The EMIR regulation (European Market Infrastructure Regulation) imposes requirements on all types and sizes of entities that enter into derivative contracts with the aim of improving transparency and reducing the risks related to the derivatives market.
Overall, the regulation introduces four types of obligations on parties to derivatives trades:
- Trade reporting obligation
- Clearing obligation
- Risk mitigation techniques
The following entities are covered by the different provisions in EMIR:
- Financial Counterparties (FC): most financial institutions
FC’s are divided into those who exceed a clearing threshold under EMIR or do not make the mandatory annual calculations (FC+) and those who fall below these thresholds (FC- or Small Financial Counterparties (SFC))
- Non-Financial Counterparties (NFC): undertakings that are not FC’s
NFC’s are divided into those who exceed a clearing threshold under EMIR (NFC+) and those who fall below these thresholds (NFC-). For more information about the clearing thresholds, please see our FAQ.
Individuals are not subject to specific requirements according to EMIR.
|Type||Trade reporting obligation||Risk mitigation obligations||Clearing obligation||Collateralisation|
|FC+ or NFC+||X||X||X||X|
|NFC-||X||(Requirements are generally less onerous than for FC and NFC+)|
The following exemptions apply to the obligations in EMIR
|Clearing Obligation (EMIR Article 4)||Exchange of Collateral||Reporting obligation|
|Pension scheme arrangements||Exempt*, until 18 June 2021||No exemption||No exemption|
|Intra-group transactions||Exempt (subject to a decision from a competent authority)||Exempt (subject to a decision from a competent authority)||No exemption|
*hedging (risk coverage) transactions
Danske Bank Group makes use of the exemption from the exchange of collateral requirements for intra-group transactions. The overview on application of such exemption is available here: Exemption from margin requirements for intra-group OTC derivative transactions.
Trade reporting obligations explained
The EMIR regulation requires reporting of the details of derivatives trade to a trade repository. A trade repository is an entity that centrally collects details about derivatives trades in a register to which financial regulators have access for supervision purposes.
The reporting obligation covers both OTC trades and exchange-traded derivatives (ETD), for instance futures, and cleared as well as non-cleared transactions.
Until 18 June 2020, the reporting obligation applied to both parties to a derivatives trade if they were registered in an EU/EEA-country – except private individuals, central banks and some public bodies.
Following a change to EMIR introduced by the EMIR REFIT regulation, as of 18 June 2020 financial counterparties are responsible for reporting of OTC derivatives trades also on behalf of their non-financial counterparties that are not subject to the clearing obligation (NFC-).
This change means that if you are a NFC- counterparty, as of 18 June 2020 Danske Bank is responsible for the reporting on your behalf of OTC trades that you enter into with us.
If you are an NFC+ or a financial counterparty (FC) the reporting obligations remains your own responsibility. Should you like Danske Bank to help you out with reporting the required information, please see the section “We can help you meet your reporting obligations” below.
What is required of you when we report on your behalf?
You must provide us with your legal entity identifier (LEI) and ensure that it is correct and valid for as long as you have outstanding OTC trades. An LEI is a unique identifier that allows us and the trade repository to identify you. Trade repositories are mandated to reject trade reports that do not contain an LEI.
Please go to the page about LEIs to find more information about LEIs and how you can obtain one.
Danske Bank’s Terms and Conditions for Mandatory Reporting set out in more detail the rules, procedures and assumptions applied in relation to our reporting on your behalf. We have gathered the different language versions on a website dedicated to the Terms and Conditions for Mandatory Reporting.
We can help you meet your reporting obligations
If the trade reporting obligation applies to you under EMIR, Danske Bank offers a trade reporting service to help you meet this obligation. By signing up for this service, you authorise Danske Bank to report – on your behalf – all trades between you and Danske Bank, including our subsidiaries within the EU/EEA, to a trade repository.
In order for us to help you with the reporting, you must acquire a Legal Entity Identifier (LEI) for your company and inform us about it. Please go to the page about LEIs to find more information about LEIs and how you can obtain one.
To start using our reporting service, you must sign up for our Trade reporting Service.
Danske Bank will report your trades, either on the basis of EMIR or Danske Bank's Trade Reporting Service, to DTCC GTR (Depository Trust & Clearing Corporation – Global Trade Repository).
You can find more information on trade reporting requirements generally and our trade reporting service in the FAQ (PDF).