Questions and answers

EMIR is a European regulation on OTC derivatives. The regulators desire to have more insight in the derivative markets. Hence, they developed EMIR to achieve this goal.

In relation to derivatives markets, the leaders of the G-20 announced a commitment in 2010 to increase regulation on non-centrally cleared (OTC) derivatives with the objective of increasing stability (mitigation of systemic risk and transparency).

As far as the European Economic Area (EEA) is concerned, this commitment is shaped in the form of the European Markets Infrastructure Regulation (EMIR) and its regulatory technical standards (RTS) and implementing technical standards (ITS).

ESMA is the European regulatory body that contributes to regulation of financial services firms, however, the local regulators are responsible for examining whether counterparties are compliant to EMIR.

Certain obligations under EMIR involve a repapering exercise i.e. parties need to be requested to agree on certain matters bilaterally concerning the following obligations:

1. Represent to my counterparty the entity’s qualification as a NFC- or NFC+
2. Employ processes to ensure timely confirmation of transactions;
3. Have formalized rules for resolving disputes;
4. Reconcile portfolio of OTC derivatives at a frequency determined by EMIR (from every business day for an NFC+ with more than 500 outstanding trades on a reducing scale to once per year for NFC- with less than 100 outstanding trades);
5. Report your OTC derivatives transactions to a trade repository

Please refer to articles 9 and 11(1) of EMIR.

Other obligations are concerned and among others portfolio compression, marking-to-market, margin requirements (not yet into force) and clearing.

Please contact us to receive the suite of documents.

Yes, your transactions have to be consistent with EEA regulation. The derivatives documentation between you and Rabobank will need to take EMIR obligations into account.

This can be done by either:

1. Signing two generic ISDA protocols (ISDA 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol + ISDA 2013 EMIR NFC Representation Protocol); or
2. Signing bilateral EMIR terms with Rabobank wherein the ISDA protocols are agreed bilaterally between the parties or Rabobank specific EMIR terms.
3. Signing a bilateral Disclosure Agreement for the benefit of reporting if requested for Rabobank for certain jurisdictions.

Further as an EEA (so not for parties outside of the European Economic Area) NFC-/NFC+ you will have a reporting obligation for OTC and listed derivatives transactions. Rabobank offers a reporting service to Large Corporates to delegate the reporting as far as OTC derivatives transactions entered into with Rabobank are concerned.

This is documented by a separate bilateral document, the Client Reporting Service Agreement (CRSA), available via email.

This will constitute a breach of EMIR. It will be likely that regulators will ask the banking sector to provide information from clients and counterparties with whom they have not established adequate EMIR procedures and documentation.

Furthermore, you are not able in the near future to enter into new OTC derivatives transactions with Rabobank without appropriate EMIR documentation.

European Union countries (Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom) and the additional countries part of the EEA (Iceland, Liechtenstein, Norway).

Yes.

Yes, we do, with some amendments, however. Please contact our EMIR legal team for more information at EMIR.documentation@rabobank.nl.

Please follow these links:

Yes this is possible. The EMIR ISDA protocols cover not only the ISDA documentation but also any other agreement covering OTC derivative transactions. Note however that any agreement signed after the adhesion by both parties to the protocols will not be covered by the protocols which means a separate repapering exercise must be carried out.

ESMA will need to have determined that the applicable legal and supervisory arrangements of the jurisdiction in which such a CCP is established are equivalent to the respective requirements under EMIR and the CCP must be recognized by ESMA.

Please send an email to emir.documentation@rabobank.nl to receive one of the following Bilateral EMIR terms:

All NFCs and FCs within the EEA are obligated to report conclusion, modification or termination of any derivative contract with any counterparty, including TCEs. Furthermore, FCs and NFCs+ are obliged to report the daily valuation of such contracts.

Every counterparty located in the EEA must ensure that the common trade details will be reported to the designated trade repository. Common transaction details are transaction type, maturity, notional, price and settlement date. Additional data can be required.

Parties are not required to report themselves but can outsource their reporting obligations to a third party.

All listed derivatives and OTC derivatives, both cleared and non-cleared. Not only the conclusion of the transactions but also the modification and termination of the transactions need to be reported. Please refer to article 9 of EMIR.

Non-financial counterparties (“NFCs”) to OTC derivatives trades are defined under EMIR as entities established in the EEA other than financial counterparties. Financial counterparties are investment firms, credit institutions, insurance, assurance and reinsurance undertakings, UCITs and their management company, institutions for occupational retirement provision or alternative investment funds, such as a private equity or hedge funds (Article 2(8) EMIR). This means that an entity is an NFC if it is not an investment firm, credit institution, insurance, assurance or reinsurance undertaking, UCIT or its management company, institution for occupational retirement provision or alternative investment fund, such as a private equity or hedge fund. This includes a large corporate.

Within the NFC qualification two different categories of NFC apply:

NFCs that trade OTC derivatives below the thresholds set by the European Securities and Markets Authority (ESMA) are being referred to in market commentary as NFC- and NFCs that trade OTC derivative above clearing thresholds set by the ESMA are being referred to in market commentary as NFC+. Please refer to articles 2(8) and (9) of EMIR.

The threshold must be determined by reference to the aggregate amount of the notional amounts of all non-hedging OTC derivative contracts (gross notional value) and do not refer to their mark-to-market value. All OTC derivative contracts, including OTC derivative contracts that have been voluntarily cleared, from all NFC entities within the same group must be taken into account on an aggregated basis for the calculation of the threshold.

A NFC which exceeds the threshold for one class of assets qualifies as a NFC+ and will be subject to extended obligations under EMIR for all classes of assets. Only the clearing obligation will apply for the specific asset classes for which the clearing thresholds is exceeded.

A FC which exceeds the threshold for one class of assets qualifies as a FC+ and will be subject to extended obligations under EMIR for all classes of assets. Please refer to articles 4a and 10 of EMIR.

Please refer to article 10 of EMIR and of the RTS on OTC derivatives.

Not all OTC derivative contracts count towards the clearing threshold. Those OTC derivative contracts entered into in order to reduce risks relating to the commercial or treasury financing activity of the non-financial entity, or of non-financials of the group it belongs to, are excluded from the calculation of the clearing threshold. Criteria to determine those contracts are specified in Technical Standards drafted by ESMA that have been endorsed by the European Commission. All other OTC derivative contracts entered into by the non-financial or other non-financial entities of the group shall be taken into account for the calculation of the clearing threshold. When the amount for one class of OTC derivative contracts is surpassed, you exceed the clearing threshold..

For Large Corporate Clients Rabobank offers this service, for Institutional Clients this can be agreed on a case-by-case basis.

Currently it doesn’t, but we reserve the right to do so in the future. The main focus at the moment is to help you comply with the EMIR reporting requirements.

We will report all eligible derivatives transactions under EMIR that you have closed with Rabobank. Please note that we will not report transactions you have in place with other financial institutions or your intercompany transactions.

Rabobank has appointed: DTCC

This differs per country. Click on the LEI link on the right of the page for the latest information or click here.

To continue trading we advise you to return the EMIR terms as soon as possible. You can also sign the Client Reporting Service Agreement, return it to us and provide the LEI code as soon as this code is available in your jurisdiction. In the meantime, we will report outstanding trades between you and Rabobank with a temporary unique identifier code.

LEI: DG3RU1DBUFHT4ZF9WN62

Yes, this is possible. As soon you have obtained an LEI code please inform Rabobank at EMIR.documentation@rabobank.nl.

Due to uncertainty and potential inconsistencies in the implementation and adoption of platform generated UTIs before February 12, 2014 – which could result in a large number of reporting breaks - the ISDA Market Architecture Group (MAG) suggests a phased in approach with respect to the use of UTIs generated by central execution platforms. Until the UTI generation by execution platforms has been matured, Rabobank will follow the rules for bi-lateral trading, meaning that the UTI will be issued by one of the counterparties in the trade.

For NFC counterparties the standard UTI generator will be Rabobank. When trading with Financial counterparties, Rabobank will follow the “ISDA tie breaker rules” for generating the UTI.

Rabobank will generate UTIs for all Non Financial counterparties, unless you explicitly state that you want to adhere to the “ISDA tie-breaker rules” out of the ISDA best practice document.

When trading with Financial counterparties, Rabobank will follow the “ISDA tie breaker rules” for generating the UTI.

Yes, Rabobank includes UTIs in the confirmations as of February 12, 2014.

Yes, Rabobank is able to distribute the UTI through Trioptima, Mysis and SWIFT as of February 12, 2014.

The bank will deliver UTIs for outstanding trades on February 12, 2014 for those trades Rabobank is the issuer of the UTI. The deadline for reporting on closed historical trades (backloading) is set in 2017. Therefore UTIs for these trades will be provided in time after the outstanding trades are covered.

You can contact your relationship manager to agree to the UTI generation and distribution.

If you prefer to get insight in your reported trades we advise you to open an account with the trade repository (DTCC). Rabobank can report the transactions for you into this account. When you haven’t opened a DTCC account, you cannot retrieve trades reported by Rabobank for you from DTCC. In exceptional circumstances Rabobank can generate a personalised report.

Rabobank reports all required data fields to the trade repository. The fields differ per instrument traded.

Clearing is a process where two counterparties to an OTC contract do not face each other directly, but indirectly through a central clearing counterparty. This eliminates the counterparty risk and offers the benefits of netting. The clearing obligation is further explained in the main text.

In general, the clearing obligation applies/will apply to FC and NFC+. The scope of the clearing obligation under EMIR is further explained in the main text.

The difference is based on a quantitative threshold linked to the level of activity of the counterparty in OTC derivatives (a threshold of EUR 8bn of month-end average gross notional outstanding amounts), which is in line with the lowest threshold defined in the BCBS-IOSCO document “Margin requirements for non-centrally cleared derivatives”.

The two categories have been introduced primarily to ease the situation for the group of FC and AIFs/UCITS firms with low level of activity on the OTC market, to promote incentives for clearing and to reduce compliance costs stemming from the clearing regulation.

Clause 4 of the IRD RTS on mandatory clearing reflects the minimum maturities for OTC derivative contracts for the relevant clearing categories.

ESMA aims to preserve fair competition between EEA and non-EEA counterparties, and therefore the phase-in period as well as the categorization of counterparties remains the same as would be the case should the counterparty be established in the EEA. More information on the treatment of third-country entities can be found in the main text.

Intra-group transactions between 2 EEA (3C) entities can benefit from an exemption from the clearing obligation subject to specific conditions. Moreover, this exemption only applies when two EEA counterparties have notified the respective authorities about making use of this exemption. More specifically, the notification must be made at least 30 calendar days before the intended use of the exemption.

Furthermore, such exemption only applies to contracts between two counterparties (that belong to the same group) established in EEA and a 3C where the counterparty established in the EEA was authorized to apply for this exemption by its respective authority and provided that the condition about the equivalence of rules related to the relevant obligation is fulfilled.

The clearing obligation only applies to FCs and NFC+. Depending on the category, the timing of the obligation differs, and frontloading obligations may apply. NFC+ that are already clearing members for one of the relevant CCPs face the strictest obligations (frontloading and quick effect of the clearing obligation) because these NFC+ belong to Category 1. NFC+s that are Alternative Investment Funds are to be classified in category 2 (if the threshold of 8bn of the month-end average gross notional outstanding amount is reached) or category 3. The frontloading obligation only applies to category 2. As for other NFC+, they are to be classified in category 4 which is the category for which the less strict obligations apply (more time to clear i.e. 3 years after the publication of the RTS and no frontloading). More information on clearing and NFCs can be found in the main text.

A list of recognized CCPs by ESMA in the EEA and in a third (non- EEA) country can be found here under post-trading: