Who must report derivatives to a trade repository, and who is liable?

Under Article 9, counterparties and CCPs must make sure that the details of every derivative contract they conclude, and of any modification or termination, reach a trade repository no later than the following working day. The repository must be registered by ESMA or, if it is in a third country, recognised by ESMA. The duty covers exchange-traded as well as OTC derivatives. Counterparties keep records for at least five years after the contract ends, and CCPs for at least ten (Article 29). Reporting may be delegated, for example to the other party or to a service provider, but counterparties and CCPs must still ensure that reports are correct and not duplicated.

Refit reallocated the duty, and the exam material rightly dates this to 18 June 2020. When a financial counterparty (FC) concludes an OTC contract with a non-financial counterparty below the clearing thresholds (NFC-), the FC alone reports for both sides and is legally liable for the accuracy of the details. The NFC- must give the FC any details the FC cannot reasonably be expected to hold, and answers for those. An NFC- that has already invested in its own reporting system may instead report its OTC trades with FCs itself, after telling them; it then carries the liability. For funds' OTC contracts the manager is responsible and liable: the management company for a UCITS, the AIFM for an AIF, and the managing entity for an occupational pension fund (IORP) without legal personality.

Two reliefs complete the picture. An NFC- trading with a firm in a third country need not report if that firm would be an FC were it established in the EU and has reported under its own regime to a repository that must give EU authorities direct and immediate access to the data. Before 24 December 2024 this also required a Commission equivalence decision; EMIR 3 removed that condition. Within a group, contracts where at least one party is an NFC need not be reported if both parties are fully consolidated and subject to centralised risk procedures and the parent is not an FC. The parties notify their competent authorities, and the exemption stands unless those authorities disagree within three months. Since 24 December 2024, where an NFC above a clearing threshold uses this exemption, its EU parent reports that NFC's net aggregate positions by class of derivatives to the parent's competent authority every week. That authority passes them to ESMA and to the NFC's authority.

Since 29 April 2024 reports have followed new technical standards: Delegated Regulation (EU) 2022/1855 sets their content and Implementing Regulation (EU) 2022/1860 their format. Reports use ISO 20022 XML and contain 203 fields instead of 129, with rules on generating the unique trade identifier (UTI), a unique product identifier (UPI), separate collateral data and a field naming the entity responsible for reporting. Trades still outstanding had to be updated to the new standard within 180 days. The entity responsible for reporting must promptly notify its competent authority of misreporting that affects many reports, of obstacles that stop reports reaching the repository on time, and of other significant reporting errors. CySEC's Circulars C593 and C633 ask firms to use ESMA's notification template and send it to CySEC's dedicated EMIR mailbox.

EMIR 3 added duties from 24 December 2024. Counterparties and CCPs must have procedures and arrangements to ensure the quality of the data they report. Where reports repeatedly contain systematic manifest errors, the competent authority must impose penalties; a periodic penalty payment can reach 1% of the entity's average daily turnover in the previous business year for each day the breach continues, for up to six months. In Cyprus, CySEC's general fining powers also apply to the firms it supervises.

The exam material lists two CCP changes that applied from 18 December 2019. First, a CCP must give its clearing members a simulation tool showing how much additional initial margin it might call if they cleared a new trade. Following Refit's wording, the exam material says the tool works on a gross basis. Since 24 December 2024 EMIR 3 has required the tool to work at portfolio level and to simulate margin under different scenarios. As before, access is secured and the results are not binding. Second, national insolvency law may not prevent a CCP from porting a defaulting clearing member's client positions and assets to another clearing member, or from returning what is left to the clients, under Article 48(5) to (7). Refit also required CCPs to explain their initial margin models, a duty EMIR 3 has made more detailed; see What must a CCP disclose, to whom, and when can a breach stay private?