Summer vibes in the Reporting Regulations’ pool
targit GmbH16.07.2019
According to the European Commission’s regulatory fitness and performance programme (“REFIT”) some (if not all) of the legislative acts must be periodically reviewed and amended if needed.
Now, it is the EMIR Regulation, which has been recently “REFIT”-ed and most of the new concepts are already effective since 17th of June 2019.
In general, they are refining definitions and counterparties’ interrelations, but among those there is one that concerns the reporting – the EMIR’s REFIT removes the obligation to report old derivatives transactions (“backloading”), unless explicitly requested by an NCA.
The table below summarises the changes, gives a short description and indicates the date of validity.
Amendment | Description | Effective date |
FC definition | Alternative investment fund (AIF) which is either established in the EU or managed by an alternative investment fund manager (AIFM) authorised or registered in accordance with AIFMD and the Central securities depository (CSD), shall be considered as Financial counterparties (“FCs”) | 17 June 2019 |
New FC category | EMIR REFIT introduces a new category called “small FCs”. Whether an FC will be considered “small” or “big” FC will depend on the volume of its OTC derivatives. | 17 June 2019 |
Clearing threshold calculation | clearing threshold calculation for NFCs to be aligned to that for FCs | 17 June 2019 |
Mandatory clearing timing | amends the date on which the entities are required to clear certain derivative contracts (subject of entity type) | 17 June 2019 (phase-in) |
Pension schemes clearing exemption | EMIR REFIT extends the provisional exemption from the clearing obligation for certain pension scheme arrangements until 18 June 2021 | 17 June 2019 |
Backloading | The reporting obligation in respect of old derivative transactions (so-called “backloading” is in principle removed in the EMIR REFIT. | 17 June 2019 |
Intragroup transactions | The reporting obligation does not apply to derivative contracts within the same group where at least one of the counterparties is an NFC or TCE NFC | 17 June 2019 (NCAs consent) |
Reporting responsibilities | The reporting requirements for NFCs when trading with FCs are transferred to the FC | 18 June 2020 |
Clearing obligation | ESMA may request the EU Commission to suspend the clearing obligation for specific classes of OTC derivatives or for a specific type of counterparty | 17 June 2019 |
Initial margin | CCPs must provide a simulation tool to their members in order to calculate and control the amount of additional initial margin | 18 December 2019 |
Insolvency laws | EU member states’ national insolvency laws will not conflict with the CCPs obligations | 18 December 2019 |
Risk Management | EMIR REFIT suggests ESA produce a regulatory technical standard for risk-management procedures | tbd in the RTS |
Clearing services | Clearing Members to provide services under fair, reasonable, non-discriminatory and transparent commercial terms (“FRANDT”), including conflicts of interest management | 18 June 2021 |
The EMIR REFIT comes only a few months after the SFTR reporting received its green light from the European Commission and shows that the regulations are constantly evolving, requiring market participants to adapt accordingly.
For more information, assistance or guidance about any of the reporting regulations, please do not hesitate to get in contact with us.
