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EMIR Reporting Obligation for FCs and NFCs

2021-01-07 02:01:45

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.

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