UK EMIR news

On 26 July 2024, we published an update to the UK EMIR Validation rules[2] (applicable from 30 September 2024) correcting typos in the conditions for fields 2.44 and 2.46 and updating the requirements to make mandatory the reporting of Field 2.41 (Venue of Execution) at position level, in line with our guidance in Q&A 6.3.

Also, in response to feedback received from industry, we've published an additional finalised Q&A (10.9) on the UK EMIR reporting questions and answers webpage[3]. This followed a short consultation period to clarify that spread bets can be reported at position level, similar to how contracts for difference (CFDs) can be reported under the new requirements.

On 2 May 2024, we published a second set of UK EMIR reporting Q&As for consultation to support implementation of the amended UK EMIR reporting requirements applicable from 30 September 2024. The second consultation closed on 12 June 2024.  

We received 11 responses from a diverse group of participants including TRs, trade associations, central counterparties, reporters and consultants. Respondents were generally supportive of our approach and the proposed guidance. Consequently, we’ve maintained the overall approach consulted on.   

Several respondents requested further clarification on certain aspects, identified where a different approach could be adopted, highlighted incorrect references, or suggested further changes to the UK EMIR Validation Rules (applicable from 30 September 2024) as a result of the proposed guidance.  

Consequently, we’ve made changes to the following Q&As:

1. Errors and omissions – 4.10, 4.12
2. Venues – 6.5, 6.6, 6.7, 6.8
3. Exchange traded derivatives – 7.5
4. Margin and collateral – 8.2, 8.3, 8.6, 8.11
5. Clearing – 9.2, 9.4
6. Position level reporting – 10.1, 10.2, 10.5, 10.7
7. Asset class and product specific – 11.5

In considering our response, we’ve been mindful of the approaching implementation date. We’ve therefore only made changes to the schema and UK EMIR Validation Rules (applicable from 30 September 2024) to address errors or to close gaps which would have affected the ability of reporting counterparties to report accurate details of derivative contracts.  

The UK EMIR Validation Rules (applicable from 30 September 2024) have now been finalised. The finalised changes have been marked in red within the document for visibility. We have also implemented a minor change to the schema to address an error with field 1.10 (Country of the counterparty 2) which would have resulted in reports being incorrectly rejected.    

We do not intend to make any further changes to the schema or validation rules ahead of 30 September 2024. 

There are 3 Q&As where we adopted a different approach: 

• We removed the part of the guidance in Q&A 6.7 indicating that derivatives resulting from clearing should be reported with the original execution timestamp as feedback highlighted that derivatives resulting from clearing receive their own UTI and associated execution timestamp. 
• We changed our approach for Q&A 6.8 as respondents said that new derivatives resulting from post-trade risk reduction (PTRR) events are treated as new trades. As such, it would be confusing for such trades to retain the venue of execution of the preceding trades. 
• In relation to Q&A 10.7, respondents suggested the Option Premium Amount field (Table 2, Item 141) should be populated with ‘0’ when reporting at position level, rather than with the total amount paid by the option buyer for the derivatives making up the position. We adopted this suggestion as we agree with respondents the original approach would not provide meaningful data. 

Additionally, we received feedback on some issues out of scope of this consultation. These have not been addressed in the guidance, but we may consider addressing them post-implementation. 

The one exception to this relates to the reporting of spread bets, where we are undertaking a short consultation on one further Q&A[4]. We welcome feedback on the additional draft Q&A by 23 July 2024. We’ll then consider the feedback before adding the finalised Q&A to out EMIR reporting Q&As webpage shortly afterwards.

We have therefore finalised this second part of the UK EMIR Reporting Q&As[3] and the Q&As will be applicable from 30 September 2024.

On 1 March 2024, we published a set of UK EMIR reporting Q&As for consultation to support implementation of the amended UK EMIR reporting requirements applicable from 30 September 2024. The consultation closed on 28 March 2024.

We received 9 responses from a range of participants including TRs, trade associations, reporters and consultants. The overall feedback was supportive of our approach and the proposed guidance. Given the supportive feedback, we've retained the overall approach consulted on.

Some respondents requested further clarification, highlighted incorrect references, or further changes to the Validation Rules due to the proposed guidance. These have been reflected in the final Q&As, specifically questions 1.3, 1.4, 3.1, 4.1, 4.4 and 5.3. An additional clarification to the initial description in Section 1 has been made and we are proposing a change to the UK EMIR Validation Rules (applicable from 30 September 2024)[2].

A number of the respondents were concerned about the proportionality of completing reconciliation checks during the 6-month transition period (particularly where reporting counterparties comply with the new requirements at different times). This is something we acknowledged in the draft guidance, but we believe that reconciliation statistics during the transition period offer authorities valuable insight into UK EMIR Refit implementation and industry’s progress in updating records to comply with the new requirements.

We also received some feedback beyond the scope of the consultation. We’ve not addressed this feedback here, but we may consider it in future.

The final Q&As have now been published[5] and will be applicable from 30 September 2024. We’re consulting on a second set of draft UK EMIR reporting Q&As[4] and we welcome your feedback by 12 June 2024.

On 18 December 2023, we published a joint FCA/PRA Policy Statement (PS23/19)[4] and final rules confirming the extension of the temporary exemption for single-stock equity options and index options from the UK bilateral margining requirements under the UK version of the European Market Infrastructure Regulation (UK EMIR).

The exemption has been extended for a further 2 years until 4 January 2026. This extension will provide the PRA and FCA time to undertake deeper analysis to develop a permanent UK framework for these products. 

Alongside the PRA, we also confirmed our intention not to implement a supervisory pre-approval requirement for bilateral initial margin models at this stage.

See our final policy and feedback to responses[9] to our consultation.

In April 2023, the Treasury laid before Parliament a statutory instrument[5] extending the exemption for pension scheme arrangements (PSAs) from the UK EMIR clearing obligation by two years until 18 June 2025 and the Temporary Intragroup Exemption Regime (TIGER) by three years until 31 December 2026. For further details please see the Explanatory Memorandum[6].

UK firms that currently benefit from intragroup exemptions from the clearing obligation and margin requirements for uncleared derivative transactions with their third country group entities (where no equivalence has been made in respect of the third country) may continue to benefit from those exemptions with no further need to notify the FCA (unless there has been a material change to the conditions under which the original exemption was granted).

Further details on the clearing exemption for pensions scheme arrangements and intragroup exemptions from the clearing obligation and margin requirements can be found on the UK EMIR Notifications and Exemptions webpage[7].

Final Validation Rules and Schemas 

On 24 February 2023 we published a joint FCA/Bank of England Policy Statement (PS 23/2)[8] alongside final Technical Standards and new rules for Trade Repositories (TRs) in relation to changes to the derivatives reporting framework under UK EMIR.

The final Technical Standards and new rules for TRs will be applicable from 30 September 2024 (with the exception of the amended Technical Standards that relate to the registration of TRs which came into force on 24 February).

Alongside the Policy Statement and final rules, we also published draft UK EMIR Validation Rules and XML schemas and invited comments from stakeholders. We have considered the feedback we received and made minor amendments to the draft versions where appropriate.

We have now published final versions of the UK EMIR Validation Rules and XML schemas on our UK EMIR reporting webpage[9].

The documents will be applicable from 30 September 2024.