Transaction reporting
Under EMIR, transactions in derivatives must be reported to a registered trade repository - an entity that centrally collects and maintains the records of financial transactions to ensure transparency for market participants and regulators.
As a general rule the reporting obligation under EMIR is two-sided, i.e. both parties are required to report the same trade, and the two reports should match.
Mandatory delegated reporting (NFC-)
An exception to the two-sided reporting is where Financial Counterparties (FCs), such as Nordea, are solely responsible and legally liable for reporting OTC derivative contracts entered into with Non-Financial Counterparties that are not subject to the clearing threshold (NFC-).This automatic delegation is known as the “mandatory reporting”.
NFC- clients can choose to opt-out and report themselves, becoming responsible and legally liable for the reporting.
Voluntary delegated reporting (NFC+ and FC)
Non-Financial Counterparties subject to the clearing obligation (NFC+) and Financial Counterparties (FC+ or FC-) are responsible and legally liable to report their OTC derivatives, but the reporting can be delegated to Nordea (voluntary delegated reporting) if there is a reporting agreement in place.
In line with industry best practices, Nordea will monitor EMIR reporting metrics and notify delegated reporting counterparties if errors breach the notification limits as specified in ESMA’s guidelines for reporting.
For new customers the reporting to a trade repository needs to be agreed before the first trade is executed.
Legal Entity Identifier (LEI) code
As part of the transaction reporting, a unique reference number to identify each party to the transaction needs to be included. The unique identifier is called a Legal Entity Identifier (LEI).
Hence it is required for all legal entities (including individuals trading as entrepreneurs/sole traders) using derivative instruments to obtain a LEI code and maintain it throughout the lifetime of the derivative contract. Without a LEI code our clients will not be able to trade derivatives*.
It is the responsibility of the client to register for and obtain a LEI code. The registration is made with a Local Operating Unit (LOU) authorised by the Global Legal Entity Identifier Foundation (GLEIF).
Clients can find a LOU through the GLEIF webpage, or through https://www.nordea.com/en/our-services/lei
*Unless the client is wholly exempted from EMIR, or only trading products not in scope of EMIR (and not in scope of MiFID or other regulatory reporting to supervisory authorities which also requires a LEI code).
Please contact TradeRepositoryTeam [at] nordea.com (TradeRepositoryTeam[at]nordea[dot]com) if you have any questions about trade repository reporting or Nordea’s reporting service.