Legal Updates

We highlight below some of the key developments under EMIR[1] which have occurred towards the end of 2022, including the implementation of the remaining aspects of the EMIR Refit[2] proposals.

1. New EMIR Refit reporting standards applicable to trades in derivatives commencing 29 April, 2024

As and from 29 April 2024, counterparties and trade repositories (TRs) will become subject to new reporting standards under EMIR[3] applicable to trades in derivatives.

The changes to the reporting framework will be significant. As such stakeholders (such as trade repositories, counterparties and their reporting delegates) will need to ensure that they are aware of, and are adequately prepared for, these changes.

Background

As part of EMIR Refit[4], the European Securities and Markets Authority (ESMA) was mandated to develop new technical standards concerning reporting, with a view to improving the quality of the data reported and transparency, and to align the reporting methodology with those of SFTR[5] and MiFIR[6] by requiring the use of ISO 20022 XML methodology.

New technical reporting standards

On 7 October 2022, six Delegated Regulations and Implementing Regulations containing regulatory technical standards (RTS) and implementing technical standards (ITS) respectively supplementing EMIR were published in the Official Journal of the European Union. ESMA published its Final Report on technical standards under EMIR Refit in December 2020.

The new technical reporting standards will start to apply from 29 April, 2024.

The new technical standards seek further alignment of data standards, formats, methods, and arrangements for reporting, as well as further harmonisation of the procedures to be applied by TRs for the validation of data reported as to their completeness and correctness and of the procedures for the reconciliation of data with other TRs. The standards also seek to require TRs to grant non-reporting counterparties access to all data reported on their behalf on reasonable commercial terms upon request.

Four of the technical standards amend the obligations and requirements imposed on trade repositories in terms of EMIR:

• Commission Delegated Regulation (EU) 2022/1856 amends the RTS laid down in Delegated Regulation (EU) No 151/2013 by further specifying the procedure for accessing details of derivatives as well as the technical and operational arrangements for their access. A copy of the RTS is available here;

• Commission Delegated Regulation (EU) 2022/1857 amends the RTS laid down in Delegated Regulation (EU) No 150/2013 as regards the details of the applications for registration as a trade repository and for applications for extension of registration as a trade repository. A copy of the RTS is available here;

• Commission Delegated Regulation (EU) 2022/1858 lays down RTS specifying the procedures for the reconciliation of data between trade repositories and the procedures to be applied by the trade repository to verify the compliance by the reporting counterparty or submitting entity with the reporting requirements and to verify the completeness and correctness of the data reported. A copy of the RTS is available here;

• Commission Implementing Regulation (EU) 2022/1859 amends the ITS laid down in Implementing Regulation (EU) No 1248/2012 as regards the format for applications for registration as trade repositories and for applications for extension of registration as trade repositories. A copy of the ITS is available here;

Two further technical standards amend the reporting standards applicable to derivatives reporting under EMIR as detailed below:

• Commission Implementing Regulation (EU) 2022/1860 lays down ITS for the application of EMIR with regard to the standards, formats, frequency, and methods and arrangements for reporting. The ITS focuses on data standardization as regards the format, collection and quality of data collection. A copy of the ITS is available here.

• Commission Delegated Regulation (EU) 2022/1855 lays down the RTS specifying the minimum details of the data to be reported to trade repositories and the type of reports to be used, the technical reporting requirements which will need to be met by counterparties, central counterparties (CCPs) and trade repositories. A copy of the RTS is available here.

New Guidelines on reporting issued by ESMA

On 20 December 2022, ESMA published a Final Report containing guidelines for reporting trades in derivatives and obligations for TRs under EMIR as revised (Guidelines).The Guidelines apply to financial and non-financial counterparties, to TRs and to national competent authorities (NCAs). The Guidelines seek to enhance the harmonisation and standardisation of reporting under EMIR contributing to the high quality of data necessary for the effective monitoring of systemic risk. They cover a wide set of topics relating to reporting, data quality and data access.

ESMA consulted on the draft guidelines in July 2021. Section 3 of the Final Report contains a summary of the feedback, together with ESMA's response.

The Guidelines will be translated and published in all EU languages and will apply from 29 April 2024.

A copy of the final report is available here.

New validation rules and XML EMIR Reporting Schemas

In addition to the Final Report, ESMA published updated validation rules on 20 December 2022. These set out detailed technical rules on how TRs should verify the completeness and accuracy of the reported data, as well as the conditions and thresholds to apply to determine whether the values reported by both counterparties match or not. ESMA also published XML EMIR Reporting Schemas for incoming messages and outgoing messages on that date. A copy of the validation rules and such schemas are available on ESMAs updated webpage entitled “EMIR Reporting” available here.

New requirement to report to NCAs in case of significant reporting issues

ITS 2022/1860 introduces a new requirement for an entity that is responsible for reporting under EMIR to notify its NCA (and, if different, the NCA of the reporting counterparty) of certain types of significant errors or omissions in its reporting, as soon as it becomes aware of them. The Guidelines clarify in what circumstances an issue is deemed significant and becomes reportable to the NCAs. In addition, ESMA has published a template for submitting these notifications to the NCAs that have decided to adhere to this template. Notifications to NCAs should be reported in accordance with the procedures adopted by each relevant Member State.

2. Increase in clearing thresholds relating to the commodity derivatives

On 28 November 2022, Commission Delegated Regulation (EU) 2022/2310 (Delegated Regulation) amending RTS laid down in Delegated Regulation (EU) 149/2013 relating to the commodity derivative clearing thresholds under EMIR was published in the Official Journal.

This Delegated Regulation amends the clearing thresholds contained in Commission Delegated Regulation (EU) 149/2013 by increasing the clearing threshold for commodity derivatives from €3 billion to €4 billion.

The Delegated Regulation applies from 29 November 2022.

As a result, the clearing thresholds are now:

• EUR 1 billion in gross notional value for credit derivative contracts;
• EUR 1 billion in gross notional value for equity derivative contracts;
• EUR 3 billion in gross notional value for interest rate derivative contracts;
• EUR 3 billion in gross notional value for foreign exchange derivative contracts; and
• EUR 4 billion in gross notional value for commodity derivative contracts.

A copy of the Delegated Regulation is available here.

3. Collateral requirements for central clearing

On 28 November 2022, Commission Delegated Regulation (EU) 2022/2311 (Delegated Regulation) amending the RTS laid down in Delegated Regulation (EU) 153/2013 relating to temporary emergency measures on collateral requirements under EMIR was published in the Official Journal.

This Delegated Regulation amends the Commission Delegated Regulation (EU) 153/2013 to temporarily expand the pool of eligible collateral that CCPs can accept to include uncollateralised bank guarantees for non-financial counterparties acting as clearing members and public guarantees for all types of counterparties (subject to certain conditions).

This Delegated Regulation applies from 29 November 2022 and its provisions expire on 29 November 2023.

A copy of the Delegated Regulation is available here.

General Queries

If you have any questions or require assistance, please contact the authors or your usual Dillon Eustace contact.

Footnotes:

[1] Regulation (EU) No 648/2012 as regards the clearing obligation, the suspension of the clearing obligation, the reporting requirements, the risk-mitigation techniques for OTC derivative contracts not cleared by a central counterparty, the registration and supervision of trade repositories and the requirements for trade repositories

[2] Regulation (EU) 2019/834 amending EMIR

[3] No 1.

[4] No 2.

[5] Regulation (EU) 2015/2365 of the European Parliament and of the Council of 25 November 2015 on transparency of securities financing transactions and of reuse

[6] Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments