What is mandatory delegated reporting?
Article 9(1)(a) UK EMIR requires non-financial counterparties (NFCs) who benefit from mandatory delegated reporting when trading derivatives with a financial counterparty (FC) to report both sides of their trades with NFC- entities, unless the NFC- entity has specifically requested otherwise. This reduces the burden on smaller non-financial counterparties.
This differs when a UK NFC- entity trades with an Australian broker. Since the Australian broker is located in a third country, the broker does not have the obligation to report under UK EMIR. Hence, the UK NFC- entity is unable to delegate its reporting and is responsible to report the trade to a UK Trade Repository.
What happens post-Brexit?
Post-Brexit, EU EMIR ceased to be applicable in the UK. As such, UK now constitutes a third country under EU EMIR and EU countries are third countries under UK EMIR.
This means that UK NFC- entities who enter into OTC derivates with EU FCs no longer benefit from the mandatory delegation of reporting under UK EMIR. Hence, the UK NFC- entity will need to report these trades to a UK Trade Repository.
A Publication on mandatory delegated reporting for UK EMIR can be found on the FCA website.
|UK EMIR||EU EMIR|
|EU countries are now third countries in UK.||UK is now a third country in EU.|
|It is mandatory for UK FCs to report under UK EMIR.||It is mandatory for EU FCs to report under EU EMIR.|
|UK NFC- entities who enter into derivatives with EU FCs are responsible to report under UK EMIR.||EU NFC- entities who enter into derivatives with UK FCs are responsible to report trades to EU EMIR.|
|UK NFC- entities who enter into derivatives with UK FCs are able to delegate their reporting to UK FCs.||EU NFC- entities who enter into derivatives with EU FCs are able to delegate their reporting to EU FCs.|
Here’s a real-life example
ABC Limited Partnership is an NFC- entity established in the UK, whom has entered into an equity swap contract with an EU FC. Given that their counterparty is located in a third country, ABC Limited Partnership is required to report this trade to a UK Trade Repository under UK EMIR.
How can we help?
At TRAction, we are a specialised third party delegated reporting entity who can assist you in submitting your transactions to the designated Trade Repository.
Please contact us if you would like to know more about how to simplify your reporting.