European Market Infrastructure Regulation (EMIR)
On 16 August 2012, Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (European Market Infrastructure Regulation or EMIR) entered into force. On 17 June 2019, EMIR was amended by Regulation (EU) 2019/834 of the European Parliament and of the Council of 20 May 2019 (EMIR Refit).
EMIR applies to all financial counterparties (FC) such as credit institutions, investment firms or UCITS, and to non-financial counterparties (NFC) such as corporates, professionals of the financial sector that do not qualify as FCs or securitisation vehicles. Moreover, it applies indirectly to non-European counterparties trading with European counterparties.
EMIR lays down among others the following requirements:
- To report all derivatives contracts to a trade repository (TR) (Article 9 of EMIR);
- To assess a counterparty’s status compared to the clearing threshold and if relevant notify the CSSF and ESMA thereof (Articles 4a and 10 of EMIR);
- To centrally clear certain OTC derivative contracts (Article 4 of EMIR);
- To apply risk-mitigation techniques for OTC derivative contracts that are not centrally cleared through a central counterparty (CCP) (Article 11 of EMIR).
Nevertheless EMIR foresees certain exemptions for intragroup OTC derivative contracts:
- Exemption from the clearing obligation for certain asset classes (Article 4(2) of EMIR);
- Exemption from the bilateral exchange of margins (Articles 11(6) to 11(10) of EMIR);
- Exemption from the reporting obligation (Article 9(1) of EMIR).
In addition, EMIR sets out rules for the authorisation, the registration and the supervision of, as well as requirements applicable to, CCPs and TRs.
Notifications by financial counterparties and non-financial counterparties exceeding or ceasing to exceed the clearing threshold
Under Articles 4a and 10 of EMIR, as amended by EMIR Refit, where a counterparty (FC or NFC) does not calculate its positions against the clearing threshold, or when the result of the calculation exceeds the clearing thresholds, the counterparty is required to immediately notify the CSSF and ESMA.
The counterparty should also notify the CSSF and ESMA when it no longer exceeds the clearing thresholds.
For the notification to the CSSF, when a counterparty exceeds or no longer exceeds a clearing threshold, the interactive form available below shall be used. Modified or incomplete templates cannot be accepted for this purpose.
For the notification to ESMA please refer to the procedures described on the ESMA website under the section post-trading.
Notifications/applications for intragroup exemptions from central clearing
As defined in Article 4(2) of EMIR, FCs established in Luxembourg where the CSSF is the competent authority and NFCs established in Luxembourg can make use of the exemption from the clearing obligation for intragroup transactions in OTC derivatives contracts.
They have to notify or apply to the CSSF not less than 30 calendar days before the intended use of the exemption.
FCs and NFCs should use the interactive form available below.
Notifications/applications for intragroup exemptions from collateral exchange
As defined in Article 11(6) to 11(10) of EMIR, FCs established in Luxembourg where the CSSF is the competent authority and NFCs established in Luxembourg can make use of the exemption from the exchange of collateral obligation for intragroup transactions in OTC derivatives contracts.
They have to notify or to apply to the CSSF before the intended use of the exemption by using the form available below.
Notifications for intragroup exemptions from reporting
As defined in the third subparagraph of Article 9(1) of EMIR, FCs established in Luxembourg where the CSSF is the competent authority and NFCs established in Luxembourg can make use of the exemption from the reporting obligation for OTC contracts concluded with intragroup counterparties, where at least one of the counterparties is an NFC or would be qualified as a NFC if it were established in the Union.
They have to notify the CSSF not less than three months before the intended use of the exemption by using the form available below and send it filled by email to email@example.com.
Notifications by financial counterparties for outstanding disputes
FCs established in Luxembourg where the CSSF is the competent authority shall report to the CSSF any disputes between counterparties relating to an OTC derivative contract, its valuation or the exchange of collateral for an amount or a value higher than EUR 15 million and outstanding for at least 15 business days in accordance with Article 15(2) of Commission Delegated Regulation (EU) No 149/2013 of 19 December 2012.
For this notification FCs shall use the form available below.
Information by non-financial counterparties
The CSSF requires all NFCs that are not subject to prudential supervision, which conclude derivative transactions (OTC and ETD) to provide the CSSF with details of the person responsible for ensuring the on-going compliance with EMIR. For this purpose NFCs shall use the form available below to be sent (in excel format) by email to firstname.lastname@example.org.
Laws, regulations and directives
Other reference texts
10 November 2020 ESMA issues statement to address upcoming end of transition period with regards to reporting, recordkeeping, reconciliation, data access, portability and aggregation of derivatives reported under Article 9 of EMIR and Article 4 of SFTRPress release 20/22Press release
27 June 2019 Communication regarding the EMIR interactive form for the notifications by financial counterparties and non-financial counterparties exceeding the clearing thresholdPress release 19/27Press release
14 June 2019 Communication regarding EMIR Refit and the relevant ESMA Q&AsPress release 19/21Press release
8 April 2019 Communication with regards to the new EMIR Refit regimePress release 19/16Press release
1 February 2019 ESMA issues statement to address upcoming EMIR Refit implementationPress release 19/06Press release
20 December 2018 Communication with regards to EMIR reportingCommuniqué
13 July 2018 Communication with regards to EMIR reportingPress release 18/23Press release
11 May 2017 EMIR – Obligations of non-financial counterparties to derivative contracts – CSSF measures and prioritiesCommuniqué