceeding (and no longer exceeding) the clearing threshold will not 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.

Future notifications

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.

For UK pension scheme arrangements, as defined in Articles 2(10)(c) and (d) of EMIR, to benefit from the temporary exemption from the clearing obligation under Article 89(1) of EMIR, an exemption for the relevant type of entity or arrangement must be granted by the FCA.

In most cases we expect to grant exemptions on an industry-wide basis for a type of entity or arrangement and we are currently coordinating with the relevant UK trade associations to facilitate this process.

Institutions for Occupational Retirement Provision (IORP)

The temporary exemption will be automatically available to pension scheme arrangements that are institutions for occupational retirement provision under the IORP Directive (2003/41/EC) and to the occupational retirement provision businesses of IORPs. These types of arrangements are defined in articles 2(10)(a) and (b) of EMIR and do not need an exemption to be granted.