• Corporate FX

EMIR Reporting FX Forwards

EMIR Reporting FX Forwards

EMIR Reporting FX Forwards

EMIR Reporting FX Forwards

Are you a company which uses FX hedging products to manage currency risk?

Do you use FX Forward Contracts or FX Options for business currency risk management purposes?

Are you an importer or exporter using FX hedging products to manage forecast cashflows?

Are you a business group with multi-currency assets or liabilities and use FX risk management products for balance sheet hedging purposes?

Some FX risk management products and trades are reportable under EMIR.

Are you reviewing the reporting requirements of different FX hedging strategies and solutions?

Are you trying to confirm which FX trades and products are reportable under EMIR?

Are you searching for information about delegated reporting?

Are you trying to confirm if FX Forwards are reportable under EMIR?

Please reach out to us for a discussion by phone or email.

We are very happy to discuss if we can help solve any issues you are currently experiencing.

We can also aim to add value in all aspects of your FX risk management strategy.

EMIR Reporting Obligations

Regulated FX Trade Reporting

The European Market Infrastructure Regulation (EMIR) came into force in 2012, with the amended EMIR Refit Regulation arriving in 2019. It was a response to the issues and factors that lead to the 2008 financial crisis and is designed to control risk and improve market transparency.

It’s important to be aware of reporting obligations but equally, it’s worth reaching out to your banks or FX brokers prior to booking any trades to verify if they report regulated trades on your behalf as part of their standard service. This is an area we can provide direct support and can manage regulatory reporting on your behalf.

EMIR Reporting Regulated FX Trades

Regulated FX Forward Hedges

EMIR (European Market Infrastructure Regulation) reporting requires businesses involved with the trading of derivative contracts to provide details of every trade. All reports are made to Trade Repositories (TRs) who are responsible for collecting and maintaining derivative contract records. The reports are then passed onto relevant financial regulators who can use the data to monitor risks in the market.

An EMIR trade report can only be submitted to a TR recognised by the Financial Conduct Authority (FCA). There are four registered TRs that can be used:

  • UnaVista Limited
  • DTCC Derivatives Repository Plc
  • ICE Trade Vault Europe Limited
  • REGIS-TR UK Limited

To meet EMIR reporting requirements, all UK counterparties involved in a derivative trade must have a Legal Entity Identifier (LEI). These are issued by Local Operating Units (LOUs) on the Global LEI System. You can visit the Global LEI Foundation (GLEIF) website to find the full list of accredited LOUs.

What is an FX Derivative?

Are Forward Contracts Classed as Derivatives?

A derivative can include FX Products such as Forward Contracts, FX Options and FX Swaps.

FX Derivative Contracts can be settled either physically or cash settled. Often this will determine whether the trades are regulated and thus require reporting.

Do companies needs to EMIR report FX hedges?

Which Businesses and Corporate Groups Must Report Regulated FX Trades

All entities in the EU and UK that are involved with an FX Derivative transaction, which includes modifying and termination, must submit an EMIR report to their local TR.

This includes:

  • Financial Counterparties Such as Banks, Brokers, Investment Firms, Insurers and Fund Managers
  • Non-Financial Counterparties Companies that do not provide financial services. Any entity that is not a Financial Counterparty.

A report usually needs to be submitted by both the buyer and seller for every trade that takes place. However, this is not applicable if a single report has been agreed for both parties, or if reporting duties have been delegated to a third party by either counterparty.

Where a non-financial counterparty is involved in a trade with a financial counterparty, then reporting duties fall upon the financial counterparty only.

EMIR reports must be issued the day after the execution of a transaction. Back-dated transactions can also be reported no more than 90 days after their due date.

EMIR Reports for FX Trades

What Does an EMIR Report Include?

Most EMIR reports feature 26 fields of Counterparty data and another additional 59 fields of supplementary Common data.

This includes information such as:

  • Counterparty Data  Name, incorporation country and other unique identifiers
  • Common Data  Contract type, value, quantity traded, settlement date.

When more detailed reporting data is required, the EMIR report also needs to include details on the clearing of eligible OTC derivatives. Measures taken to reduce Counterparty operational risks and credit risks will also need to be included.

What is Delegated Reporting?

Delegated EMIR Reporting of Regulated FX Trades

Delegated reporting is when a third-party reports FX Derivative trades on behalf of another entity. Examples of delegated reporting channels include FX Brokers and Banks.

Both FX Brokers and Banks will aim to make FX Hedging as convenient as possible for customers. Thus it is very likely that delegated EMIR reporting will be included in standard services. It is always worth checking with FX providers before placing any reportable FX hedging trades to avoid the direct administration and commitments of regulatory reporting.

Do FX Forwards Need to Be Reported Under EMIR?

Which FX Forwards are Regulated

If an FX Forward Contract is cash settled at expiry and not delivered, this will be classed as a regulated contract and require regulatory reporting. Thus any NDF Forwards (Non-Deliverable Forwards) would need to be reported under EMIR.

If a Non-Financial Counterparty secured an FX Forward Contract for commercial risk management purposes that is physically delivered and settled for the payment of goods and services. These FX Forwards fall outside of the scope of regulatory reporting and do not require EMIR reporting. These FX Forward trades are classed as means of payment and as such are not regulated.

Balance Sheet Hedging Best Business FX Foreign Exchange Services Companies Best Treasury Risk Management Solutions Business Currency Business Foreign Exchange Business Forex Business FX Business FX Services Commercial Foreign Exchange Commercial FX Company FX Corporate Foreign Exchange Corporate Forex Corporate FX Corporate Payments Currency Currency Brokers Currency Exchange Currency Hedging Currency Hedging Solutions Currency Providers Foreign Exchange Foreign Exchange Companies Forex Forex Options Forex Risk Management FX FX Companies FX Hedging FX Hedging Companies FX Hedging Solutions FX Options FX Payments FX Risk Management FX Risks FX Services FX Solutions FX Treasury Hedging FX UK GBP International International Payments Live Pricing Managing Business Foreign Exchange Risk and Minimising Exposures Risk Management