What you should know about the EMIR Refit regarding reporting obligation for FCs and NFCs
Article 9 of EMIR as amended by EMIR REFIT states:
“Financial counterparties (FCs) shall be solely responsible, and legally liable, for reporting on behalf of both counterparties, the details of OTC derivative contracts concluded with a non-financial counterparty that does not meet the conditions referred to in the second subparagraph of Article 10(1) (NFC-s), as well as for ensuring the correctness of the details reported.”
As of 18 June 2020 FCs are responsible and liable for the reporting of new OTC derivatives concluded with NFC-s, the reporting of any modification or termination of existing OTC derivative contracts and the reporting of OTC derivatives contracts outstanding on 18 June 2020 on behalf of NFC-s. A
Whilst EMIR requires FCs to report OTC derivative contracts on behalf of NFC-s that doesn’t lift all the responsibilities of NFC-s. Firstly, NFC-s are still responsible for the reporting of exchange traded derivatives (ETDs) and ,if they choose to, the reporting of OTC derivative contracts. Secondly, NFC-s remain responsible for the provision of correct and accurate details to the FCs. A point worth noting is that NFC-s are not required to report data on collateral, mark-to-market, or mark-to-model valuations of the contracts.
| Contract Type | Counterparties to a contract | Reporting Obligation | ||
| Counterparty A | Counterparty B | FCs | NFCs | |
| >OTC | FC | NFC+ | Yes | Yes |
| FC | NFC- | Yes | No* | |
| NFC- | TCE | – | No** | |
| ETD | >Every counterparty to a contract reports for itself. | |||
* An NFC- can choose whether to report itself.
** An NFC- shall not be responsible for reporting when concluding an OTC contract with a TCE, provided that:
- the third-country entity would be qualified as a financial counterparty if it were established in the Union;
- the legal regime for reporting to which that third-country entity is subject, has been declared equivalent pursuant to Article 13; and
- the third-country financial counterparty has reported such information pursuant to that third-country legal regime for reporting to a trade repository that is subject to a legally binding and enforceable obligation to grant the entities referred to in Article 81(3) direct and immediate access to the data.
