Parties and main characteristics
Article 9 of EMIR states the details that must at least be reported, e.g.
- the parties involved in the derivatives contract and, insofar as these differ, the beneficiary of the ensuing rights and obligations; and
- the main characteristics of the derivatives contract, including the type of contract, the underlying value, maturity and nominal value, price and settlement date.
The RTS ‘on the minimum details of the data to be reported to trade repositories’ (RTS 148/2013) provide a further elaboration of Article 9 of EMIR. The annex to this RTS states the minimum data to be reported, including the following:
- information on the parties to the contract (Annex, Table 1, Counterparty data), and
- information on the contract itself (Annex, Table 2, Common data), such as the notional amount (nominal value or underlying principal), physical or cash settlement (settlement through cash or underlying values), termination date and clearing obligation.
RTS 148/2013 states that if a derivatives contract is concluded on a trade platform and then cleared by a CCP, where the parties to the contract do not know each other's identities, the CCP must be reported as the counterparty (Article 2(1)).
A further explanation to the contract details to be reported is provided in Implementing Technical Standards (ITS).
Finally, a Legal Entity Identifier (LEI) is required for reporting, unless the institution concluding a derivative contract is not the reporting firm. The LEI code is a unique, institution-specific code, which is available from the Kamer van Koophandel (Chamber of Commerce). In other words, a LEI code is a prerequisite for correctly reporting a derivatives transaction, which is why it is important to check that you have a LEI code before entering into OTC derivative transactions.
Reporting mark-to-market valuations
Mark-to-market valuations of derivative contracts cleared by CCPs are only reported by the CCP (see Article 3(5) of the RTS 148/2013).
Financial parties and some non-financial parties are required to mark their outstanding contracts to market daily as part of the required risk-mitigating techniques for non-centrally cleared OTC derivatives. These parties are obliged to report these valuations to the trade repository on a daily basis (see Article 2 of the ITS ITS 1247/2012).).
Format and starting dates
The ITS ‘on the minimum details of the data to be reported to trade repositories’ (ITS 1247/2012) state the format in which reports to the TR must be submitted. It also prescribes the starting dates for reporting the different classes of derivatives, depending on the time of registration of the TR. TRs are required to use validation reports to ensure that the reporting obligations are met. For more information on validation reports’ and the latest news on data reporting rules, please consult the ESMA website. Obligatory use of risk-mitigation techniques (Note that this only applies to non-centrally cleared OTC derivatives).
What are risk-mitigation techniques?
Article 11 of EMIR stipulates that financial counterparties and non-financial counterparties concluding OTC derivative contracts not cleared by a CCP must ensure that they have appropriate procedures and rules in place to measure, monitor and limit operational risks and counterparty risks.