EMIR - European Market Infrastructure Regulation

The European Union is introducing the European Market Infrastructure Regulation (EMIR) to enhance the efficiency and robustness of the derivatives market. The five main EMIR requirements for you as a derivatives trading corporate or institution are:

  1. Counterparty categorisation
  2. Risk mitigation techniques
  3. Trade repository (TR) reporting
  4. Central counterparty (CCP) clearing
  5. Margin requirements for non-cleared OTC derivatives


This page describes each of these requirements in brief and what Nordea and you as customer should do to comply with the requirements. This page also provides information about Nordea’s status in relation to EMIR for the benefit of our customers.

Legal Entity

Legal Entity Name to be used before 1st January 2017: Nordea Bank Finland Plc

Legal Entity Name to be used on and after 1st January 2017: Nordea Bank AB

 

Legal Entity Identifiers (LEI)  - CICI code

LEI code to be used before 1st January 2017: CXW2O4H2U3MBVXMY1773

LEI code to be used on and after 1st January 2017: 6SCPQ280AIY8EP3XFW53

 

EMIR counterparty categorisation
Financial Counterparty (FC)

 

Adherence to ISDA 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol
Adhering entity before 1st January 2017: Nordea Bank Finland Plc
Adhering entity on and after 1st January 2017: Nordea Bank AB
Adherence to protocol Yes
Portfolio data Data sending entity
Local business days Copenhagen (CET)

 

Adherence to ISDA 2013 EMIR NFC Representation Protocol
Adhering entity before 1st January 2017: Nordea Bank Finland Plc
Adhering entity on and after 1st January 2017: Nordea Bank AB
Adherence to protocol Yes
Legal Entity Identifiers (LEI)
Legal Entity Registered LEI (CICI-code) before 1st January 2017 Active LEI codes after 1st January 2017
Nordea Bank Finland Plc CXW2O4H2U3MBVXMY1773 Existing LEI code will not be active anymore
LEI code for Nordea Bank AB (publ) to be used
Nordea Bank AB (publ) 6SCPQ280AIY8EP3XFW53 6SCPQ280AIY8EP3XFW53
Nordea Bank Norge ASA 8UFQZZDNYQPXONCJED72 Existing LEI code will not be active anymore
LEI code for Nordea Bank AB (publ) to be used
Nordea Bank Danmark A/S 549300LX0YIEPRTY0Z32 Existing LEI code will not be active anymore
LEI code for Nordea Bank AB (publ) to be used
Nordea Hypotek AB (publ) 5493000K2HPWIF6MFO29 5493000K2HPWIF6MFO29
Nordea Eiendomskreditt AS 549300TTWFTM3HRP0618 549300TTWFTM3HRP0618
Nordea Liv & Pension, Livsforsikringsselskab A/S FA46PHXX1BSX003TQE78 FA46PHXX1BSX003TQE78
Nordea Livförsäkring Sverige AB - -
Livsforsikringsselskapet Nordea Liv Norge AS - -
Nordea Life Assurance Finland Ltd - -
Nordea Hypoteksbank Plc NOT ISSUED YET
LEI code will be available after 1st October 2016 as this is a new company
NOT ISSUED YET

EMIR counterparty categorisation 
Legal Entity EMIR categorisation before 1st January 2017 EMIR categorisation after 1st January 2017
Nordea Bank Finland Plc Financial Counterparty (FC) Does not exist
Nordea Bank AB (publ) Financial Counterparty (FC) Financial Counterparty (FC)
Nordea Bank Norge ASA Financial Counterparty (FC) Does not exist
Nordea Bank Denmark A/S Financial Counterparty (FC) Does not exist
Nordea Hypotek AB (publ) Financial Counterparty (FC) Financial Counterparty (FC)
Nordea Eiendomskreditt AS Financial Counterparty (FC) Financial Counterparty (FC)
Nordea Liv & Pension, Livsforsikringsselskab A/S Financial Counterparty (FC) Financial Counterparty (FC)
Nordea Livförsäkring Sverige AB Financial Counterparty (FC) Financial Counterparty (FC)
Livsforsikringsselskapet Nordea Liv Norge AS Financial Counterparty (FC) Financial Counterparty (FC)
Nordea Life Assurance Finland Ltd Financial Counterparty (FC) Financial Counterparty (FC)
Nordea Hypoteksbank Plc NOT STARTED YET
This new company will be established from 1st October 2016
Financial Counterparty (FC)
Financial Counterparty (FC)

 

Adherence to ISDA 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol
Legal Entity Adherence to protocol before 1st January 2017 Adherence to protocol after 1st January 2017 Sending or receiving entity Local business days
Nordea Bank Finland Plc Yes No Sending Entity Copenhagen (CET)
Nordea Bank AB (publ) Yes Yes Sending Entity Copenhagen (CET)
Nordea Bank Norge ASA Yes No Sending Entity Copenhagen (CET)
Nordea Bank Danmark A/S Yes No Sending Entity Copenhagen (CET)
Nordea Hypotek AB (publ) Yes Yes Sending Entity Copenhagen (CET)
Nordea Eiendomskreditt AS Yes Yes Sending Entity Copenhagen (CET)
Nordea Liv & Pension, Livsforsikringsselskab A/S Yes Yes Receiving Entity Copenhagen (CET)
Nordea Livförsäkring Sverige AB Yes Yes Receiving Entity Stockholm (CET)
Livsforsikringsselskapet Nordea Liv Norge AS Yes Yes Receiving Entity Oslo (CET)
Nordea Life Assurance Finland Ltd Yes Yes Receiving Entity Helsinki (CET+1)
Nordea Hypoteksbank Plc NOT STARTED YET
This new company will be established from 1st October 2016
Will adhere from that date
Yes Receiving Entity Helsinki (CET+1)

 

Adherence to ISDA 2013 EMIR NFC Representation Protocol
Nordea Legal Entity Adherence to Protocol before 1st January 2017 Adherence to Protocol after January 2017
Nordea Bank Finland Plc Yes No
Nordea Bank AB (publ) - Yes
Nordea Bank Norge ASA - -
Nordea bank Danmark A/S - -
Nordea Hypotek AB (publ) - -
Nordea Eiendomskreditt AS - -
Nordea Liv & Pension, Livsforsikringsselskab A/S - -
Nordea Livförsäkring Sverige AB - -
Livsforsikringsselskapet Nordea Liv Norge AS - -
Nordea Life Assurance Finland Ltd - -
Nordea Hypoteksbank Plc - -

EMIR supervisors


EMIR regulation

Risk mitigation techniques (In effect)
EMIR requires the compliance with the following risk mitigation techniques:

  • Timely Confirmation
  • Portfolio Reconciliation & Dispute Resolution
  • Portfolio Compression


Each of these are described below together with Nordea’s approach to ensure compliance.

Timely Confirmation
The timely confirmation requirement came into effect on 15 March 2013 and effects all OTC derivatives counterparties. It requires that the terms of derivatives transactions are confirmed swiftly after the transaction is executed and effectively means that you as customer should sign confirmations and send them back to Nordea as soon as possible.

Portfolio Reconciliation & Dispute Resolution
The portfolio reconciliation and dispute resolution requirements came into effect on 15 September 2013 and affects all OTC derivatives counterparties. In order to be compliant with these requirements, certain procedures must be in place between Nordea and a customer. To ensure that these procedures are in place Nordea has approached all derivatives customers by sending out letters. The content of these letters depends on the type of agreement in place with Nordea. Customers with an ISDA agreement are asked to adhere to the “ISDA 2013 EMIR portfolio reconciliation, dispute resolution and disclosure protocol”. Customers with a Nordea Master agreement receive a letter with amendments to the existing agreement, which automatically take effect unless the customer contacts Nordea about this. To perform the actual reconciliation Nordea will typically send you as customer a reconciliation report, which you then check against your own records. Should you identify an error you will be required to inform Nordea within a certain period of time.

Portfolio compression
The portfolio compression requirement came into effect on 15 Septermber 2013 and affects counterparties with 500 or more OTC derivatives transactions outstanding between them. It requires the analysis twice a year of the possibility to compress derivatives portfolios. Nordea will contact customers with whom any Nordea legal entity has more than 500 outstanding OTC derivatives to agree the necessary procedures.

Please contact emir@nordea.com at your earliest convenience if you do not believe you have received a Risk mitigation requirements letter from Nordea.

Counterparty categorisation

EMIR requires the categorisation of counterparties as Financial Counterparty (FC), Non-Financial Counterparty below the clearing thresholds (NFC-) or Non-Financial Counterparty above the clearing threshold (NFC+). The table below outlines the clearing threshold per asset class, which is defined as gross notional amount of non-risk reducing OTC derivatives held. All but the very largest corporates with substantial trading activity will be labelled NFC-.

 

NFC clearing thresholds
Asset class

Gross notional amount outstanding

Commodity € 3 billion
Credit € 1 billion
Equity € 1 billion
Foreign exchange € 3 billion
Interest rate € 3 billion

Trade Repository reporting (Live)

       Reporting obligation
All derivatives counterparties have a responsibility to ensure that information about their derivatives transactions are reported to a licensed trade repository, which is essentially a database that regulators use to monitor the derivatives market. The EMIR reporting obligation started on 12th February 2014, and applies to any trade that has been outstanding after 15th August 2012. As with all EMIR requirements private individuals are excluded from the reporting obligation.

Both counterparties to a derivatives transaction are under a legal obligation to ensure that the transaction is reported, when entered into, modified or terminated, to a trade repository. The transaction has to be reported no later than the working day following such conclusion, modification or termination. The operational reporting (but not the legal responsibility) can be delegated to the transaction counterparty or to a third party, in which case the delegating counterparty is able to ensure that the reported trades and values are correct by getting a user-license to the specific trade repository.

       LEI code
When transactions are reported to a trade repository the counterparties to the transaction must be identified by a Legal Entity Identifier (LEI). LEI is a new identifier unique for each legal entity developed globally to identify counterparties to financial transactions as well as for other purposes.

Obtaining a LEI is the responsibility of each counterparty to a derivatives transaction. If the customer has not obtained a LEI, Nordea cannot guarantee that the transactions Nordea report on behalf of the customer to the trade repository can be reconciled and sent further on to the regulators.

Please visit the LEI section for more information.

       Nordea’s offering
To reduce the effort of customers and help ensure fulfilment of the reporting requirement, Nordea offers reporting to trade repositories on behalf of customers for all trades executed directly with Nordea. Nordea’s reporting is an operational service only and it is the responsibility of the customer that the reported information is correct and complete in compliance with the EMIR regulation (see above). Nordea reports to the following trade repositories:

Nordea has sent out letters with information and conditions for the reporting service to most existing customers. If you don’t have access to such information and conditions for the service, please contact TradeRepositoryTeam@nordea.com. For new customers the reporting to a trade repository needs to be agreed before the first trade is executed.

Please contact TradeRepositoryTeam@nordea.com if you have any questions about Trade repository reporting or Nordea's reporting service.


 

Margin requirements for non-cleared OTC derivatives (Expected September 2016)
For OTC derivatives that are not CCP cleared, Financial Counterparties (FC) and Non-Financial Counterparties above the clearing threshold (NFC+) will be required to post collateral for all bilateral OTC derivatives trades. The detailed rules for this will be defined by the European Securities and Markets Authority (ESMA) and EU. Nordea will inform customers in due time about the detailed requirements.


Please contact emir@nordea.com if you have questions about any of the above

CCP Clearing (start 21 June 2016 for interest rate swaps)
Financial Counterparties (FC) and Non-Financial Counterparties above the clearing threshold (NFC+) will be required to clear standardised OTC derivatives. This is done at a CCP, which becomes the seller to all buyers and buyer to all sellers and thereby becomes the legal counterparty to each of the original trading counterparties. Clearing involves the posting and receiving of collateral, both Initial Margin to protect the CCP from the default of the counterparty and Variation Margin to settle daily market value changes of the trades of the counterparty. Most large banks will become direct clearing members at a CCP, but smaller market participants will typically become clients of a clearing broker. To guarantee the ability to trade and clear with Nordea at a CCP a client of a clearing broker must sign an execution agreement with Nordea.

The timing and scope of these requirements depend on CCP clearing membership and, for non-clearing member financial counterparties, the size of non-cleared OTC derivatives gross notional amounts. Nordea is classified as a Category 1 counterparty and will CCP clear accordingly.


Please contact emir@nordea.com at your earliest convenience if you will soon start CCP clearing and have not been contacted by Nordea.