Fines for inaccurate EMIR reporting
According to art. 12 of EMIR the member states should lay down the rules on penalties applicable to infringements of the EMIR rules and shall take all measures necessary to ensure that they are implemented. Furthermore, at regular intervals they must publish assessment reports on the effectiveness of the penalty rules being applied.
The national competent authorities (NCAs) had the obligation to inform the EC by 17 Feb 2013 regarding the penalties and legal measures established in the local legislations. All NCAs except the one of Luxembourg have officially confirmed to ESMA the successful implementation of penalty regimes into their legislations regarding EMIR.
Please find below a table that outlines the official notifications to ESMA and refers to the texts in the local legislations that set the rules for penalties and fines imposed for inaccurate EMIR reporting and EMIR non-compliance as well as the minimum and maximum fines if indicated.
|Country||Language and Link to Notification||Minimum Fine under EMIR||Maximum Fine under EMIR|
|Austria||Notification in German||3,000 EUR||150,000 EUR|
|Belgium||Notification in French||2,500 EUR||2,500,000 EUR|
|Bulgaria||Notification in Bulgarian||2,500 EUR||40,000 EUR|
|Cyprus||Notification in English||700,000 EUR|
|Czech Republic||Notification in English||Not indicated||Not indicated|
|Denmark||Notification in Danish||Not indicated||Not indicated|
|Estonia||Notification in English||32,000 EUR|
|Finland||Notification in Finish||260,000 EUR|
|France||Notification in French||Not indicated||Not indicated|
|Germany||Notification in German||Not indicated||Not indicated|
|Greece||Notification in Greek||10,000 EUR||3,000,000 EUR|
|Hungary||Notification in Hungarian||Not indicated||Not indicated|
|Ireland||Notification in English||500,000 EUR|
|Italy||Notification in Italian||Not indicated||Not indicated|
|Latvia||Notification in English||100,000 lats|
|Lithuania||Notification in English||LTL 15,000|
|Luxembourg||No notification received by ESMA for implementing the art. 12 of EMIR in the local legislation||Not applicable||Not applicable|
|Malta||Notification in English||150,000 EUR|
|Netherlands||Notification in Dutch||4,000,000 EUR|
|Poland||Notification in English||250,000 EUR|
|Portugal||Notification in Portuguese||1,500,000 EUR|
|Romania||Notification in English||Not indicated||Not indicated|
|Slovakia||Notification in English||332 EUR||663,878 EUR|
|Slovenia||Notification in English||Not indicated||Not indicated|
|Spain||Notification in Spanish||500,000 EUR|
|Sweden||Notification in Swedish||Not indicated||Not indicated|
|UK||Notification in English||Broad definition that gives freedom to FCA.|
Although some of the NCAs failed to meet the deadline of 17 February 2013 for official confirmation about the legal transposition of the penalties and fines into the local legislations, one year after EMIR has been in force all member states except Luxembourg have successfully implemented the necessary rules and regulations. The maximum fine for inaccurate EMIR reporting and failure to comply with EMIR vary:
- from approximately EUR 35,000 in the Eastern European countries, for example: the lowest is 4,800 EUR (LTL 15,000) in Lithuania, EUR 32,000 in Estonia and EUR 40,000 in Bulgaria;
- within the range of EUR 150,000 and EUR 500,000 in Central and Western Europe, for example: EUR 150,000 in Austria, EUR 500,000 in Spain and Ireland. In Cyprus the maximum fine that can be imposed by CySEC is EUR 350,000 for the first time penalty for inaccurate EMIR reporting and up to EUR 700,000 for the second time.
- up to millions Euro. Few NCAs are given the option to impose maximum fines in million Euros, for example: Portugal with 1.5 million; Belgium with max 2.5 million; Greece: 3 million and the Netherlands with the highest figure of maximum 4 million according to the local legislations.
As an exception the British legislation has not defined any range. It gives freedom to FCA by implementing broad definitions about fines regarding EMIR. The fines are similar to those already imposed by FCA to the companies regarding MiFID: GBP 1 per line of inaccurately reported or non-reported transaction with up to GBP 1.5 per line for companies that repeatedly fail to comply with MiFID. .
On 23 Oct 2017 FCA fined Merrill Lynch £34.5 million for failing to report 68.5 million exchange traded derivative transactions between 12 February 2014 and 6 February 2016. This is the first enforcement action against a firm for failing to report details of trading in exchange traded derivatives under the European Markets Infrastructure Regulation (EMIR). MLI agreed to settle at an early stage of the investigation and received a 30% reduction in their overall fine. Without this discount the fine would have been £49,320,000. More information is available here.
A quick review of the supervisory activities that are in connection to an earlier established transaction reporting regulation MiFID (in force since Nov 2007) indicates that FCA has actively started to perform its supervisory obligations one year after MiFID came into force. FCA (then FSA) noted discrepancies in Barclays’ transaction reports whilst conducting a review of trading due to an incident of suspected market abuse by a third party. On 9 Aug 2009 a final notice with a penalty of GBP 2,45 million was issued to Barclays for the period between October 2006 and October 2008 (covering pre-MiFID period and the first year of MiFID). Since then FCA has officially imposed fines to 7 banks, 2 brokers (Plus500UK Limited and City Index Limited) and 3 other companies. The fines vary from GBP 49,000 to GBP 13,2 million which is the last one and the biggest one for now. The other NCAs have not officially announced any penalties and fines regarding MiFID. For more information about fines related to MiFID please click here.
It is important to establish the fully compliant EMIR reporting processes and procedures since day one. Back in Feb 2014 there was still some uncertainty about few rules and few definitions. For that reason we would urge the companies that are already reporting to perform internal audit of the accuracy of the first submitted transactions as well as back-dated reporting in order to avoid future fines and penalties related to EMIR reporting.
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