EMIR – a regulatory framework that affects trading in derivatives

The European Market Infrastructure Regulation (EMIR) is an EU regulation aimed at mitigating the risks and increasing the stability of the European derivative markets, primarily in relation to trading in over-the-counter (OTC) derivatives. Unlike derivatives that are traded on a trading venue via a regulated marketplace, OTC derivatives are traded directly between two parties. EMIR is divided into three main areas – transaction reporting, risk-mitigating actions, and clearing requirements. EMIR is only applicable to legal entities, i.e. companies.

All clients that are affected by EMIR must have a client categorisation; please see below. This categorisation affects the reporting, clearing requirements and risk management for the company.

Financial counterparties (FC), e.g. banks, insurance companies, UCITs and securities companies:
FCs which exceed the clearing threshold are categorised as FC+, and
FCs which are below the clearing threshold are categorised as FC-.

Non-financial counterparties (NFC): all entities which are not considered FC:
NFCs which exceed the clearing threshold are categorised as NFC+; and
NFCs which are below the clearing threshold are categorised as NFC-.

For more information on clearing and clearing thresholds, see Clearing.

On 17 June 2019, an amendment regulation to EMIR called EMIR Refit entered into force. The main changes included in EMIR Refit are:

Financial counterparties are required to report for NFCs that are below the clearing threshold. For more information, see the section below on Reporting.
Changes to the clearing requirement and the method for assessing whether a company exceeds or is below the clearing threshold. For more information, see Clearing.

Exemption from exchange of collateral for companies belonging to the same Group

In accordance with EMIR article 11, p. 6, Swedbank AB has been granted an exemption from the requirement to exchange collateral for non-cleared derivatives between the following companies within Swedbank Group:

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

Main areas

Reporting

According to EMIR, all derivative transactions entered into by a company (including derivatives traded on a regulated trading venue) shall be reported in an approved transaction register.

More information on the reporting requirement

Clearing

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

Risk-mitigating actions

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

Learn more about the requirements for risk-mitigating actions

Mer information

Reporting of derivative contracts

In accordance with EMIR, all derivative contracts shall be reported in specifically designated transaction registers. Swedbank offers our clients assistance with such reporting.

Learn more