FIA Europe Publishes Report Regarding Valuation and Collateral Reporting under EMIR (with Damianova Comment)

FIA Europe published a report, titled "Reporting Valuation and Collateral Data under EMIR for 12 August 2014," which sets out the views of the exchange-traded derivatives ("ETDs") industry with regard to the reporting of valuations and collateral data under EMIR.

According to FIA Europe, it has been working with members since 2013 to interpret EMIR's reporting requirements for ETDs, while encouraging ESMA staff to discuss how best to apply the collateral and valuations rules to ETD markets to ensure unified interpretation between ESMA and market participants.

In the report, FIA Europe addresses a number of issues in order to provide a clear and consistent interpretation of EMIR's reporting requirements, including the following:

• timing for reporting: FIA Europe explained that, according to the ESMA Q&A, the start date for reporting will be August 11, 2014;
• a consistent interpretive approach should be applied between asset classes and the OTC for the sake of simplicity and to minimize the need for different sets of "logic";
• report cumulative variation margin, which is akin to net present value with respect to OTC derivatives; and
• collateral approach:
  • client as counterparty: report "Uncollateralized" in field 22, because clearing members do not post collateral to clients
  • CCP as counterparty: clearing members will report "One Way" to indicate that they have posted collateral to the CCP.

Damianova Comment: ETDs are perhaps the hardest product to report under EMIR, so this is welcome guidance indeed.