Derivatives Reporting following the end of the UK Transition Period

On the 4th December 2020, the Malta Financial Services Authority (“MFSA”) issued a circular advising relevant entities on the derivatives reporting obligations emanating from the European Markets Infrastructure Regulation (the “Regulation”) following the end of the UK transition period, being the 31st December 2020.

In particular, the circular is addressed to financial and non-financial counterparties (together defined as “Counterparties”) , which use the services of Trade Repositories based in the United Kingdom in order to report their derivative transactions and to the Counterparties which trade with UK counterparties.

As things stand, the withdrawal agreement entered into by the United Kingdom and the European Union in order for the UK to withdraw its membership from the European Union has been in effect since the 31st January 2020. Nevertheless, the withdrawal agreement had created a transitory period whereby although the UK had effectively ceased to be an EU member state, it would continue to apply EU law until the 31st December 2020.

As counterparties are required to report their derivative transactions to registered trade repositories based in the European Union, Counterparties should ensure to stop making use of UK based trade repositories and switch to trade repositories based in an EU member state as from the 31st December 2020.

From the end of the transition period, UK financial Counterparties will no longer be responsible for the reporting of OTC derivatives, subject to the mandatory allocation of their responsibility under the Regulation. The EU Counterparties will become responsible for the reporting of those derivatives allocated as from the 1st January 2021.

Feel free to contact us should you require any further information on the reporting obligations deriving from the Regulation.