CYPRUS: CySEC Circular on EMIR

Tuesday February 18 2014

The Cyprus Securities and Exchange Commission (CySEC) has published Circular CI144-2014-07 for the attention of Cyprus investment firms and UCITS Management Companies.

The Circular mainly concerns the lack of clarity in respect of the definition of a derivative contract under MiFID due to different transposition of the Directive across EU Member States. This is particularly true in the case of foreign exchange (FX) forwards and physically settled commodity forwards. CySEC has therefore highlighted the letter sent by ESMA on 14th February 2014 to the European Commission in order to clarify the treatment of certain categories of contracts. Until then, the relevant provisions of EMIR will not be implemented for contracts that are not clearly identified as derivatives contracts across the Union, in particular for:

• FX forwards with a settlement date up to seven days.
• FX forwards concluded for commercial purposes.
• Physically settled commodity forwards.

CySEC has also provided more information in respect of reporting to trade repositories. Reporting without a LEI is not in compliance with EMIR. However, the Commission is aware of the difficulties that several Regulated Entities are facing in getting a LEI on time and, if a Regulated Entity has to report and does not have a LEI, it is preferable to report, on a temporary basis, without the LEI than not to report at all. The Commission expects most Trade Repositories to be able to accept reports without LEIs.

CySEC have also issued a note within the Circular in respect of the amended ESMA Questions & Answers on EMIR on 11th February 2014.

Click on the above link for the Circular.