Insight & News

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.