Current EMIR regime 

The current EMIR regime encompasses three main regimes:

• The European Market Infrastructure Regulation – Regulation (EU) No 648/2012 of the European Parliament and Council of 4 July 2012 on OTC derivatives, central counter-parties and trade repositories (EMIR) requires parties entering into over-the-counter derivatives and exchange-traded derivatives to report the detail of those contracts to a registered or recognised trade repository on a T+1 basis where they are in scope. 
• UK EMIR is the UK's on-shored version of EMIR following Brexit.
• EMIR Refit refers to Regulation (EU) No 2019/834 of the European Parliament and of the Council of 20 May 2019 amending 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. 

In summary, what is changing? 

With effect from 29 April 2024 for EMIR and/or September 2024 for UK EMIR, and depending on which regime is applicable to you, you'll need to be aware of enhanced reporting requirements. These apply as a result of amendments to EMIR Refit by way of Commission delegated regulations (EU) 2022/1855 and 2022/1860.

Why is 2024 an important year? 

In the world of EMIR and specifically EMIR Refit, 2024 is an important year. The European Commission's "Refit" programme is part of the European Commission's "Better regulation" agenda, specifically its "Regulatory Fitness and Performance programme". The EMIR Refit (both in the EU and UK) relates to broadly three areas (1) clearing for over-the-counter derivative products, (2) mitigation techniques (such as the obligation to exchange collateral and post margin) and (3) reporting obligations. The 2024 implementation of the EMIR Refit will substantially impact the existing approach to reporting and will require firms subject to EMIR to make sure they understand the changes and are ready to meet the reporting deadlines; day one compliance is expected.

It is possible for many derivative counterparties that both EMIR and UK EMIR regimes apply. Whilst the changes under both regimes are likely to be similar, they will not be exact (eg in relation to the new misreporting notification obligation) so counterparties need to continue ensuring compliance under both, as required. The Financial Conduct Authority (FCA) as the competent authority for UK EMIR, has published final versions of the UK EMIR Validation Rules and XML schemas on their reporting webpage and have various guidance notes to help counterparties.

What are the key changes? 

In high level terms, some of the key changes being implemented under EMIR this year are:

• More reporting fields: there will be an increased number of fields on which counterparties must report, bringing with it greater complexity and volume of data to be checked. The new technical standards contain 74 more reporting fields for EMIR and some of the existing reporting fields have been amended. Counterparties need to familiarise themselves with the updated reporting requirements and make sure they are able to source and report the additional information in a timely manner.
• ISO certification: reporting will need to be made in .xml message format, compliant with ISO20022 certification. This is the standard of communication for financial data already used under regimes such as MIFID but it will soon also apply for reporting under EMIR. Counterparties need to make sure that they are set up internally for this change. 
• UPI: All derivative products will need a Unique Product Identifier (UPI) (unless already identified by an ISIN code). The Derivatives Service Bureau will issue the UPI codes so counterparties need to make sure they are onboarded to the UPI platform and are ready with their UPI code. The requirements for a Legal Entity Identifier (LEI) remains – counterparties need to remember to keep them up to date. There is also going to be a greater emphasis on Unique Transaction Identifiers (UTIs) and their generation; parties need to make sure they understand who is responsible for generating the UTIs on each derivative transaction.
• Misreporting obligation: Counterparties are obliged to notify any misreporting under EMIR to the relevant competent authority (which is the FCA under UK EMIR). Under UK EMIR, any material errors or omissions in reporting need to be reported to the FCA. Currently there is no guidance as to what might constitute a "material" error or omission. 

What do you need to do? 

Do you have outstanding derivatives? In the EU, counterparties have until 26 October 2024 and in the UK, counterparties have until 31 March 2025 to re-report on their outstanding derivatives. However, if trade details need to be updated or amended during the "transition" period, counterparties should report their trades under the new rules coming into effect this year. 

Delegated reporting does not mean you won't be affected by the latest implementation of EMIR Refit. Post EMIR Refit, non-financial counterparties (specifically NFC- counterparties) entering into derivative contracts with a financial counterparty requires the financial counterparty to report on behalf of the NFC- (subject to certain exceptions). Even though there is this mandatory delegation and that counterparties can, in certain instances, contractually delegate reporting, each party retains legal responsibility for its own reporting. Oversight on reporting is key; notwithstanding any delegation (whether contractual or mandatory), counterparties may need to make their own notifications to their regulator.

Find out more

To discuss the issues raised in this article in more detail, please contact a member of our Banking and Finance team.