UK EMIR / EU EMIR CLASSIFICATION AND PARTICIPANT OBLIGATIONS

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(On this page, all Capitalised terms shall refer to their corresponding definitions in the FCA's Handbook, available at https://www.handbook.fca.org.uk)

  1. Overview

This page sets out relevant information regarding classification and regulatory obligations under:

  • The UK European Market Infrastructure Regulation (as onshored into UK law following the UK’s withdrawal from the European Union, hereafter “UK EMIR”), which applies to UK-based participants; and
  • The EU European Market Infrastructure  Regulation (EU Regulation No. 648/2012) (“EU EMIR”), which may apply to participants in the European Union or trading with EU counterparties.

Participants are responsible for determining their own regulatory classification and obligations under the applicable regime.OptAxe MTF may rely on representations made by participants for operational and reporting purposes but does not assume responsibility for verifying aparticipant's regulatory classification.

 

 

2. Applicability

As an FCA-regulated UK Multilateral Trading Facility(MTF), OptAxe operates under UK EMIR. However, where participants are subject to EU EMIR, this page also outlines relevant provisions to facilitate cross-border compliance. This informatiion is provided for assistance, however, it is non-exhaustive and participants shall be responsible for their own ongoing compliance.

This page does not constitute legal advice and should not be relied upon as such. Participants should should seek their own independent legal and regulatory advice to determine their classification and obligations.

 

 

3. Counterparty Classification

Participants must notify OptAxe in writing of their classification under UK EMIR and/or EU EMIR. This includes, but is not limited to, whether the participant is:

  • A Financial Counterparty (FC);
  • A Non-Financial Counterparty above the clearing threshold (NFC+); or
  • A Non-Financial Counterparty below the clearing threshold (NFC−).

In the absence of notification to the contrary, OptAxe will treat the participant as a Financial Counterparty, notwithstanding the participant’s actual regulatory status, if different.

 

 

4. Summary of EMIR/UK EMIR Regulatory Obligations

Both UK EMIR and EU EMIR impose the following categories of obligations on relevant counterparties engaged in over-the-counter (OTC) derivative transactions:

4.1 Central Clearing Obligations

Certain standardised OTC derivatives are subjectto mandatory clearing through authorised Central Counterparties (CCPs). As ofthe date of this Schedule, these obligations do not currently apply to FX options or other FX derivatives.

4.2 Risk Mitigation for Uncleared Trades

Where any trades on the OptAxe MTF are not centrally cleared, counterparties may be subject to bilateral risk mitigation requirements, including:

  • Timely confirmation;
  • Portfolio reconciliation and dispute resolution;
  • Daily mark-to-market valuation;
  • Exchange of variation and initial margin (subject to thresholds).

4.3 Trade Reporting

All in-scope derivatives must be reported to an authorised Trade Repository (TR) by at least one counterparty. Participants are solely responsible for ensuring compliance with these reporting obligations.

OptAxe may assist participants by generating or transmitting Unique Transaction Identifiers (UTIs) or by supporting delegated or assisted reporting arrangements. Such services are subject to separate agreement and do not transfer legal responsibility for reporting from the participant to OptAxe.

 

4.4 Clearing Thresholds

Counterparties must assess whether their OTC derivatives trading activity exceeds the applicable clearing threshold in force from time to time for OTC foreign exchange derivatives, based on the aggregate average notional amount (AANA) over a 12-month period. Exceeding the applicable threshold may result in mandatory clearing and margin requirements. Participants should note potential divergence between UK and EU EMIR thresholds and monitor FCA or ESMA guidance for updates.

 

5. Classification Reference – Financial Counterparties (Illustrative Purposes)

A participant may qualify as a Financial Counterparty under UK EMIR or EU EMIR if it is, for example:

  • A bank or credit institution;
  • An investment firm;
  • An insurance or reinsurance undertaking;
  • A UCITS or UCITS management company;
  • An occupational pension scheme;
  • An alternative investment fund (AIF) or its manager (AIFM);
  • A central securities depository.

Participants are responsible for determining their correct classification in accordance with applicable regulation. 

 

6. Changes in Classification or Threshold Status

Participants must promptly notify OptAxe in writing via email to compliance@optaxe.com or client portal of any change in their classification or clearing threshold status under UK EMIR or EU EMIR within 5 business days of the relevant change. Failure to notify may result in reporting errors or operational issues, for which OptAxe accepts no liability, and the participant shall be reponsible for any penalties, charges, costs or enforcement action taken against OptAxe resulting from such failure.