CCP-cleared trades terminated - not modified (in EMIR reports)
- Category: EMIR
Where an existing contract is subsequently cleared by a CCP, it mustn't be reported under EMIR to the trade repository as a modification of the existing contract, but the original contract should be flagged as terminated and the new contract resulting from clearing should be reported.
This is the essence of ESMA's recent draft amendments with respect to EMIR reporting of derivatives subject to clearing.
It will be also expressly stipulated by the law that when a contract is concluded in a trading venue and cleared on the day of execution, only its cleared form will be reported.
Brokers as reporting agents under REMIT
- Category: REMIT
Brokers role in the REMIT reporting framework appears somewhat complex. Let alone entirely different structuring of executing brokers and the clearing ones (where the clearing brokers have been placed - fundamentally - outside the REMIT market participants' scope), the reporting of life-cycle events with respect to trades executed with the broker's participation requires a careful reflection.
Another problematic case emerges when the firm has two different types of business - is an executing broker (exchange member) and is also an organised market place (it runs a broker platform). Recent updates to the ACER's reporting manuals offer some help while resolving these issues.
REMIT reporting - derivatives traded in the EU with a delivery outside the EU
- Category: REMIT Reporting Database
From the group of derivatives of contracts related to electricity/natural gas (a) produced, (b) traded or (c) delivered in the European Union, only those that also relate to the supply of electricity/natural gas with delivery in the European Union are reportable under REMIT.
MiFID II position limits regime - be mindful of EEOTC (Economically-Equivalent OTC Contracts)!
- Category: MiFID
Among multiple issues involved with applying MiFID II position limits the most prominent appears that there is no ex ante certainty on whether contracts are recognised as EEOTC before entering into transactions.
Benefits from trade repositories having an RRM functionality - areas for residual risk
- Category: REMIT
Are you completely certain on what occasions your energy supply and derivatives contracts must be reported to ACER and not to the trade repository?
Surprised? It may mean you are at risk of non-compliance...
Client relationship brings bonuses under REMIT
- Category: REMIT
As the latest version of the ACER's reporting guidelines acknowledges, the client participation in the trading venue not involving a membership does not entail a reporting requirement for the client under REMIT.
Day-ahead contract is a "forward style"?
- Category: REMIT
Do you identify differences between "forward contract" and "forward style contract"? No? You should start doing this. Since "forward style contract" can equally be a spot and your REMIT transaction reports may occur flawed.
Our REMIT magnifying glass - check whether your transparency website uses RSS feed!
- Category: REMIT
There are first regulatory interventions sanctioning improper disclosure of REMIT inside information, in particular, regarding the power plant unplanned unavailability.
It shouldn't be a surprise since the necessary content of such disclosure is sometimes missing.
The key dates approaching are 7 April 2016 and 7 July 2016.
Risk-reducing transactions more transparent
- Category: MiFID
Non-financial companies are required to include in their internal policies "measures to ensure" that the risk-reducing transactions serve no other purpose than covering risks directly related to the commercial activities of the non-financial entity, and that any transaction serving a different purpose can be clearly identified.
If they still want to remain non-financials, obviously…
The clock starts ticking to be authorised under MiFID II
- Category: MiFID
Overall, when it comes to transitory issues, it is useful to note that for an anciliary activity exemption the clock has started ticking as from July 2015 i.e. well before 2017, which is is the date when MiFID II will enter into force.
It follows, the trading activity executed as from July 2015 must be assessed against the relevant thresholds.
Hedging - tornado approaches
- Category: EMIR
Clearing thresholds' calculations are quite complicated - partially on account of requirement to classify all OTC derivatives transactions as hedging or non-hedging (which fatigue applies even to the smallest counterparties).
There is a chance, in the foreseeable future the companies' procedures setting the company's position versus clearing threshold may become simpler, but this novelty unnecessarily would mean less regulatory burden.
Individual client accounts uneasy take-up
- Category: EMIR
Why do firms choose omnibus client accounts ignoring better protections offered by the individual form of segregation?