Reporting

Trade repository reporting is one of the key requirements of EMIR. The objective is to provide regulatory authorities with transparency in the derivatives markets to facilitate identification and mitigation of systemic risk.

EMIR requires the reporting of all derivatives contracts to a Trade Repository (TR). TRs are entities regulated by ESMA that centrally collect and maintain the records of all derivatives trade related data.

In-scope counterparty types for Trade Reporting include:

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

Non-EEA (European Economic Area) counterparties generally do not have to report their side of the trades (whereas the EEA counterparties have to report their side) under EMIR.

In-scope products for Trade Reporting include:

• Over-The-Counter (OTC) derivative products including both cleared and uncleared.
• Exchange Traded Derivatives
• HSBC is including Foreign Exchange (FX) physically settled forwards as in scope until further guidance is issued

HSBC is aware of the clarification provided by ESMA on 26^th September 2018 regarding reporting obligations under MiFID II (RTS22 and RTS23 Reporting) and EMIR (Trade Reporting) and has considered the implications of this guidance. This notice sets out how we treat such forwards for purposes of reporting required by various regulations.

• HSBC offers clients the ability to simultaneously trade two independent FX Forwards as a single package; we offer this for purposes of pricing and booking convenience.
• HSBC does not provide liquidity in Single FX Swap instruments (single instruments executed as FX swap points with one ISIN), unless on a pre-agreed basis.

Going forward, HSBC will continue to support trading of two FX Forwards as a strategy of two independent trades, legally confirmed independently with a separate confirmation for each FX Forward leg and represented for MiFID and EMIR reporting purposes with two ISINs and two Unique Trade Identifiers. HSBC will include a package identifier on each leg and where the strategy includes FX Spot legs these will be excluded for the purposes of Trade and Transaction Reporting, in accordance with regulatory guidance. This includes, but is not limited to, where HSBC trades with you as a Systematic Internaliser. HSBC believes this is the best approach to achieve global consistency with other major reporting regulations, ensures clarity for counterparties, clients and regulators and aligns with the intended outcome of the ESMA Q&As.

In connection with the reporting requirements under EMIR, counterparties are required to generate and agree UTIs in respect of the derivative contracts to be reported. Accordingly, each derivative transaction requires a UTI which is unique to each trade and applies throughout that trade’s existence. The UTI will enable the trade to be clearly identified and matched.

If you are only subject to reporting under EMIR (please see below in respect of UTI generation for swaps that are also subject to Title VII reporting), we need to know how you intend to agree and exchange UTIs with us. The form below should have been completed and emailed to emir.client.support@hsbc.com by 1 February 2014. If we did not hear from you by this date, we have assumed that you would like HSBC to generate UTIs and notify you of such UTIs.

• UTI Election Notice

Where a given derivative contract between you and HSBC is also a swap that is required to be reported pursuant to Title VII of the US Dodd-Frank Wall Street Reform and Consumer Protection Act (“Title VII”), the unique swap identifier (USI) will be used for the EMIR version of the trade report. In this case, the USI should be generated by the counterparty required to submit the Title VII trade report, which could either be you or HSBC, depending on the trade. Where trades are not executed on a middleware platform, an e-platform or other means where UTI generation is agreed at the outset, UTIs will be generated in accordance with ISDA Logic, which is a set of best practice tie-breaker rules used to determine the generating party and may result in you or us generating a UTI for a given trade. Details relating to ISDA Logic can be accessed using this link.

Trades entered into after 16 August 2012 and still outstanding on the reporting start date should have been reported by the reporting start date of 12 February 2014.

Trades entered into on or prior to 16 August 2012, which were outstanding on 16 August 2012, and which were still outstanding on the reporting start date of 12 February, need to be reported within 90 days of the reporting start date (i.e. by 13 May 2014). Additionally, HSBC was backloading these prior to 12 February 2014.

Trades entered into before 16 August 2012 which were still outstanding on 16 August 2012, or which were entered into on or after 16 August 2012, and which are not outstanding on the reporting start date need to be reported within three years of the reporting start date (12 February 2017).

An important prerequisite for backloading is the allocation and agreement of a Unique Trade Identifier (UTI) for all eligible trades in your current portfolio.

Your usual contacts in HSBC Operations will be in touch with you about this. They will explain the relevant varying processes for Foreign Exchange (FX), Rates, Equities and Credit (as applicable to your portfolio).

New trades: trades entered into on or after 12 February 2014

New contracts, changes to existing contracts (including confirmation), and early termination of contracts need to be reported no later than the working day following the relevant event (T+1).

When subject to EMIR reporting requirements, an EEA counterparty to a trade is required to send two blocks of data electronically to the Trade Repository of its choice:

• Counterparty data (seller or buyer data block): this block of data includes a total of 16 fields such as the counterparty’s broker ID, beneficiary ID or the ‘directly linked to commercial activity or treasury financing’ (’hedging’) information
• Common data: this block of data includes a total of 59 fields amongst them the UTI, Product ID, notional amount, currency and other trade static and economic data. These data fields are identical for both counterparties.

ESMA expects all counterparties to provide a Legal Entity Identifier (LEI) or an interim ‘pre-LEI*’. Many Local Operating Units (LOUs) are able to provide global pre-LEIs which means they are able to generate a pre-LEI for clients from any country.

You can find more on LEI and pre-LEI on The Legal Entity Identifier Regulatory Oversight Committee (LEIROC) website

*Pre-LEIs are accepted as reporting identifiers before they are officially endorsed by the LEI Regulatory Oversight Committee (ROC).

The European Commission's Regulatory Fitness and Performance programme in 2016 (“REFIT”), assessed the existing requirements under EMIR to determine whether they could be simplified and whether certain compliance costs that were considered disproportionate could be eliminated.

This has led to the preparation of a new Regulation (“EMIR REFIT”) that directly amends certain provisions of the existing EMIR Regulation, including reporting obligations.

From 18 June 2020, Financial Counterparties (FC) will be responsible for the reporting of in-scope OTC derivatives contracts with their NFC- counterparties.

EMIR Trade Repository reporting obligations are a challenge for most companies.

Fortunately, the EMIR legislation enables a counterparty to delegate the reporting of its trades to the other counterparty. This capability is called ‘delegated reporting’.

HSBC understands there are client needs in this area and is offering a full delegated reporting model, where we report both counterparty data and common data on your behalf.