EMIR REFIT: an overview


Interview of Laurent Laurent Collet, Deloitte, on EMIR refit

Laurent, EMIR refit was announced and will apparently be approved by EU parliament during 2018 with enforcement in 2019. In your view what will be the major changes for Corporates and NFC’s?

In REFIT, you have the word FIT and consequently FITNESS, it is clear that the new release of the regulation aims to be more fit to the reality of the derivatives business. Clearly, some actors among with the Non-financial counterparty (NFC) will benefit from some reliefs in the new version of EMIR. Still subject to the final vote but the following adaptations for NFC are currently foreseen in the texts

  • The current 30 day rolling average determination of positions of a non-financial counterparty (NFC) against the clearing thresholds should be replaced with an annual determination  

  • Exemption from reporting for intra-group transactions involving an NFC

  • Clearing obligation for NFC+ to be limited to the asset class(es) for which the clearing threshold is exceeded

Don’t you think that the removal of intercompany reporting, which is good news for NFC’s, will have an impact on Trade Repositories and banks? We wonder whether TR’s will lose a big part of their business without compensation and whether banks will not be required by their customers to report on their behalf, increasing significantly their tasks and risks?


This is an interesting question and difficult to comment in the name of TR / Banks but in case of TRs, I assume the next coming SFTR reporting obligations will more than expected compensate any potential losses from NFC reporting business.

From the bank point of view (at the least the one which propose the delegated reporting services), we note that they are more and more keen to focus on their core business rather than offering transaction reporting services. EMIR reporting together with MiFIR and next year SFTR is a full business where we see more and more dedicated services providers acting as reporting platform.    


"It is clear that the new release of the regulation aims to be more fit to the reality of the derivatives business."

As all NFC’s, for example here in Luxembourg, are potentially subject to compliance control by their Supervisor (i.e. CSSF in Luxembourg), what piece of advice could you give them? How to best prepare a possible control?

On July 13, 2018, CSSF has sent a new press release where the regulator specifies that it will increase its focus of oversight on the review of reported transactions to Trade Repositories and this involves all impacted counterparties.    First of counterparties must know that delegation of reporting does not equal delegation of the reporting responsibility   towards the competent authority.  Counterparty must have a clear and detailed understanding as well as evidence of the reporting obligations done by its counterparty on its behalf. In case the counterparty is doing itself the reporting – regular follow up of of the daily transactions sent to the TR as well as analysis of the TR feedback (ACK, NACK) is a must. All these processes must be well documented in policy and procedures. 


Are there any specific areas where Supervisors a focusing on when they review EMIR compliance?

Not really as far as I know, in theory and in practice, NFC must meet the all EMIR obligations they are subject to including reporting and risk mitigations techniques.  While often these operations are actually done, the counterparty suffer from a lack of documentation on the way they actually manage the EMIR requirements. This are is also important from a regulator point of view.


"While we are clearly moving to a new REFIT regulation, this does not mean a REFIT in terms of supervision at least in the next coming months."

I have the impression that our NFC members are convinced EMIR remain a highly theoretical regulation and that there is no control at all from National Supervisors. Could you give your views and experience on this perception?

As mentioned above, I recommend your members to read the latest CSSF Press Release on the topic. While we are clearly moving to a new REFIT regulation, this does not mean a REFIT in terms of supervision at least in the next coming months. 

The major issue for NFC’s was the exemption on collateral (at least when below thresholds). It seems that it will be maintain as is. However, do you think that we face a risk of change in the regulation in future or that banks suddenly for business purposes require more and more collateral or leave these derivative businesses, like FX business?

I do not think so. The spirit of EMIR REFIT is clearly to adapt the exchange of collateral when and where appropriate. Nevertheless, it is important to keep in mind that exemptions does not mean that no collateral can be applied.  While exemptions may be applicable for one transaction, counterparty can require the exchange of collateral for specific reasons related to the quality of the other counterparty or potential risks assessed for that particular transaction.