United Kingdom (UK) Derivative Trade Reporting (UK EMIR)

Overview of UK Reporting (UK EMIR)

The regulation of over-the-counter (OTC) derivatives in the United Kingdom is primarily governed by UK EMIR, which is the UK’s version of the European Market Infrastructure Regulation, retained and amended following Brexit. The Financial Conduct Authority (FCA) and the Bank of England oversee UK EMIR.

The European Market Infrastructure Regulation (EMIR) (as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018) (UK EMIR).
The Financial Services Act 2012.
FCA Handbook, including relevant sections on reporting.
Bank of England and FCA Rules and Guidance providing compliance guidance.

Financial Counterparties (FCs): Investment firms, credit institutions, insurance undertakings, UCITS, AIFs, central counterparties (CCPs), central securities depositories (CSDs) authorised or recognised in the UK.
Non-Financial Counterparties (NFCs) exceeding certain thresholds for their aggregate month-end average position in OTC derivatives.
Certain third-country entities may also be subject to UK EMIR reporting obligations.

If you’re unsure if your entity is subject to these requirements, contact us for a consultation.

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Understanding OTC Derivatives Subject to Reporting under UK EMIR

Over-the-Counter (OTC) derivatives are financial contracts privately negotiated and traded directly between two parties, rather than on a formal public exchange (like the LSE). Their value is derived from an underlying asset, index, or rate, such as interest rates, currency exchange rates, commodities, stocks, or credit events.

The key characteristic of OTC derivatives is their flexibility – terms can be customised to meet the specific needs of the counterparties. However, this private nature historically led to less market transparency. To address this and monitor potential systemic risks, UK EMIR mandates the reporting of transactions in certain OTC derivative classes.

UK EMIR covers a broad range of OTC derivatives, including interest rate, foreign exchange, credit, equity, and commodity derivatives. Certain exemptions may apply to specific types of contracts.

Transactions and Participants

UK EMIR requires the reporting of all derivative contracts (OTC and exchange-traded) concluded, modified, or terminated by UK counterparties to registered or recognised trade repositories.

This includes details of the counterparties, the terms of the contract, and any collateral posted.

Both counterparties are generally responsible for reporting, although delegated reporting is common.

Let us help you understand if the dual-sided or delegated reporting model is right for your business

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Reporting Deadlines

The standard reporting deadline under UK EMIR is generally T+1 business day following the conclusion, modification, or termination of the derivative contract.

Reporting Format and Submission Method

Reports must be submitted to Trade Repositories (TRs) registered or recognised by the Bank of England or the FCA.

The reporting format follows specific standards defined in the UK EMIR Technical Standards, including ISO 20022 messaging standards.

Identifiers

UTI: each transaction must have a Unique Trade Identifier (UTI) agreed upon by the counterparties.
LEI: counterparties are identified using a Legal Entity Identifier (LEI).
UPI: a Unique Product Identifier (UPI) is required for derivative classification.

UK EMIR has been subject to amendments following Brexit to tailor it to the UK market. Counterparties need to stay informed of ongoing developments and any new requirements issued by the FCA and the Bank of England.

Contact us to understand how these changes will affect your specific reporting obligations.

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Key Challenges in UK Reporting (UK EMIR)

Data Quality and Reconciliation – Ensuring accurate and consistent reporting across counterparties and trade repositories.
Understanding Reporting Obligations for Different Counterparty Types (FC vs. NFC).
Implementing and Maintaining Systems to Meet the T+1 Reporting Deadline.
Keeping Abreast of Frequent Regulatory Updates and Guidance from the FCA and Bank of England.
Ensuring Correct Use of Identifiers (UTI, LEI, UPI).