From 12 February 2014 all counterparties need to report details  of any derivative contract (over the counter or exchange-traded)  they have concluded, or which they have modified or terminated,  to a registered or recognised trade repository (TR) in accordance  with the reporting requirements contained in the European Markets  Infrastructure Regulation (EMIR).

EMIR is the name given to The Regulation on OTC derivative  transactions, central counterparties and trade repositories  (Regulation (EU) No. 648/2012) which is intended to require that  counterparties to derivatives contracts adhere to certain reporting  and risk mitigation obligations and, in some cases, to centrally clear  those derivatives transactions.

The obligations arising out of EMIR are being adopted in stages,  with the first set of obligations (in relation to timely confirmation of  trades and requiring non-financial counterparties to notify ESMA  and the FCA, as competent authority in the UK, if they take financial  positions which exceed the relevant “Clearing Threshold”) having  come into force on 15 March 2013. Since 15 March, certain other  obligations have come into effect. More information on these other  obligations is available on our Publications section.

Reporting - timing

EMIR requires that all counterparties ensure that details of any  derivative contract (whether over-the-counter or otherwise) they  have concluded, and of any modification or termination of a  derivative contract, are reported to a trade repository (TR).

By no later than the day on which a derivative contract is concluded  details of that contract are required to be reported to a TR that has  been registered for the purpose of EMIR. In addition, however, the  reporting requirement also applies to the modification or termination  of a derivative contract and applies to all such contracts that have  been entered into since 16 August 2012 or that were entered into  prior to 16 August 2012 and that were outstanding on that date  (provided that if they have ceased to be outstanding on the relevant  reporting start date (see below) they must be reported within 3  years of the relevant reporting start date).

The start date for the requirement to report is staggered, with the  requirement having effect from 1 July 2013 with respect to credit  and interest rate derivatives and from 1 January 2014 with respect  to all other derivatives. However, in each case that start date was  subject to the availability of an appropriate registered TR.

In practice, the first registration of TRs was not effective until 14  November 2013 (i.e. after the relevant start dates) and because  of that delay, in accordance with the terms of EMIR the reporting  obligations will arise 90 days after 14 November 2013, so 12  February 2014 is the effective date.

Reporting - details

Parties do not have to send copies of each derivative contract to  the TR. The details sent to the TR should, however, encompass  all elements related to the derivative trade that are relevant for  regulatory purposes under EMIR, with particular emphasis on  measurement and mitigation of systemic risk. The details to be  reported are specified in regulatory technical standards adopted  on 19 December 2012 and set out in the Commission Delegated  Regulation (EU) No. 148/2013.

EMIR requires that details of the derivative contract must be reported  without duplication. Accordingly, and because EMIR permits reporting  to be delegated, we anticipate that many corporate counterparties  will enter into arrangements with their bank counterparties such that  reporting is conducted by the bank counterparty. It should be noted  however that, notwithstanding any such delegation, the primary  obligation to report remains with each counterparty.

Legal Entity Identifier

The details to be provided to the TR include, amongst other things,  the Legal Entity Identifier (LEI) of each counterparty or, if one is not  available, an interim entity identifier.

In the UK, LEIs are able to be allocated by the London Stock  Exchange. Details of the application procedure and costs involved  are available on their website: http://www.lseg.com/LEI

To ensure compliance with the regulations it will be essential that an  LEI is obtained as soon as possible.

Record Keeping

In addition to the obligation to report details of any derivative  contract upon its conclusion, modification or termination, EMIR also  requires counterparties to keep a record of any derivative contract that they have concluded or modified for at least five years following  its termination.

No detail has been published or is available from ESMA or  the FCA as to the information which must be maintained by a  counterparty for this purpose nor to which derivatives contracts (in  particular, in relation to when such contracts were concluded) this  obligation applies.

ISDA Protocol

To assist counterparties to comply with their reporting obligations,  ISDA has published the ISDA 2013 Reporting Protocol. The effect  of the protocol is to ensure that each counterparty has consented to  the disclosure of information to ensure that reporting of information  under EMIR will not breach data protection requirements.

However, the protocol does not, for example, document a process  by which information is reported or contain an agreement to  delegate reporting to one counterparty. Similarly, the protocol will  not assist to implement an appropriate record keeping system.

Accordingly, although execution of the protocol, or incorporation  of its principals, will assist counterparties, it will not of itself be  sufficient to satisfy the requirements of EMIR.