The European Securities and Markets Authority (ESMA) has published much-needed guidance on how reporting obligations in the European market infrastructure regulation (EMIR) will be applied to exchange-traded derivatives.
Exchange-traded derivatives are already subject to reporting obligations under MiFID and market participants had complained about a lack of clarity on how this would be affected with EMIR deadline for reporting rapidly approaching.
In an update to its Q&A document, ESMA said to ensure consistency and avoid conflicts with the EMIR and MiFID regimes, the two should be aligned to the maximum extent possible, including which counterparties submit the reports.
As such, entities that are deemed to have a reporting deadline at the conclusion of a contract will include: the central counterparty (CCP) clearing the trade; clearing members of the CCP that are clearing the trade; the MiFID-regulated firm executing the trade on a trading venue of which it is a member; and counterparties that do not fall into the above but which are not exempted by their status.
All of the above must report a derivative contract they have concluded with any other market participant.
When an entity fulfills more than one of the roles, such as an investment firm that is also a clearing member, only one report will need to be submitted, rather than separate reports for each role.
In cases where an investment firm is not a counterparty and is only acting on behalf of a client to execute or transmit an order, they will not be expected to report under EMIR.
Additionally, transaction reference numbers, required for reports under EMIR, will not need to be the same as transaction reference numbers reported for MiFID.
Reporting of derivatives trades under EMIR is set to begin on 12 February 2014 and covers both OTC trades and exchange-traded derivatives.