ESMA issues statement to address upcoming end of transition period with regards to reporting, recordkeeping, reconciliation, data access, portability and aggregation of derivatives reported under Article 9 of EMIR and Article 4 of SFTR

The CSSF draws attention to the statement published by ESMA on 10 November 2020, on issues affecting reporting, recordkeeping, reconciliation, data access, portability and aggregation of derivatives reported under Article 9 of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (EMIR) and on SFTs reported under Article 4 of Regulation (EU) 2015/2365 of the European Parliament and of the Council of 25 November 2015 on transparency of securities financing transactions and of reuse and amending EMIR (SFTR) following the end of the transition period on 31 December 2020 provided for in the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (ESMA’s statement).

The CSSF¹ expects counterparties to follow the clarifications provided in ESMA’s statement.

In this context, the CSSF wants to draw the attention of counterparties falling under the scope of EMIR, to specific elements provided in the ESMA’s statement, as indicated below.

1. EU counterparties and CCPs should report the conclusion of derivatives to an EU TR or an EU recognised TR when they have a reporting obligation in accordance with Article 9 of EMIR.
2. Following the end of the transition period, UK financial counterparties are no longer responsible for the reporting of OTC derivatives subject to mandatory allocation of responsibility for reporting under Articles 9(1a) to 9(1d) of EMIR. From 1 January 2021, the EU counterparties become responsible for the reporting of those derivatives. EU NFC are required to do so unless the condition relating to equivalence in the last sub-paragraph of Article 9(1a) of EMIR with regards to the UK counterparty becomes applicable.

Similarly, the CSSF wants to draw the attention of the counterparties falling under the scope of SFTR, to specific elements provided in the ESMA’s statement, as indicated below.

1. EU counterparties and EU branches of third-country counterparties should report the conclusion of SFTs to an EU TR or an EU recognised TR when they have a reporting obligation in accordance with Article 4 of SFTR.
2. Following the end of the transition period, UK counterparties and UK branches of third-country counterparties are no longer responsible for the reporting of SFTs subject to mandatory allocation of responsibility for reporting under Article 4(3) of SFTR. From 1 January 2021, the EU counterparties and EU branches of third-country counterparties become responsible for the reporting of those SFTs.

The CSSF recommends that:

a. counterparties currently reporting to UK TRs are ready to ensure continuity of their reporting obligation by reporting to a TR registered or recognised in the EU, at the latest by 31 December 2020, in accordance with the principles laid down in the ESMA’s statement;

b. counterparties currently benefiting from the mandatory allocation of responsibility for reporting under Articles 9(1a) to 9(1d) of EMIR or Article 4(3) of SFTR, towards UK entities, are ready to assume their reporting obligation as from 1 January 2021.