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EMIR – a regulatory framework that affects trading in derivatives

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The European Market Infrastructure Regulation (EMIR) is an EU framework aimed at reducing risks and increasing stability in the European derivatives markets, primarily in relation to the trading of over-the-counter (OTC) derivatives. OTC derivatives are derivatives that, unlike exchange traded derivatives (ETDs), are entered into directly between two parties, without going through a regulated market.

New requirements for EMIR entered into force on 29 April 2024. The new requirements include the following:

  • New and amendments to existing data points to be reported to authorities.
  • Reporting of errors and omissions relating to transaction reporting to the supervisory authority.
  • UTI (Unique trade identifier) - new rules and guidance.
  • NFC- counterparties must provide information required for transaction reporting that is not available to Swedbank.

EMIR applies only to companies. The regulations are divided into three main areas:

  1. Transaction reporting.
  2. Clearing requirements.
  3. Risk mitigation measures.

All customers affected by EMIR shall have a counterparty category. The category affects reporting, clearing requirements and risk management for the company.

Financial counterparties (FC) e.g., banks, insurance companies, funds and investment firms.

  • FC above the clearing threshold for one or more asset classes are categorised as FC
  • FC below all clearing thresholds are categorised as FC-

Non-financial counterparty (NFC): other non-FC companies.

  • NFC above the clearing threshold for one or more asset classes are categorised as NFC+.
  • NFC below all clearing thresholds are categorised as NFC-

Exchange traded derivatives (ETD)

Exchange traded derivatives may be traded either bilaterally between two parties or on a trading venue to which both parties are members or have access. For ETD, only the EMIR transaction reporting requirements apply (see below), other EMIR requirements such as clearing, hedging and timely confirmation apply only to OTC derivatives.

Exemption from exchange of collateral for intragroup companies

Swedbank has been granted an exemption in accordance with Article 11(6) of EMIR from exchanging collateral for non-cleared derivatives between intra-group companies.

The following intra-group counterparties are exempt:

  • Swedbank Hypotek AB
  • Swedbank AS (Estonia)
  • Swedbank AS (Latvia)
  • Swedbank AB (Lithuania)

EMIR regulations – main areas

Transaction reporting

According to EMIR, all derivative transactions that a company does, including those traded on an exchange, must be reported to an approved trade repository.At Swedbank, we offer our customers help with this reporting.

Transaction reporting

Clearing requirements

The clearing requirement includes only transactions which Swedbank, as a financial counterparty, conducts with other financial counterparties and with non-financial companies which exceed the clearing threshold.

Clearing obligation

Risk-mitigation measures

For OTC derivatives which are not cleared, EMIR stipulates that certain risk-mitigating actions shall be taken.

Risk-mitigating actions