knowledge | 12 June 2020 |

EMIR Reporting – Check Your Compliance Calendar!

The first anniversary of the coming into force of EMIR Refit1 is fast approaching.  Some of the reporting changes provided for by EMIRonly take effect on 18 June 2020 and another of those changes requires in scope entities to undertake an annual calculation.  Entities affected by those changes need to ensure that they are set up to comply.

Mandatory reporting of OTC derivatives

With effect from 18 June, responsibility for reporting OTC derivative contracts3 transacted by a UCITS or AIF, and certain such contracts transacted by a NFC-, will change.  In the case of:

  • UCITS/AIFs: The UCITS management company or AIFM4 will be responsible for the timely and accurate reporting of the details of OTC derivatives to which that UCITS or AIF, respectively, is counterparty and ensuring the correctness of the reports.  Relevant UCITS management companies and AIFMs must ensure that they have in place any measures necessary to enable them to comply with the new reporting obligations from 18 June 2020 (see further here).
  • IORPs: The position regarding OTC derivative contracts transacted in respect of IORPS5 that do not have legal personality is similar to that for UCITS/AIFs; responsibility is allocated to the authorised entity that is responsible for managing and acting on behalf of the IORP.
  • NFC-s: An EU FC counterparty6 to an OTC derivative contract with an NFC- will become responsible for the timely and accurate reporting of that contract on behalf of the NFC-7.  An NFC- may, however, choose to undertake its own reporting and, if it does, it must inform its counterparties of the fact that it will remain responsible for its own reporting.  To enable its FC counterparty to undertake reporting on its behalf, an NFC- is obliged to provide to that FC the data that the FC cannot reasonably be expected to possess.  ESMA has recently updated its EMIR Q&A to outline the information that FCs would be expected to request and has issued a further consultation on the issue8.  Importantly, pending any determinations regarding the equivalence for EMIR purposes of third-country (non-EEA) legal regimes for reporting (none have yet been made), an NFC- will remain liable to report OTC derivative contracts entered into with a third-country (non-EEA) counterparty that would be an FC if it were established in the EU.  Of course the NFC- may agree with such a third-country FC counterparty to delegate to it the function of reporting (but not its legal responsibility and liability for reporting) on its behalf.

Any entity that will on 18 June assume responsibility for reporting OTC derivative contracts on behalf of a UCITS, AIF, IORP or NFC- will need to ensure that it has taken any measures necessary to enable it to comply with its new reporting obligations from that date.  These may include putting in place:

  • delegated reporting arrangements with the relevant counterparty to the contract (where it is not the counterparty) or a third party service provider9;
  • in the case of an FC reporting on behalf of an NFC- counterparty, arrangements to obtain any information required for reporting that the FC cannot reasonably be expected to possess; and/or
  • ensuring that it has in place appropriate operational arrangements10.

Clearing threshold calculations

Pursuant to EMIR, an NFC taking positions in OTC derivative contracts that wishes to continue to be treated as not subject to the clearing obligation is required to calculate its aggregate month-end average position11 for the previous 12 months in accordance with EMIR and determine that it does not exceed the clearing threshold in respect of any class of OTC derivative contracts.  That calculation was required to have been undertaken (by in scope NFCs that had OTC derivative contracts outstanding) on the day EMIR Refit entered into force (17 June 2019).  NFCs who chose not to calculate their positions were treated as NFC+ under Article 10(1)(a) of EMIR and were required to notify ESMA and any relevant national competent authority (“NCA”).  An NFC- that chose to calculate and was below the clearing thresholds should, if it wishes to continue to be treated as an NFC-, re-calculate every 12 months to confirm that it remains below the threshold.  If it does not undertake any 12 month calculation, it should notify ESMA and the relevant NCAs as this would constitute a change of its status (from NFC- to NFC+).

Similar requirements apply to an FC that chose to calculate its aggregate month-end average position with a view to establishing itself as a “small FC” or “FC-” for the purposes of any EMIR clearing threshold after EMIR Refit entered into force12.

Any NFC- or FC- that wishes to retain its status as such should ensure that it undertakes its anniversary calculations.


  1. Regulation (EU) 2019/834 of the European Parliament and of the Council of 20 May 2019 amending Regulation (EU) No 648/2012 as regards the clearing obligation, the suspension of the clearing obligation, the reporting requirements, the risk-mitigation techniques for OTC derivative contracts not cleared by a central counterparty, the registration and supervision of trade repositories and the requirements for trade repositories.
  2. Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories, as amended, including by EMIR Refit.
  3. As defined in EMIR, this encompasses all derivative contracts that constitute financial instruments for the purposes of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EC (recast) (“MiFID II”) other than those transacted on (a) an EU regulated market (within the meaning of Article 4(1)(21) of MiFID II) or (b) a third country market that is treated for purposes of Article 2a of EMIR as equivalent to such a regulated market. It is important to note, therefore, that the shift in reporting responsibility also encompasses any derivative contract that is transacted on a third country venue that is not treated as equivalent to an EU regulated market for EMIR purposes.
  4. As EMIR Refit is not yet incorporated into the Agreement on the European Economic Area (see here), EEA AIFMs are not yet in scope.
  5. Institutions for occupational retirement provision, as defined in point (1) of Article 6 of Directive (EU) 2016/2341 of the European Parliament and of the Council [Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs)(OJ L 354, 23.12.2016, p. 37)].
  6. As EMIR Refit is not yet incorporated into the Agreement on the European Economic Area (see here), EEA FC counterparties are not yet in scope.
  7. The European Securities and Markets Authority (“ESMA”) declined a request from the International Swaps and Derivatives Association, Inc. (“ISDA”) and the Global Financial Markets Association for a period of “regulatory forbearance” following the 18 June 2020 effective date for this FC/NFC- reporting requirement.
  8. ESMA updated its EMIR Q&As on 28 May 2020 to address the reporting of OTC derivative contracts by an FC on behalf of an NFC- (see here).  ESMA has also launched a consultation on draft Regulatory and Implementing Technical Standards (RTS and ITS) under EMIR Refit on certain reporting issues, including reporting by FCs on behalf of NFC-s (see here).
  9. A number of industry bodies have jointly published a Master Regulatory Reporting Agreement to facilitate arrangements for regulatory reporting (including the mandatory reporting the subject of this briefing) under EMIR and Regulation (EU) 2015/2365 of the European Parliament and of the Council of 25 November 2015 on transparency of securities financing transactions and of reuse and amending Regulation (EU) No 648/2012 (see here).
  10. ISDA has published a note of operational considerations for FCs and NFC-s(see here).
  11. In calculating this, an NFC should include all OTC derivative contracts entered into by it or any other non-financial entity within the group to which it belongs which are not objectively measureable as reducing risks directly relating to the commercial activity or treasury financing activity of the NFC or that group (Article 10(3) of EMIR).
  12. It should be noted that there is no carve-out for hedging transactions in an FC’s calculation of its aggregate month-end average position and the positions of all entities in the relevant group must be taken into account.

This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.

Key contacts