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EMIR Update - February

ESMA asks Commission to clarify definition of derivative

ESMA has asked the European Commission to clarify the definition of a derivative or derivative contract under EMIR which refers to the list of financial instruments in MiFID. ESMA’s concern is that the different transpositions of MiFID across Member States means that there is no single, common adopted definition of derivative contract in the European Union, thus preventing the consistent application of EMIR. ESMA has indicated that it would be particularly important to clarify:

  • The definition of currency derivatives in relation to:
    • The frontier between spot and forward
    • Their conclusion for commercial purposes
  • The definition of commodity forwards that can be physically settled

To avoid the inconsistent application of EMIR across the EU, ESMA understands that until the Commission provides clarification, and to the extent permitted under national law, national competent authorities will not implement the relevant provisions of EMIR for contracts that are not clearly identified as derivatives contracts across the EU.

ESMA updates Q&As on EMIR

ESMA has published an updated version of its Q&A on the implementation of EMIR. The updated Q&As clarify amongst other things, issues related to reporting to trade repositories such as how to construct and generate Unique Trade Identifiers (UTI), the reporting of empty/not available fields and the UPI taxonomy. Other areas covered by the updated Q&A include OTC derivatives and CCP requirements.

Commission endorses RTS relating to non-EU counterparties

The European Commission has adopted regulatory technical standards setting out the circumstances in which an OTC contract shall be considered as having a direct, substantial and foreseeable effect within the EU and the cases where it is necessary or appropriate to prevent the evasion of rules or obligations provided for in EMIR.

ISDA Reporting Delegation Agreement

ISDA has published a Reporting Delegation Agreement which is intended to help market participants meet their reporting obligations by providing a bilateral standard form of reporting delegation agreement whereby a reporting delegate may, on the client’s behalf, report relevant data to a trade repository or ESMA.

Contributed by Orla McKnight.