The European Securities and Markets Authority (ESMA) published the eleventh version of its “Questions and Answers” on EMIR implementation (EMIR Q&A) on October 24. The updated EMIR Q&A responds principally to questions that have been raised in respect of meeting applicable trade repository (TR) reporting requirements.
Of note, ESMA has now clarified that any third country firm not originally subject to EMIR trade reporting obligations that subsequently becomes a financial counterparty subject to EMIR—for example as a consequence of relocation to the EU or because it is an investment fund managed by an alternative investment fund manager that becomes authorized under the EU Alternative Investment Fund Managers Directive—must comply with the EMIR reporting obligation in respect of all outstanding derivatives contracts. In addition, the updated EMIR Q&A distinguishes between reporting of block trades by investment firms that are subsequently allocated—where the block trade and the subsequent allocations must be reported—and block trades concluded by a fund manager not subject to a reporting obligation. In the latter case, if the block trade is allocated to the manager’s individual funds on the trade date, only the allocations need to be reported, whereas if the block trade is not allocated on the trade date, the block itself must be reported with the fund manager as counterparty.
The updated EMIR Q&A also addresses certain outstanding operational issues. For example, ESMA has now set out its recommended approach for establishing the responsibility to generate a unique trade identifier as well as a method for determining which party is the “seller” and which the “buyer” on physically delivered foreign exchange forwards and swaps.
The updated EMIR Q&A is available here.