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EMIR Refit reporting changes update

June 9, 2020


Our regulatory advisors answers how the reporting changes under EMIR Refit, taking effect in June 2020, will affect corporates, special purpose entities, and holding companies, now classified as NFCs-.

Changes to the EMIR reporting rules will become effective on 18 June 2020, as a result of the EMIR Refit which became law last year. After the changes take effect in June, European banks, and more specifically European financial counterparties (FCs), will become solely responsible and legally liable for reporting on behalf of European non-financial counterparties below clearing threshold (NFCs-) and for ensuring the correctness of reported details. Corporates, special purpose entities, and holding companies are among the types of entities that are generally classified as NFC-s under EMIR. For the banks to take over the reporting responsibility, NFCs- will need to supply basic entity information upon their bank’s request.

While EMIR Refit provides for the mandatory reporting delegation, it also allows the NFC-s to opt out from the mandatory delegation. If the NFC- chooses to opt out, it can continue to report on its own behalf following the notification of its decision to do so to the relevant banks. Both parties can also contractually agree that the bank will be responsible for reporting only new OTC derivative transactions concluded as from 18 June 2020 with old transactions remaining subject to the old reporting arrangements.

Frequently asked questions

Are banks terminating existing delegated reporting agreements?

The majority of the existing delegated reporting agreements are not suitable to use under the mandatory delegation regime and therefore we expect banks to either amend or terminate these agreements.

What determines whether an entity is NFC- under EMIR

An NFC- is a nonfinancial counterparty that has outstanding group wide speculative derivative transactions with a gross notional value that does not exceed €1 billion for credit and equity derivatives or €3 billion for rates, FX, and commodity transactions. Under the EMIR Refit, a non-financial counterparty whose group wide speculative derivatives exposure exceeds only one category (e.g., credit derivatives), will only be considered to be an NFC+ for that category and will be an NFC- for the others.

What action do I need to take on behalf of my NFC- entity regarding reporting of a new transaction after June 18th?

Banks can by default assume that they are reporting on behalf of NFC- entities since they now will have that legal responsibility under the EMIR Refit. We therefore recommend that you notify your bank counterparty if you wish to continue to report on your own behalf. In practice, we expect that most banks will proactively reach out to their NFC- counterparties anyway to confirm whether they want to delegate the reporting to them.

If your bank counterparty will assume the reporting obligation, the NFC- will need to provide certain information to the bank that the bank cannot be reasonably expected to know. This information includes the LEI for the NFC-, the NFC-’s corporate sector, whether the trade is linked to commercial activity or treasury financing, whether the NFC- is acting in the capacity as a principal or agent, and the entity’s EMIR classification, among other fields.

Are NFC- entities mandated to maintain active LEIs now?

Under EMIR, an active LEI is required upon entering into a derivatives transaction and upon any lifecycle event (partial or full termination, novation, etc.) by an NFC- entity, and this requirement hasn’t changed under new rules. The European Securities and Markets Authority (ESMA) has provided recent guidance that it expects an NFC- to ensure that its LEI is valid and duly renewed so that the FC can satisfy the reporting obligation on behalf of the NFC-.

Does my NFC- entity have a reporting obligation when facing a non-EU bank or an EU branch of a non-EU bank?

If an EU NFC- entity is either facing a third-country bank or its European branch, the EU NFC- will not be responsible and legally liable for reporting as long as such non-European bank or a European branch of the non-EU bank reports the transaction in its own jurisdiction and that jurisdiction has been declared equivalent under EMIR. To date no such equivalence decision has been made and consequently the EU NFC- remains responsible for reporting its derivative transactions under EMIR for transactions with non-European banks or European branches of non-EU banks.

What are the AIFs/manager’s reporting responsibilities under EMIR Refit?

Under EMIR, a European alternative investment fund (EU AIF) is still required to report its derivative transactions. The EMIR Refit has shifted the responsibility and legal liability for ensuring that an AIF’s derivative transactions are reported correctly from the AIF to the AIF’s manager.

Do I need to continue to report my intragroup transactions under EMIR Refit?

Intragroup transactions are no longer required to be reported by an NFC, where: (1) both counterparties are consolidated; (2) both counterparties are subject to a centralized risk management system; and (3) the sponsor/parent undertaking is not an FC. This relief is not automatic however. To take advantage of this relief under the EMIR Refit, NFC entities must file an exemption with their national competent authority (NCA).

In addition, ESMA has issued an opinion interpreting this reporting exemption such that only corporate groups where the parent entity is domiciled in the EU can avail themselves of the exemption. This means that, for now, those NFC entities whose parents are domiciled outside of the EU must continue reporting their intragroup trades.

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About the author


Chatham Hedging Advisors, LLC (CHA) is a subsidiary of Chatham Financial Corp. and provides hedge advisory, accounting and execution services related to swap transactions in the United States. CHA is registered with the Commodity Futures Trading Commission (CFTC) as a commodity trading advisor and is a member of the National Futures Association (NFA); however, neither the CFTC nor the NFA have passed upon the merits of participating in any advisory services offered by CHA. For further information, please visit

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