Beware of derivatives' reporting when you establish yourself in the EU!
- Category: EMIR
ESMA latest EMIR Q&A October edition brings an important clarification on derivatives' reporting duties placed by the EMIR Regulation on the businesses relocated into the EU.
The EU financial authority explained the regulatory stance with regard to the following issue:
"Are third country entities (not subject to the reporting obligation when it came into force on 12 February), that have subsequently become financial counterparties in the EU (due to re-location or because they are managed by an AIFM which becomes authorised or registered under AIFMD), required to report trades that were entered into before they became subject to EMIR?"
So, the answer is:
"Yes. When a counterparty to a derivative contract that is outstanding establishes itself in the EU it becomes subject to the reporting obligation. This applies to all outstanding contracts, so that such counterparty's risks are known in the EU where that entity is now based. Non-reporting of those outstanding contracts would represent hidden risk that would be contrary to the EMIR / G20 reform objectives."
The logical implication is, before the relocation into the EU is effected due diligence process within the financial institution needs to identify and establish whether there are any derivatives contracts outstanding and ensure they are reported to the trade repository within the required deadlines.
Read more on the EMIR reporting requirements...
Repo not for EU ETS operators
- Category: MiFID
It looks like a repo transaction with the use of emission allowances will no longer be available for EU ETS operators beyond 2016 (MiFID II entry into force).
MiFID paradoxes
- Category: MiFID
The firm making use of the MiFID II ancillary activity exemption (Article 2(1)(j)) in parallel with dealing on own account exemption (Article 2(1)(d)) is allowed to be a member of or a participant in a regulated market or MTF. True of false?
C6, C7 - financial market secret code
- Category: MiFID
Those, who have expected recent ESMA draft Guidelines on the application of C6 and C7 of Annex I of MiFID bring some discoveries to their day-to-day trading practice must feel somewhat disappointed.
Commodity derivatives under special supervision
- Category: MiFID
Are you sure your commodity derivatives trading does not exceed the allowable position limit?
Red alert for combustion plants below 50 MW
- Category: MCP Basics
The approximate number of 142,986 of medium combustion plants in the European Union will have to adapt to new rules.