ESMA EMIR Q&A – Intragroup reporting exemption updates (plus some added UK EMIR guidance too)

ESMA EMIR Q&A – Intragroup reporting exemption updates WEB

You know the saying when you’re waiting ages for a bus, then three come along all at once? Well, that’s how it feels with the recent EU EMIR and UK EMIR validation updates, and then last week ESMA published an update to its EMIR Q&A.

The updated TR Q 51 provides further clarifications on the intragroup transactions (IGT) reporting exemptions, specifically on the following:

  • Reporting of details of derivatives when the IGT reporting exemption ceases to be valid; and
  • Location of parent undertaking for purposes of the IGT reporting exemption.

So what exactly are the updates?

Any form of legislation can be quite confusing as it tells you to cross-refer to this, that and all manner of documents in order to get to the final conclusion, and this isn’t any different here. The latest round of updates to the EMIR Q&A points the reader to take into account EMIR REFIT, but we’ve gone slightly deeper and also looked at the impact under UK EMIR REFIT too.


“Once the reporting exemption ceased to be valid due to a change in any of the conditions, referred to in the third sub-paragraph of Article 9(1) EMIR, as amended by Regulation 2019/834 (EMIR REFIT), what actions should the concerned counterparties undertake with regards to the derivatives that are outstanding? “

TR A 51 (I)

“The counterparties concerned should report the outstanding derivatives with Action type “N = New” and provide all the relevant details of those derivatives as they stand on the date when the exemption ceases to be valid, and report all subsequent lifecycle events as they occur. It is not necessary to report the modifications to the derivative that occurred between the date of conclusion of that derivative and the date when the exemption ceased to be valid. If the outstanding derivatives were previously cancelled with Action type “E = Error” at the moment when the exemption was granted, the counterparties should report such derivatives with a new UTI so that the reports are not rejected in accordance with the EMIR validation rules”

As a footnote to the above, ESMA provides the following guidance too here “Validation for the field 2.93 Action type: “Only one report with the action type “New” for a given combination of Counterparty ID – ID of the other counterparty-Trade ID shall be accepted”.

Some important points

EMIR REFIT (and also UK EMIR REFIT*) made updates to the original Article 9(1) of EMIR, specifically for IGT:

  • Reporting obligation shall not apply to derivative contracts within the same group where one of the counterparties is a non-financial counterparty or would be qualified as non-financial counterparty if it were established in the Union, and provided that:
  • both counterparties are included in the same consolidation on a full basis; and
  • both counterparties are subject to appropriate centralised risk evaluation, measurement and control procedures;
  • the parent undertaking is not financial counterparty.


Any counterparties meeting the above criteria and wishing to apply for the exemption shall notify their regulator. The exemption shall be valid unless the regulator doesn’t agree that all the relevant criteria has been met within the three months from the notification being made.


An interesting point under UK EMIR REFIT is the timing that that exemption will apply from. Under UK EMIR REFIT, we note that if the FCA provides no objection, that the exemption will be valid from the end of the three-month period after the notification has been made.

As an additional point, and for further guidance, once the FCA provides notification of exemption, the counterparties “…should send reports with Action type “E = Error” for all open derivative contracts with the counterparties for which the reporting exemption is valid.”

*Under UK EMIR REFIT the same conditions as per EU EMIR REFIT have to be met, but the first bullet point is amended as follows:

  • “any intragroup transaction where at least one counterparty is a non-financial counterparty (or would be qualified as a non-financial counterparty if it were established in the UK).”

Further guidance on notifications and exemptions under UK EMIR can be found on the FCA’s website.


“In the case of derivatives contracts where at least one of the counterparties is a non-financial counterparty: does the exemption of reporting obligation for intra-group transactions introduced in Article 9(1) of EMIR REFIT apply when the parent undertaking is established in a third country?”

ESMA EMIR TR Q 51 (M) Answer provided by the European Commission in accordance with article 16b(5) of the ESMA Regulation*

“The exemption contained in Article 9(1) of EMIR does not cover intragroup transactions for which the parent undertaking is established in a third country, even if the transaction occurs between two counterparties which are both established in the EU. This conclusion is based on the following elements:

  1. The definition of parent undertaking refers to an undertaking governed by the law of a Member State and nothing in EMIR indicates a will to modify that reference.
  2. This interpretation fits the actual purpose of Article 13 of EMIR: deference is granted where there is equivalence with the jurisdiction hosting the parent undertaking.
  3. This interpretation ensures a meaningful use and purpose of the transparency objective of Article 9 while limiting the exemption in article 9(1) to the minimum necessary.”

What else does this mean?

In summary, and in keeping with the spirit that EU EMIR applies to EU counterparties (as UK EMIR applies to UK counterparties). Moreover, Article 13 of EMIR and as referenced above, requires ESMA to assist the European Commission in monitoring and preparing reports to the European Parliament and to the Council on the international application of principles in a number of articles, including the reporting obligation under Article 9 of EU EMIR. Therefore the reporting exemption here wouldn’t apply where the parent undertaking is located in a third country such as the UK.

What do ESMA Q&As mean for UK counterparties?

For those of you that missed the FCA’s statement from 2020, documents such as ESMA’s Questions and Answer documents (also known as non-legislative material) were not incorporated into UK law. However, the FCA broadly went on to say that firms providing services in the UK should adhere to these as appropriate.

The FCA’s document entitled Brexit: Our approach to E.U and non-legislative materials can be found on its website.

  • Kaizen provides comprehensive quality assurance testing for firms reporting under both UK and EU EMIR.  We don’t do sample or scenario testing – we test all reported data to give you a full picture of the quality of your reporting, allowing you to evidence where you are right and identify where you are wrong.  For a conversation with one of our regulatory experts about your reporting challenges, please contact us.

  • To read the latest EMIR Q&A please visit ESMA’s website.