European Union: EMIR Reporting Obligation Takes Effect On 12 February 2014

As of 12 February 2014, financial and non-financial counterparties must ensure that details of any derivative contract concluded and any modification or termination of those contracts are reported to a trade repository.

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The European Securities and Markets Authority ("ESMA"), on 7 November 2013, approved the registration of the first four trade repositories under the European Market Infrastructure Regulation ("EMIR"). The following entities have been registered as Trade Repositories for the European Union: DTCC Derivatives Repository Ltd. and UnaVista Ltd. (both based in the United Kingdom); Krajowy Depozyt Papierów Wartosciowych S.A. KDPW (based in Poland); and Regis-TR S.A. (based in Luxembourg).

ESMA is processing additional registration applications from other trade repository parties.

Reporting obligation

According to the press release on ESMA's website, the reporting obligation takes effect on 12 February 2014 (the "Reporting Start Date"). This is 90 calendar days after the first official registration date (14 November 2013) as provided by Article 5 Commission Implementing Regulation (EU) No 1247/2012. As of this date, financial and non-financial counterparties must ensure that details of any derivative contracts (OTC derivatives contracts and exchange traded derivative contracts) concluded, and any modifications or terminations of those contracts are reported to a trade repository. The responsibility to report applies to both counterparties, but parties can delegate this obligation to a third party or arrange for one of the counterparties to report on behalf of both counterparties.

Retroactive reporting

The reporting obligation applies to derivative contracts entered into before 16 August 2012 and which remain outstanding on that date or to derivative contracts entered into on or after 16 August 2012.

Derivative contracts that were outstanding on 16 August 2012 and remain outstanding on the Reporting Start Date must be reported to a trade repository within 90 days of the Reporting Start Date. Derivative contracts that were outstanding on 16 August 2012 or which were entered into on or after 16 August 2012, and which are no longer outstanding on or after the Reporting Start Date must be reported to a trade repository within three years of the Reporting Start Date.

No postponement of starting date reporting obligations for exchange traded derivative contracts

ESMA proposed delaying the Reporting Start Date for exchange traded derivatives until 1 January 2015, in order for it to develop guidelines and recommendations to ensure a common, uniform and consistent application of the reporting obligation. However, the European Commission believes that postponing the Reporting Starting Date for exchange traded derivatives by almost one year would hinder the achievement of a key objective of EMIR, namely the identification, monitoring, assessment and mitigation of systemic risk arising from derivative contracts. For this reason, the European Commission does not intend to endorse the proposed amendment as submitted by ESMA.

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