Presentation on theme: "EMIR reporting - Are you ready?"— Presentation transcript:
1 EMIR reporting - Are you ready? Vincent KeavenyEmma Gilkes28 January 2014 at 14:30-15:30
2 Overview Background and Objectives of EMIR EMIR Implementation timetableWhat is the “Reporting Obligation”?How does EMIR define “derivatives”?Who does EMIR Reporting Obligation apply to?What needs to be reported?
3 Background and Objectives of EMIR To increase transparency (especially with respect to prices and volumes) by requiring:reporting of information to trade repositories (accessible to regulators);Publication by trade repositories of aggregate positions by class (which would be accessible to all market participants).To reduce counterparty credit risk by imposing:mandatory clearing of standardised OTC derivatives;capital and collateral requirements for CCPs (for cleared trades);risk mitigation (for non-cleared trades).To reduce operational risk by requiring the use of electronic means for trade confirmations.
4 EMIR Implementation timetable 15 Mar 2013Risk mitigation for OTC derivatives: Timely confirmation and daily valuation requirements (FC and NFC+) in force;Obligation on NFCs to report to ESMA and competent authority if exceed clearing thresholdFCs monthly report unconfirmed OTC derivatives outstanding > 5 business days15 Sep 2013Risk mitigation for OTC derivatives: Requirements for portfolio reconciliation, portfolio compression and dispute resolution enter into forceFCs required to report any disputes about OTC derivative, its valuatioon or exchange of collateral > €15 million and outstanding > 15 business days12 Feb 2014Reporting start date for each asset class for which a Trade Repository is authorised: commodities, credit, foreign exchange, equity, interest rates and others both OTC and exchange tradedApplies to all new derivative contractsBackloading requirement: All derivatives entered into on or after 16 August 2012 onwards that are still outstanding13 May 2014Backloading requirement: derivatives entered into before 16 August 2012 which were still outstanding on 12 February 2014Q1 2014First CCPs likely to be authorisedSummer 2014ESMA to submit draft RTS on the clearing obligation12 August 2014Trade reporting will include requirement to report on mark-to-market/ mark-to-model and information on collateral (FC and NFC+ only)H2 2014Expect ESMA RTS on margin for non-cleared OTC derivatives trades. (Impact FC and NFC+ only)12 February 2017Backloading requirement: derivatives entered into before 16 August 2012 but which were no longer outstanding on 16 August 2012
5 What is the “Reporting Obligation”? Financial counterparties, non-financial counterparties and CCPs are required to report to a trade repository the details of any derivative contract which is concluded, modified or terminated (including any derivative with a pension fund or intra-group).The report is to be made no later than the working day following the conclusion, modification or termination of the relevant derivative contract.The Reporting Obligation covers both cleared and non-cleared derivatives and applies to derivative contracts:entered into before 16 August 2012 (i.e. EMIR came into force) but which were outstanding on that date; andentered into on or after 16 August 2012.Delegated reporting is permitted, liability remains with party with reporting obligation
6 How does EMIR define “derivatives”? EMIR uses the same definition of “derivatives” as set out in MiFID and therefore covers:cash and physically settled financial derivatives;cash settled commodity derivatives;physically settled commodity derivatives traded on a regulated market or a multilateral trading facility;physically settled commodity derivatives having characteristics of financial derivatives provided not being for commercial purposesNB does not include spot FX but will include rolling spot FXForward FX for commercial purposes
7 Who does EMIR Reporting Obligation apply to? The Reporting Obligation applies to counterparties and CCPsESMA Q&A: only counterparties established in EU i.e. “financial counterparties” and “non-financial counterparties”.What is a “financial counterparty”?A “financial counterparty” is any investment firm, credit institution, insurance, assurance or reinsurance undertaking, UCITS or UCITS manager, institution of occupational retirement provision or an alternative investment fund managed by an alternative investment fund manager (each as authorised under relevant European Directive).What is a “non-financial counterparty”?A “non-financial counterparty” is any undertaking established in the EU that is not a “financial counterparty”.
8 What needs to be reported? ESMA “pro-forma” reports identifying the fields that will need to be completed by counterparties for the purposes of satisfying the Reporting Obligation85 fields – Counterparty Data (x26) and Common Data (x59)Counterparty Data - Information to be reported with respect to the counterparty includes:parties to the contract;whether the counterparty is a financial or non-financial counterparty;whether the clearing threshold has been exceeded by the non-financial counterparty; andname of the reporting entity (where the counterparty has delegated the reporting obligation)mark-to-market/mark-to model and collateral details (Aug 2014 FC and NFC+ only)Common Data - Information to be reported with respect to the derivative contract itself includes:type of derivative contract;maturity;notional value;price, andsettlement date.
9 EMIR reporting - Are you ready? Vincent Keaveny - Partner Baker & McKenzie LLP Structured Capital MarketsEmma Gilkes - Senior Associate Baker & McKenzie LLP Structured Capital MarketsThis Webcast is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases.This may qualify as "Attorney Advertising" requiring notice in some jurisdictions.