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The EC has already released some Frequently Asked Questions on EMIR to clarify the timing and the scope of EMIR, together with certain issuers related to third country CCPs and trade repositories. In view of ESMA's statutory role to build a common supervisory culture by promoting common supervisory approaches and practices, ESMA has adopted this Q&As document which relates to the consistent application of EMIR. The first version of this document was published on 20 March 2013 and was updated on 6 June 2013 and 5 August. On 22 October 2013 TR question 10 was amended to clarify the use of LEIs for reporting purposes.
Updates:
Calculation of the clearing threshold (OTC Question 3): In the case of e.g. amortising swaps (i.e. swaps where a change of their notional at fixed points in time has been pre-determined) the updated notional needs to be taken into account when calculating the clearing threshold.
Risk Mitigation techniques for OTC derivative contracts not cleared by a CCP (OTC Question 12): Whereas all financial counterparties (including non-MiFID firms) must comply with the EMIR obligations, the requirements on Timely Confirmation, Portfolio Reconciliation, Dispute Resolution and Portfolio Compressions do not apply when one counterparty to the transactions is an entity established in the EU and exempted in accordance with Article 1 of EMIR. Further sub-questions look at which (special) entities need to report to which national competent authority (NCA).
Pension scheme exemption from the clearing obligation (OTC Question 16): If, after the three-year exemption period, pension schemes need to adhere to EMIR they only need to take into account such trades, which will be concluded after the exemption phase. This question also looks at the definition of “primary purpose of providing retirement benefits test”.
Segregation and portability (CCP Question 8): The new sub-question (h) clarifies that a CCP must – at a minimum – set up an omnibus segregated account in which only the positions and assets of the indirect clients of a client may be recorded. The CCP may also, at the request of a clearing member, set up individually segregated accounts in which the positions and assets of indirect clients of a client may be recorded, but there is no obligation to do so. It is also pointed out that non-EU clearing members of EU CCPs need to provide services to EU clients subject to the segregation requirements in Article 39, whereas EU clearing members of non-EU CCPs are not required to comply with Article 39 when offering client clearing on non-EU CCPs.
Reporting of collateral and valuation (TR Question 3): This new addition points out which price should be considered for the purpose of calculating the mark-to-market value of contract.
Portfolio Reconciliation (OTC Question 14): “For counterparties having to perform their portfolio reconciliation quarterly, the first one shall be made within one quarter from the date of application of Article 13 of the RTS on OTC derivatives (15 September 2013), i.e. before 15 December 2013.“
Further reporting © The OTC Space