European Market Infrastructure Regulation (EMIR)
What is EMIR?
The European Market Infrastructure Regulation (EMIR) introduced an obligation to report all derivatives to trade repositories; a clearing obligation for eligible OTC derivatives, measures to reduce counterparty credit risk and operational risk for bilaterally cleared OTC derivatives, as well as common rules for central counterparties (CCPs) and for trade repositories.
The EU regulation on OTC derivatives, central counterparties and trade repositories came into force on 16 August 2012. However, full implementation required ESMA to finalise around 20 sets of technical standards, which came into force from 2014. Key dates in the EMIR implementation timetable are below:
- Operational risk management of non-cleared OTC derivatives – 2013.
- Reporting of OTC derivatives and ETDs to a trade repository – 12 February 2014
Firms will also be required to back report derivative contracts as follows:
Back reporting of derivative contracts outstanding on 16 August 2012 (and still outstanding on reporting start date) – within 90 days of reporting start date for that asset class
Back reporting derivatives entered into before, on or after 16 August 2012 that are no longer outstanding on reporting start date – theoretically reportable within three years of the reporting start date for that particular asset class
Forecast for EMIR Level 3
- 10 November 2014 - Public Consultation
- 13 February 2015 - Consultation Paper
- 13 November 2015 - Final Report from ESMA to the EU Commission (feedback expected within 3 months, in theory)
- 19 October 2016 - Commission Delegated Regulation (148/2013): from the EU Commission to the EU Parliament & Council
- 19 October 2016 – 19 January 2017 - 3 months non-objection timeline
- February 2017 estimated - Publication in the European Journal (Regulations enter into effect on the 20th day following that of its publication in the EJ)
- November 2017 estimated - Go-live (9 months implementation timeline)
Which firms will be affected?
All counterparties to all derivative transactions
Includes financial and non-financial counterparties
Under EMIR, a counterparty outside the EU does not have to report to a trade repository
How will EMIR affect you?
Key points at a glance
Covers all derivative transactions - Equity, interest rate, currency, commodity, credit, “other” - Includes OTC and exchange traded derivatives - Differs from Dodd Frank by including ETDs - No exemptions for “non-EEA derivatives” - Trading venue and underlying assets are irrelevant - No exemptions for index or basket products - Includes retail derivatives such as spreadbets - Exchange traded warrants are not included
No threshold below which transactions are not reportable
Includes modifications: - Novations - Terminations and partial terminations
Trade repositories will receive derivative trade details from different sources and make the information available to all relevant regulators (and a subset of information to the public)
Regulators intend that the trade repository information will:
Help detect systemic risk through position information
Increase transparency to the market leading to greater market understanding and increased confidence
Determine and manage counterparty exposure in even of a firm collapse
If you are affected by the this regulation you may also be affected by these:
How can UnaVista help you with EMIR?
UnaVista can assist you with a number of regulations, so that you don’t have to build separate solutions for each problem, future regulations can then be catered for through the platform when required.
ESMA has approved UnaVista to be a trade repository across all asset classes. We ran a pilot service for clients that allowed customers to test the service before the February 2014 'go-live' date. To see the full details of the UnaVista Trade Repository click here.
There are a number of reasons the UnaVista is well positioned to assist with trade repositories.
Fulfil all of your EMIR reporting requirements
UnaVista currently operates as a European Approved Reporting Mechanism (ARM) under the MiFID regime for all asset classes and markets. By becoming a trade repository for all asset classes across all venues, customers will only need to connect once to meet both their EMIR and MiFID reporting requirements.
Use our European regulatory experience
London Stock Exchange Group has been at the forefront of helping clients with European regulations for decades. We are a trusted, neutral and regulated venue already providing many regulatory services such as Regulatory News Service (RNS), National Numbering Agency (ISIN) and regulatory reporting (UnaVista).
Use our regulatory reporting experience
As a market leading MiFID Approve Reporting Mechanism (ARM), UnaVista reports c1 billion multi-asset transactions annually to multiple regulators, including over 300 million derivatives on behalf over 600 clients. Our trade repository will harness the power of our transaction reporting service.
STP from CCPs part of the LSE Group
As well as connecting to all European CCPs, firms will be able to report straight through from the CCPs that are part of the LSE Group, making the most of our Group’s infrastructure.
More than just a trade repository
UnaVista can assist you with more than just EMIR and MiFID. The UnaVista’s Rules Engine acts as a central hub for the production of data to meet global regulatory reporting requirements. With linkages to global trade repositories the UnaVista rules engine helps firms to meet global regulations. Using a firm’s source data, our global multi asset class reference data of 5m tradable products and the relevant regulation’s rules logic, the data is enriched and routed to the required destinations. UnaVista also has solutions for various regulations such as Financial Transaction Tax, Short Selling, FATCA and more.
Fulfil your EMIR reconciliation obligations
UnaVista has a powerful matching and reconciliation engine, allowing you to fulfil your obligation to reconcile your trade with the counterparties before submission. UnaVista will also allow you to match the trades with your counterparties after submission, so you can be sure your data is correct.
Enrich your data