Under EMIR trading counterprties have the obligation to report derivatives trades, valuation and collateral data to a designated Trade Repository. Both counterparties must report, however one party (delegor) may delegate its reporting obligation to the other party (delegee). In this event the delegor is still responsible for the data quality, and must monitor the data submitted by the delegee to a Trade Repository.
A unique feature of EMIR is that a trade can be reported to multiple trade repositories. This has caused significant data challenges, and financial firms are taking steps to implement compliance and data quality/reconciliation programs.
Under EMIR the derivatives trade reporting frequency is an end-of-day snapshot reported by T+1. This differs from intraday reporting in the U.S. under CFTC / Dodd-Frank regulations.
EMIR essentially applies to all market participants trading derivatives in the European Union, including banks, asset managers, alternative investment funds (AIFs / AIFMs), pensions, custodians, corporates, small traders, etc. EMIR has vast coverage across firms and products.
All derivative products are covered including over the counter (OTC) and exchange-traded derivatives (ETD).
There are particular exceptions to EMIR’s reporting requirements, including:
- FX trades settling < T+2 (FX spot and forwards)
- Commercial hedging in UK (producers / consumers)
- Central banks
- Quasi-banks (e.g. EBRD)
- Non-EU countries (e.g. Switzerland)
As of mid-2014 Central Clearing of vanilla swaps not yet required under EMIR, which is different than in the U.S. under CFTC / Dodd-Frank.