Are You Ready to Report? European Market Infrastructure Regulation (EMIR) Derivatives Reporting Obligation Becomes Effective on February 12, 2014

January 29, 2014

Updated on March 11, 2014

On February 12, 2014, derivatives reporting obligations under the European Market Infrastructure Regulation ("EMIR")[1] came into force with immediate effects on all derivatives counterparties that fall under the scope of EMIR.  As a result of these new trade reporting obligations, many derivatives counterparties that do not have reporting obligations or are exempt from such obligations under the laws of other jurisdictions, such as the United States, find themselves subject to reporting requirements under EMIR.

EMIR is the EEA’s[2] equivalent of Title VII of the U.S.’s Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ("Dodd-Frank").[3]  Both EMIR and Dodd-Frank share the same origins in the 2009 G20 post-crisis reform agenda, and introduce requirements aimed at reducing counterparty risk and improving transparency in the OTC derivative markets.[4]  Like Dodd-Frank’s requirements to report swap transaction data to a swap data repository, EMIR has a similar requirement to report swap transaction data, including historical swap data, to a registered trade repository ("TR").  However, requirements for two-sided reporting, intragroup (i.e., inter-affiliate) transaction reporting and documentation, among other things, could prove to be challenging undertakings for many market participants (especially corporate end-users, which are subject to more onerous reporting obligations under EMIR than Dodd-Frank due to the absence of a single-counterparty reporting system).

This alert summarizes the EMIR trade reporting obligation, what affected entities should be doing to comply, cross-border concerns and potential risks of noncompliance with the EMIR reporting requirements.


Conflicts exist between the reporting requirements under EMIR and the Dodd-Frank Act.[5]  Unlike the Dodd-Frank Act, which places reporting requirements on swap dealers, major swap participants and financial entities, EMIR places reporting requirements on both parties to a swap.  Accordingly, all entities that are subject to EMIR, including derivatives end-users, have reporting requirements under EMIR for both external derivatives and intragroup derivatives.[6]  While an entity can delegate its reporting obligations, it would still carry the regulatory burden of ensuring the data is appropriately reported. 

Additionally, derivatives end-users are eligible for no-action relief from reporting requirements under the Dodd-Frank Act for intragroup derivatives (CFTC Letter No. 13-09).  EMIR does not have such relief and, accordingly, derivatives end-users subject to EMIR are required to report swap data for intragroup derivatives transactions to a TR no later than the end of the next business day following the conclusion, modification or termination of such transactions (i.e., within T+1).  This means before entering into intragroup derivatives with EEA affiliates, derivatives end-users should follow the steps described below to ensure that they are connected and ready to report intragroup derivatives to a TR. 

We are still awaiting final equivalency determinations from the European Commission to determine to what extent compliance with the Dodd-Frank Act will satisfy EMIR requirements in the case of cross-border transactions.  While the CFTC has provided no-action relief for certain entities, namely with respect to the reporting of intragroup derivatives transactions under CFTC Letter No. 13-09, the European Commission has indicated that it will adhere to the policy that the "strictest rule applies" making the importation of CFTC no-action relief unlikely as part of an EMIR equivalency determination.  Accordingly, entities, including derivatives end-users, are  required to report intragroup derivatives and external swaps under EMIR to the extent that one or more affiliates entering into the derivatives contract is located in an EEA member state. 


Under EMIR, all counterparties and central counterparties ("CCPs")[7] must ensure that details of any derivative contracts are reported to a TR within one working day of its execution or the occurrence of a subsequent life-cycle event. 

[8]  The purpose of the reporting requirement is to ensure that information on the risks inherent in the OTC derivatives markets will be centrally stored and easily accessible to the European Securities and Markets Association ("ESMA"), regulators and relevant central banks. 

Scope of the Reporting Obligation:

  • Which derivatives are covered? 
    • The reporting obligation applies to all EMIR derivatives contracts, whether cleared or non-cleared, OTC or exchange-traded.[9]  EMIR looks to the definitions of derivatives in MiFID.  Specifically, EMIR considers a "derivative" or "derivatives contract" to mean "a financial instrument as set out in points (4) to (10) of Section C of Annex I to Directive 2004/39/EC as implemented by Article 38 and 39 of Regulation (EC) No 1287/2006."[10]
    • The reporting requirements cover derivatives in all asset classes (interest rates, credit, foreign exchange ("FX"), equities and other commodities).[11]  However:
      • FX spot transactions are not considered derivatives and are therefore not subject to the reporting obligation (the same would be true for spot transactions in other asset classes).
      • There is some disagreement amongst regulators as to whether or not FX forwards are derivatives and would be subject to the reporting obligations.  The issue has arisen because the definition of "derivative" in EMIR cross references the definition to MiFID,[12] which was a directive (i.e., a piece of European Union legislation that does not have direct effect—as is the case with a regulation, such as EMIR—but only sets out a framework for corresponding local law, which must then be implemented by each member state introducing detailed local legislation).
        • The United Kingdom’s Financial Conduct Authority ("FCA") has provided guidance explaining that FX forwards that are entered into for commercial purposes rather than for investment will not be treated by the FCA as subject to EMIR as a matter of local law.  Furthermore, the FCA has explained that if one or both counterparties choose to voluntarily report an FX forward contract it will not consider that report to bring the contract in scope of the other EMIR requirements.  However, the FCA has cautioned that counterparties are individually responsible for determining whether their United Kingdom FX forward contracts have been entered into for commercial purposes according to applicable local legislation.[13]  However, note that other EEA member states do not have similar guidance, so FX forwards would be in scope of EMIR and subject to the reporting obligation by relevant local regulators.
        • More recently, Luxembourg’s National Competent Authority, Commission de Surveillance du Secteur Financier ("CSSF"), issued a press release indicating that "[u]ntil clarification is provided on the definition of currency derivatives in relation to the frontier between spot and forward as well as to their conclusion for commercial purposes, and on the definition of commodity forwards that must be physically settled, the CSSF will not ensure the implementation of the relevant provisions of EMIR for forex derivatives up to 7 days, forex derivatives for commercial purposes, and physically settled commodity forwards, since those contracts are not clearly identified as derivatives contracts across the European Union."[14]
        • ESMA has requested that the European Commission provide clarification on the scope of FX forwards.  ESMA explains in a letter to the European Commission "that, until the Commission provides clarification, and to the extent permitted under national law, National Competent Authorities will not implement the relevant provisions of EMIR for contracts that are not clearly identified as derivatives contracts across the [European Union], in particular FX forwards with a settlement date up to 7 days, FX forwards concluded for commercial purposes, and physically settled commodity forwards, as identified in the annex [to the letter]."[15]  While ESMA has requested this clarification from the European Commission, it is not clear of the timing of any European Commission response to such a request. 
  • To which entities does the reporting obligation apply?
    • The reporting obligation applies to all entities that are subject to EMIR that enter into a derivative or derivative contract (as described above).  This would include entities that are organized under the laws of an EEA member state.  This includes financial counterparties ("FCs"), nonfinancial counterparties above the clearing threshold ("NFC+s") and nonfinancial counterparties below the clearing threshold ("NFC-s", together with NFC+s, "NFCs").[16]
  • Which counterparties must report? 
    • Under EMIR, both counterparties to a derivatives contract are required to report key details to a TR to the extent that such parties are within the scope of EMIR.  This would include both FCs and NFCs.
    • If there is a transaction between an EEA-based entity and a counterparty based outside the EEA (including an intragroup derivatives transaction), the EEA-based counterparty has the reporting obligation and needs to report the transaction data to the TR.  The EEA-based entity needs to make note on the "counterparty data" section of its report to the TR that its counterparty is a non-EEA counterparty.
  • Are intragroup derivatives transactions required to be reported to a TR?
    • Yes.  There is no exemption from the reporting obligation for intragroup derivatives transactions between two affiliates.  Accordingly, to the extent that one affiliate is in scope of EMIR, they should be reported in the same manner as other trades and there should be an indication that such trades are intragroup trades when reporting.
    • However, transactions between two desks or two branches within the same legal entity are not required to be reported since they do not involve two separate counterparties.[17]
  • Which historical derivatives data must be backloaded onto a TR?
    • There is an obligation to backload the following derivatives data onto a TR:
      • Derivatives in existence on the date that EMIR entered into force (i.e., before August 16, 2012) that either:
        • Terminated prior to February 12, 2014; or
        • Are in existence on February 12, 2014; and
      • Derivatives entered into after the date that EMIR entered into force (i.e., after August 16, 2012) but before February 12, 2014 that either:
        • Terminated prior to February 12, 2014; or
        • Are in existence on February 12, 2014. 
    • Grace periods apply in respect of trades that were entered into prior to August 16, 2012 and/or terminated prior to February 12, 2014.  However, no grace periods apply to swaps entered into after August 16, 2012 that are in existence on February 12, 2014.  See below.
    • This obligation to report historical swap data is underpinned by each counterparty’s obligation under EMIR to keep a record of any derivative contract they have concluded and any modification for at least five years following the termination of the contract which became effective when EMIR entered into force (i.e., August 16, 2012).[18]

Details to be Reported to a TR:

  • What data must market participants that are subject to the EMIR reporting obligation report to a TR?
    • Generally, counterparties are required to report "counterparty data" and "common data."   "Common data" must be agreed on by the counterparties.  Regulation (EU) No 648/2012 provides technical standards regarding the format and frequency of trade reporting, including the "counterparty data" and "common data" fields that must be reported to TRs.[19]
    • FCs and NFC+s (i.e., NFCs above the clearing thresholds)[20] are required to report additional data fields relating to mark-to-market (or model) valuations and collateral value.

Timing of the Reporting Obligation:

  • When does the reporting obligation under EMIR become effective for new swaps?
    • The requirement to report derivatives transactions under EMIR came into force on February 12, 2014 (i.e., 90 days after the recognition of a TR by ESMA).
    • Reporting of exposures (i.e., valuation and collateral data) is required by FCs and NFC+s on August 11, 2014 (i.e., 180 days after the reporting obligation comes into force).
      • NFC-s are not required to report exposures.
  • When does the reporting obligation under EMIR become effective for backloading existing and extinguished (i.e., historical) swaps?
    • If the derivatives transactions were entered into on or after August 16, 2012 and are outstanding on February 12, 2014, then they must be backloaded onto a TR by February 12, 2014 (i.e., there is no grace period).
    • If the derivatives transactions were entered into prior to August 16, 2012 and are outstanding on February 12, 2014, then they must be backloaded to a TR by May 13, 2014 (i.e., there is a 90-day grace period).
    • If the derivatives transactions are not outstanding on February 12, 2014, but were outstanding between August 16, 2012 and February 12, 2014, then they must be reported to a TR by February 12, 2017 (i.e., there is a three-year grace period).
  • How quickly after a derivative transaction is executed or modified must such data be reported to a TR?
    • Reporting must occur no later than the working day (i.e., T+1) following the conclusion, modification or termination of the contract.[21]
  • When must FCs and NFC+s report exposures of derivatives transactions to a TR?
    • Beginning on August 11, 2014, FCs and NFC+s must provide daily reports on mark-to-market valuations of positions and on collateral value.


To prepare to report data to a TR, a counterparty should take the following steps:

  • Ensure that it has obtained a legal entity identifier ("LEI") or pre-LEI from an appropriate issuing entity. 
  • Confirm EMIR counterparty classification.
    • Entities must provide their EMIR classification status to a TR in a transaction report.  Accordingly, entities must know their classification (i.e., FC, NFC+ or NFC-) and the classification of their counterparty.
  • Ensure that internal systems and procedures are in place to enable reporting to a TR.
    • Entities should ensure that the appropriate data fields[22] are being captured and maintained in the form and manner specified for all derivatives contracts under the scope of EMIR.
    • Entities should also set up processes and identify internal personnel responsible for ensuring that reports can be transmitted to the TR in the required timeframes.
    • Entities should determine whether they will report the information themselves or delegate the obligation (see discussion titled "Delegating the Reporting Requirement" below).
  • Ensure that documentation is amended to include necessary provisions to ensure that data can be reported to the TR.
    • For example, certain amendments may need to be made with counterparties regarding confidentiality, including waivers of consents.  Additionally, the reporting of certain data may conflict with a counterparty’s local law and/or raise privacy concerns certain counterparties may have privacy concerns which may require agreements regarding the reporting of such data. 
    • Adherence to one or more of the various ISDA protocols may address some of these issues.[23]
  • Select one or more TRs.
    • There are currently six ESMA-registered TRs: DTCC Derivatives Repository Ltd., Krajowy Depozyt Papierów Wartosciowych S.A., Regis-TR S.A., UnaVista Limited, CME Trade Repository Ltd. and ICE Trade Vault Europe Ltd.[24]
    • Note that each of the TRs, with the exception of ICE Trade Vault Europe Ltd., accepts the reporting of derivatives in all asset classes.  ICE does not accept reporting in the FX asset class.
    • A company can choose to register at one or more TRs (although, it seems more likely that most companies will choose just one TR).
  • Register and connect to the selected TR(s).
    • Registration requires reviewing and signing rulebooks and user agreements among other documents.  Entities also need to identify one or more persons who will have access to the data at the TR and who will receive communications from the TR.
    • Entities need to engage in appropriate testing in anticipation of reporting data to the TR.
  • Arrange for backloading of historical swap data to the TR.
    • This process requires gathering the appropriate records internally and working within the rules of the TR to deliver such data in accordance with EMIR.


As a result of the preparation and costs to comply with EMIR’s reporting obligation, counterparties may consider whether to delegate the reporting requirement to their counterparties or to a third party.  Article 9 of EMIR permits counterparties to delegate the reporting of details of a derivative contract; however, Article 9 also explains that counterparties "shall ensure that the details of their derivative contracts are reported without duplication."  Accordingly, counterparties, including those counterparties to intragroup transactions, should consider whether delegation of the reporting of details makes sense given that the counterparty remains ultimately responsible for ensuring that the correct data is reporting.  Further, counterparties wishing to delegate the reporting requirement would be required to enter into a delegation agreement with their counterparty or a third party, the terms of which may not be favorable to the delegating counterparty.

The ISDA/FOA EMIR Reporting Delegation Agreement

On January 13, 2014, ISDA and the FOA published a jointly drafted document entitled the "ISDA/FOA EMIR Reporting Delegation Agreement" (the "ISDA/FOA Delegation Agreement") in an effort to help market participants meet their reporting obligations under EMIR by providing a bilateral standardized form contract which can be used to delegate reporting obligations under EMIR.  The ISDA/FOA Delegation Agreement allows an entity offering reporting services (the "Reporting Delegate") to submit "Relevant Data" (either itself or through a third party) to a specified TR with respect to "Relevant Transactions" on behalf of a "Client" by the reporting deadline specified in Article 9 of EMIR.

The Schedules to the ISDA/FOA Delegation Agreement allow counterparties to tailor their delegation arrangements by specifying various things, including: (1) type of transactions to be reported; (2) identifying the identities of the Reporting Delegate, affiliates of the Reporting Delegate, relevant TR; (3) date on which to commence reporting services; (4) whether Relevant Data includes "counterparty data" and/or "common data" and whether any data should not be reported; (5) notice period for terminating the ISDA/FOA Delegation Agreement; (6) contact information; (7) waiver of relevant confidentiality provisions (if applicable); (8) restrictions around the use of certain data; and (9) details and mechanics of the delegated reporting.

While the ISDA/FOA Delegation Agreement is aimed at easing the reporting obligations under EMIR, there are some potential issues that all market participants should consider when determining whether to enter into such an agreement to delegate the reporting obligation. 

  • Indemnity Provision
    • The ISDA/FOA Delegation Agreement includes a provision that requires the Client to indemnify the Reporting Delegate and its affiliates to protect them from all losses incurred in connection with any claim brought by any third party, or any information provided to the Reporting Delegate and/or its affiliates by the Client, unless caused by gross negligence, willful default or fraud of the Reporting Delegate or its affiliates.
  • Discretion of the Reporting Delegate
    • The ISDA/FOA Delegation Agreement provides the Reporting Delegate with the sole and absolute discretion to decide whether the Reporting Obligation has arisen, the characterization of the Relevant Transaction and the "common data" (where the Relevant Data includes "common data").  The Reporting Delegate must use reasonable care in exercising this discretion.
  • Amendment of Agreement
    • The Reporting Delegate can by written notice to the Client, amend, in whole or in part, the ISDA/FOA Delegation Agreement and any operational and procedural documents to accommodate any change in law, rule, regulation or operation requirement.  The Client has a right to reject any such change, but if such changes are rejected, then the Agreement will terminate on a notice period specified in the Schedules.
  • Limitations on Liability
    • Under the ISDA/FOA Delegation Agreement, the Reporting Delegate must perform its duties with reasonable care and is responsible for the accuracy of its own information and that of its affiliates.  However, the Reporting Delegate is not liable for any loss suffered by the Client or any failure to report, except to the extent caused by its or its affiliates’ gross negligence, willful default or fraud.
  • Delegation of the reporting obligations does not remove a delegating counterparty’s (i.e., the Client’s) liability for misreported data. 
    • Under the ISDA/FOA Delegation Agreement, if incorrect data is reported to a TR, the Client’s only remedy is a commitment from the Reporting Delegate to notify the Client when it becomes aware of the inaccuracy and, to use reasonable efforts, acting in good faith and a commercially reasonable manner, to resolve the error.

Bilateral Delegation Agreements

Counterparties and third-parties may also provide their own bilateral delegation agreements to entities seeking to delegate the reporting requirement.  Generally, bilateral agreements include similar provisions to those included in the ISDA/FOA Delegation Agreement.  Counterparties should carefully review all delegation agreements.


Article 12 of EMIR directs EEA member states to issue rules on penalties applicable to noncompliance with the rules under EMIR, including the reporting obligation.  Specifically, EMIR directs that those penalties shall include "at least administrative fines" and that the penalties provided for shall "be effective, proportionate and dissuasive."[25]  As of the date of this alert, certain EEA member states have issued notifications on penalties while others have not yet filed notifications.[26]  For the countries that have filed their notifications, the penalties range in scope.  For example, The Netherlands has a minimum €10,000 administrative fine with the most severe fine being €4,000,000, Germany has fines ranging from €50,000 to €500,000, Sweden has fines ranging from 5,000 kronor to 50,000,000 kronor (payable within 30 days) and the United Kingdom has a very broad range of corresponding penalties (including censures as well as fines).  Other countries, such as Hungary, Denmark and France have not set specific fines, but imply that there will be consequences. 

   [1]   EMIR is legally binding on and directly applicable in the courts of all European Economic Area ("EEA") member states and needs no transposition into national law.  The text of EMIR is available here:

   [2]   This is an acronym for the European Economic Area, which includes the following countries: Austria; Belgium; Bulgaria; Croatia; Cyprus; Czech Republic; Denmark; Estonia; Finland; France; Germany; Greece; Hungary; Iceland; Ireland; Italy; Latvia; Liechtenstein; Lithuania; Luxembourg; Malta; Netherlands; Norway; Poland; Portugal; Romania; Slovakia; Slovenia; Spain; Sweden; and United Kingdom.

   [3]   Public Law 111-203, 124 Stat. 1376 (2010).  Pursuant to Section 701 of the Dodd-Frank Act, Title VII may be cited as the "Wall Street Transparency and Accountability Act of 2010."

   [4]   See Leaders’ Statement at The Pittsburgh Summit, p. 9 (Sept. 24-25, 2009), available at

   [5]   See Parts 45 and 46 of the regulations of the Commodity Futures Trading Commission ("CFTC").

   [6]   The CFTC generally refers to internal transactions between affiliates of the same corporate group as "inter-affiliate" swaps while EMIR refers to such transactions as "intragroup" derivatives.

   [7]   See Article 2(1) EMIR.

   [8]   Modifications to any of the reported items; cancellations arising from errors; terminations (but not on the expected date); compressions; valuations and collateral (not applicable to NFC-s); etc. must all be reported.

   [9]   The reporting of exchange-traded derivatives presents additional challenges.  For corresponding guidance refer to also ESMA, Questions and Answers, Implementation of the Regulation (EU) No 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR) ("EMIR: Q&A"), p. 46 (last updated: December 20, 2013), available at

[10]   Article 2(5) EMIR.  Annex I, Section C of MiFID sets out the definition of financial instruments.

[11]   See EMIR: Frequently Asked Questions, pp. 4-5 (last updated December 18, 2013), available at

[12]   See The Markets in Financial Instruments Directive 2004/39/EC, available at

[13]   Article 84(5) of The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.

[14]   See Press Release 14/11, "Reminder on EMIR – Reporting Obligation Starts Today, 12 February 2014," (Feb. 12, 2014), available at

[15]   See Letter from ESMA to Michel Barnier Re: Classification of financial instruments as derivatives (Feb. 14, 2014), available at

[16]   An FC is a counterparty to a derivative that is an investment firm, bank, insurer, registered UCITS fund, pension fund or an alternative investment fund managed by an alternative investment manager (as defined by the applicable EU legislation authorizing or regulating those entities).   See Article 2(8) EMIR.  An NFC is a counterparty to a derivative that is not a CCP or an FC.  See Article 2(9) EMIR.  For more information regarding the effect of EMIR for FCs and NFCs, please consult our respective alerts here and here

[17]   See EMIR: Q&A, p. 52 (last updated: December 20, 2013), available at

[18]   Article 9(2) EMIR.

[19]   Some of the data fields to be maintained and reported include (as applicable): LEIs (or pre-LEIs), reporting timestamp, financial or nonfinancial nature, asset class, notional amount, underlying, price/rate, price notation, price multiplier, quantity, up-front payment, effective date, maturity date, termination date, settlement date, master agreement type, confirmation timestamp, clearing timestamp, intragroup indicator, etc.  Further information including required data fields that must be reported can be found in the EMIR implementing regulations.  See Commission Implementing Regulation (EU) No 1247/2012 (Dec. 19, 2012), available at OJ:L:2012:352:0020:0029:EN:PDF.

[20]   Please see our client alert discussing the clearing thresholds for NFCs, available here.

[21]   Article 9 EMIR.

[22]   See supra note 17.

[23]   For example, the ISDA 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol and the ISDA 2013 Reporting Protocol may address some of these potential issues.

[24]   The list of ESMA TRs is available at

[25]   Article 12(1) EMIR.

[26]   See Notifications by Member States of the rules on penalties applicable to infringements of the rules under Title II of EMIR (Article 12), available at

Gibson, Dunn & Crutcher LLP 

Gibson, Dunn & Crutcher’s lawyers are available to assist in addressing any questions you may have regarding these issues.  Please contact the Gibson Dunn lawyer with whom you usually work or any of the following lawyers:

Michael D. Bopp – Washington, D.C. (+1 202-955-8256, [email protected])
Patrick Doris – London (+44 (0)20 7071 4276, [email protected])
Arthur S. Long – New York (+1 212-351-2426, [email protected])
Chuck Muckenfuss Washington, D.C. (+1 202-955-8514, [email protected])
Jeffrey L. Steiner - Washington, D.C. (+1 202-887-3632, [email protected])
Lisa Stevens – London (+44 (0)20 7071 4231, [email protected])

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