Note: firms should seek formal advice from their legal advisors.
Members using derivatives should be aware that from 17 June 2019 any intra-group transaction where one counterparty is a non-financial counterparty (or would be qualified as a non-financial counterparty if it were established in the Union) is exempt from the reporting obligation under EMIR Refit providing that specific circumstances are met, as summarised on this FCA weblink.
The FCA website states that once the [National Competent Authority/ies] has confirmed to the counterparty that they may benefit from the exemption, “the counterparty should send reports with Action type ‘E = Error’ for all the derivative contracts with the counterparties for which the reporting exemption is valid”. The ACT has received the following clarification of this requirement from the FCA:
“If a firm has notified its intention to benefit from the intragroup reporting exemption, once the FCA has confirmed that the counterparty may benefit for the exemption, or the three month review period has passed, the exemption will be valid. [The FCA] expects firms to submit reports with Action type ‘E’ for all intragroup derivative contracts (which are open at the point when the exemption applies from) with counterparties for which the reporting exemption is valid. This is a one-off action. Going forward, these historic derivative reports are closed after the Action Type ‘E’ report is submitted, and so there is no ongoing reporting obligation for those intragroup derivatives. Intragroup derivatives entered into after the date when the reporting exemption applies are subject to the reporting exemption and do not need to be reported at all (there is no ongoing reporting obligation for these intragroup derivatives either).”
The ACT Policy & Technical team would be interested to hear of process difficulties or uncertainties experienced by NFC firms when seeking their exemptions from the intra-group reporting obligation. Illustrative examples of such difficulties may include:
Please send any comments to technical@treasurers.org