ESMA Clarifies No-Deal Derivatives Reporting
The European Securities and Markets Authority (ESMA) has issued today a public statement on how derivatives data reported under the European Market Infrastructure Regulation (EMIR), should be handled in the event of the United Kingdom (UK) leaving the European Union (EU) without a withdrawal agreement, the no-deal Brexit scenario.
EMIR mandates the reporting of all derivatives to ESMA supervised Trade Repositories (TRs), who centrally collect and maintain the records of all derivative contracts. EMIR requires both counterparties to a derivative contract to report its details to TRs.
However, UK counterparties would not be mandated to report under EMIR to EU27 TRs following a no-deal Brexit. Therefore, the statement clarifies the following aspects for different reporting scenarios, namely where both counterparties are from the EU27, both are from the UK, and where one is from EU27 and the other from the UK. The statement clarifies:
- Reporting by CCPs and counterparties;
- Reconciliation and recordkeeping by TRs;
- Access by EU27 authorities;
- Portability and aggregation by TRs.
- The statement also sets out the timeline for completion of the relevant adjustments by the EU27 TRs
Members based in the European Economic Area will be able to continue using Liquidnet.
The MOUs come into force on the date EU legislation ceases to have direct effect in the UK.
The instruments now commence on ‘exit day’, rather than 11pm on 29 March.
The US regulator has provided guidance on the transfer of uncleared legacy swaps.
The move ensures uninterrupted service for EU clients due to Brexit.