News

Updated list of recognised third-country CCPs

On 9 Oct 2017, ESMA has issued an updated list of recognised third-country CCPs. i.e. list of recognised central counterparties (CCPs) based in third countries.

The update concerns CCPs established in India:

  • Indian Clearing Corporation Limited;
  • National Securities Clearing Corporation Limited; and
  • MCX-SX Clearing Corporation.

The European Markets Infrastructure Regulation (EMIR) requires third-country CCPs to be recognised by ESMA in order to operate in the European Union.

For more information please feel free to contact us at office@emirreporting.eu.

more

Updated validation rules under revised EMIR standards

On 3 October 2017, ESMA published a further update to the Validation Rules under revised EMIR standards. The validation rules are additional instructions that accompany the delegated regulation and implementing regulation amending the regulatory technical standards (RTS) and implementing technical standards (ITS) on the minimum details of the data to be reported to trade repositories under EMIR. Both standards and the updated Validation Rules will apply from 1 November 2017.

For further information please contact us at office@emirreporting.eu.

more

Updated EMIR Q&As regarding AIFs and CCP

On 2 Oct 2017 ESMA has published an updated version of EMIR Q&As.

The update is covering the following:

  • If an AIF that is subject to the clearing obligation of Article 4(1) of EMIR in most of the casts it cannot make use of the exemption of intragroup transactions under Article 4(2) of EMIR;
  • Ongoing monitoring of collateral requirements for CCPs (under article 46 of EMIR and Article 37 of the RTS on CCP requirements).
more

Updated EMIR Q&As

On 10 July 2017 ESMA has published an updated version of EMIR Q&As. The update provides further information about the treatment of AIF subject to the clearing obligation of Article 4(1) of EMIR and whether it can make use of the exemption for intragroup transactions under Article 4(2) of EMIR.

The questions about the buy/sell indicators for swaps are modified by adding also FX futures in the examples.

For more information please feel free to contact us at office@emirreporting.eu.

more

Clearing obligation for Category 3 with new date

On 14 Nov 2016 ESMA has published its final report regarding the amended application of the clearing obligation that financial counterparties in the category 3 need to comply with under EMIR (the European Market Infrastructure Regulation).

ESMA has proposed to postpone the phase-in period for central clearing of OTC derivatives applicable to financial counterparties with a limited volume of derivatives activity. ESMA’s report proposes to amend EMIR’s Delegated Regulations 2015/2205, 2016/592 and 2016/1178 on the clearing obligation in order to prolong, by two years, the phase-in for financial counterparties with a limited volume of derivatives activity – classified in Category 3 under EMIR Delegated Regulations. ESMA is also proposing to align the three compliance dates for Category 3 firms in the Delegated Regulations regarding Interest Rate Swaps and Credit Default Swaps. The newly proposed compliance date would be 21 June 2019.

The EC has approved the final report. On 24 April 2017 Commission Delegated Regulation (EU) 2017/751 was published in the Official Journal. The approved date is 21 June 2019. The Regulation enters into force on 19 May 2017. The first date for the clearing obligation for interest rate swaps denominated in the G4 currencies is postponed by 2 years from 21 June 2017 to 21 June 2019.

more

EMIR Q&As and validation rules after 1 November 2017

On 3 April 2017 ESMA has published updated EMIR Q&As document. In order to facilitate smooth and well-informed preparation for the implementation of the revised standards (revised EMIR RTS and ITS), ESMA has included the updated versions of those questions in the Q&A, indicating that they will become applicable from 1 November 2017, together with the revised technical standards.

The Q&As also include an updated question regarding the obligation to report outstanding trades following the entry into force of EMIR, i.e. the backloading.

Furthermore, ESMA has published the updated validation rules for the reports submitted under the revised technical standards (revised RTS). The updated validation rules will equally become applicable from 1 November 2017.

more

Updated EMIR Q&As 2017

On 1 February the European Securities and Markets Authority (ESMA) has issued an update of Q&A on practical questions regarding the European Markets Infrastructure Regulation (EMIR).

The updated EMIR Q&A includes a new answer in relation to transition to the revised technical standards on reporting, which will become applicable on 1 November 2017. The Q&A clarifies that the reporting entities are not obliged to update all the outstanding trades upon the application date of the revised technical standards and that they are required to submit the reports related to the old outstanding trades only when a reportable event takes place (e.g. when the trade is modified). Furthermore, the Q&A explains how those reports will be validated by the Trade Repositories.

The purpose of this document is to promote common supervisory approaches and practices in the application of EMIR. It provides responses to questions posed by the general public, market participants and competent authorities in relation to the practical application of EMIR. The content of this document is aimed at competent authorities under the Regulation to ensure that in their supervisory activities their actions are converging along the lines of the responses adopted by ESMA. It should also help investors and other market participants by providing clarity on the requirements under EMIR.

more

Revised EMIR RTS and ITS published in OJ

According to article 85 of EMIR ESMA is obliged to prepare and submit a general report with appropriate proposals that ensure a better implementation of the Regulation. The current revised RTS and ITS are focused mainly on the better quality of the data received by the trade repositories and ESMA.

On 13 Nov 2015 a final report – review of the regulatory and implementing technical standards on reporting under article 9 of EMIR has been issued by ESMA.

The most important parts of the EMIR Q&As documents have been included in the revised EMIR regulatory technical standards (RTS) and implementing technical standards (ITS). This has been done because EMIR Q&As document is not legally binding and it serves to promote common supervisory approaches and practices in the application of EMIR. It is aimed at competent authorities to ensure that in their supervisory activities their actions are converging along the lines of the responses adopted by ESMA. Information regarding the penalties for inaccurate EMIR reporting is available here.

On 21 January 2017 the revised RTS and ITS have been published in the Official Journal. They enter into force on 10 February 2017 and shall apply from 1 November 2017.

Commission Delegated Regulation (EU) 2017/104 introduces the following amendments to the EMIR RTS:

  • New rules on the reporting of a contract composed of a combination of several other derivative contracts. In case the fields in the report do not allow reporting of a complex products by a single line, then the counterparties should decompose the contract and agree on the number of lines (with separate UTIs) that should be submitted. The transaction reports should be identified by using the new field ‘Complex Trade Component ID’ for any transaction reports resulting from the same derivative contract.
  • New rules on the reporting of a previously reported contract which is subsequently cleared by a CCP. The existing contracts shall be reported as terminated and the new contracts resulting from the transaction shall be reported. For contracts concluded and cleared on the same date, only the cleared contract shall be reported.
  • New rules for the reporting of collateral exchanged by the counterparties, including specifying what exactly should be reported, by whom, and how it should be valued.
  • Rules for the reporting of the notional amount for different classes of derivatives. For swaps, futures and forwards (traded in monetary units) the notional amount should be the reference amount from which the contractual payments are determined in derivatives markets. For options the notional amount should be calculated using the strike price. Financial CFDs and commodities denominated in units (like barrels or tons) – the resulting amount of the quantity at the relevant price set in the contract.
  • A new section of asset class specific fields for credit default swaps (CDS) with 10 fields and other new or renamed fields.
  • More fields are included to correctly reflect the different types of collaterals: initial margin posted; variation margin posted; initial margin received; variation margin received; excess collateral posted; excess collateral received and the relevant fields that identify the currency of the new types of the margin fields.
  • More new fields like: “Level” to indicate whether the reporting is done on a trade level or a position level, etc.

Commission Implementing Regulation (EU) 2017/105 covers the following amendments in EMIR ITS:

  • Rules for clearly identifying the counterparty side depending on the different asset classes.
  • Identification and classification of the derivatives. The ETDs will be identified by ISIN or AII. The OTC derivative contracts will be identified by their types. Two more categories are added: ‘SB’ for spread bet and ‘ST’ for swapton.
  • Unique Trade Identifier (UTI). The UTIs of the cleared trades should be generated by the CCPs. For centrally-executed bit not centrally cleared trades the UTI shall be generated by the trading venue. For centrally confirmed and cleared trades the UTI generation obligation is placed to the clearing member. For trades that were centrally confirmed by electronic means but were not centrally cleared the UTI should be generated by the trade confirmation platform at the point of confirmation. Financial counterparties (FC) trading with non-financial counterparties – the FCs. For all other cases – the seller is responsible to generate the UTI and communicate it to the buyer. The UTIs should be generated and communicated in a timely manner so that the other counterparty can meet its reporting obligations.
  • Clear rules about identifying the venue of execution.
  • Extending the deadline for backloading from 12 February 2017 to 12 February 2019.

For further information and clarification please feel free to contact us at office@emirreporting.eu.

more

EC adopted delegated Regulation on margin requirements for non-cleared OTC derivatives

On 4 October 2016 the European Commission adopted a delegated regulation that specifies how margin should be exchanged for OTC derivatives contracts that are not cleared by a CCP. The Commission adopted the draft regulatory standards submitted by the European Supervisory Authorities with amendments.

For those derivatives not centrally cleared EMIR requires bilateral exchange of collateral to mitigate risks. Should one counterparty to the transaction default, the margin collected will protect the non-defaulting counterparty against resulting losses. The draft regulatory technical standards (RTS) under EMIR were submitted jointly by the three European Supervisory Agencies (ESAs). The Commission decided to endorse these standards with certain amendments, in particular concerning the concentration limits for pension scheme arrangements and the timeline for implementation. Today’s decision takes the form of a Delegated Regulation and is now subject to an objection period by the European Parliament and the Council after which it will be published in the Official Journal. The full text of the press release is available here.

The text of the delegated Regulation is available here.

The text of the Annex to the delegated Regulation is available here.

For more information please feel free to contact us at office@emirreporting.eu.

more

ESMA updates list of recognised third-country CCPs

On 28 Sept 2016 the European Securities and Markets Authority (ESMA) has updated its list of recognised central counterparties (CCPs) based in third countries. The update concerns the recognition of the US-based CCPs ICE Clear Credit LLC (ICC) and the Minneapolis Grain Exchange Inc. (MGEX).

The European Markets Infrastructure Regulation (EMIR) requires third-country CCPs to be recognised by ESMA in order to operate in the European Union.

more