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. For now we can assume that the fines will be 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. Keeping in mind the recent consultations about the plans to increase the regulatory fees (that the regulated firms have to pay for the 2015/2016 financial year) we conclude that FCA would probably like to position itself in the upper side of the scale regarding the amounts of the fines.
By now none of the national competent authorities (NCAs) have officially imposed any fine for inaccurate EMIR reporting or infringements of the rules under EMIR. This is due to the fact that EMIR is still considered as a relatively new regulation and still a few of the transitional provisions in article 89 of EMIR apply (although not directly related to the obligation of EMIR reporting). However since day one ESMA and the NCAs are very closely monitoring and analyzing the data received from the trade repositories.
According to the transitional and final provisions in article 85 of EMIR by 17 August 2015 the commission shall review and prepare a general report on EMIR and submit it to the European Parliament and the Council, together with appropriate proposals. Because of articles 89 and 85 we consider that we are now towards the end phase of the transitional period therefore it is very likely that no penalties and fines for inaccurate EMIR reporting will be imposed by the NCAs during the next months. However it is very probable that after September 2015 and during 2016 we will be witnessing increased regulatory activity especially by FCA regarding EMIR reporting. Another reason for this conclusion is that the level 2 validation rules for EMIR come into force at the end of October 2015. More information about level 2 validation 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.
Once the supervisory activities start they will cover the reports since the date EMIR came into force as well as the back-dated reporting. For that reason 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.
For more information please feel free to contact us at firstname.lastname@example.org.