UK EMIR

For a Japanese financial institution that trades derivatives with UK counterparties, reporting, clearing, and margin exchange raise the question of whether the UK text applies to the trade.

EMIR as UK domestic law

UK EMIR is the version of the European Market Infrastructure Regulation (EMIR) that the UK keeps as its own law after leaving the EU. The Financial Conduct Authority (FCA) uses this name, and the title of the legislation is the same as that of the EU regulation (Regulation (EU) No 648/2012)¹. The substance of the EU's EMIR is covered in the EMIR article.

EU regulations and similar instruments that were operative immediately before the end of the transition period on leaving the EU (IP completion day, 11pm on December 31, 2020) form part of UK domestic law on and after that day, under the European Union (Withdrawal) Act 2018². EMIR became part of domestic law under this provision. After that, a number of statutory instruments (SIs) and binding technical standards (BTS) amended it to replace the roles of EU institutions and the European Securities and Markets Authority (ESMA) with UK authorities³.

The regulation requires the following three things⁴.

• Report the details of derivative contracts to a trade repository that the FCA has registered or recognized
• Clear OTC derivatives that are subject to the clearing obligation through a central counterparty
• Apply risk-mitigation techniques, including operational procedures and margin, to OTC derivatives that are not cleared

The UK text continues to be amended by UK legislation. The regulation is listed among the items to be revoked under Part 1 of Schedule 1 to the Financial Services and Markets Act 2023. The revocations in that Schedule are being brought into force in stages, provision by provision⁵.

Responsible authorities and how the provisions divide their roles

In the UK, the roles that ESMA and the national authorities of member states hold in the EU are divided among the FCA, the Bank of England (BoE), and the Prudential Regulation Authority (PRA). The FCA is responsible for the conduct regulation of financial services, and the PRA, as part of the BoE, regulates the prudential soundness of banks, insurers, and major investment firms⁶. The regulation assigns each matter as follows⁷.

Penalties for breaches are left to a 2013 order⁸.

The provisions were checked in the version published on legislation.gov.uk and retrieved on October 5, 2026.

Differences from the EU's EMIR

The addressees of the provisions and some of the values differ from the EU's EMIR. The table below shows the differences between the two versions.

Of the clearing threshold values, those for credit and equity (EUR 1 billion) and for interest rate and foreign exchange (EUR 3 billion) are the same on the FCA page and the ESMA page¹³¹⁴. The UK text provides that the same thresholds also apply to the clearing obligation of an FC, as they do for an NFC¹⁵.

The 2024 amendments to the EU's EMIR (EMIR 3) are EU legislation made after the UK's departure, so they are thought to fall outside what the Withdrawal Act made part of domestic law². Amendments on the UK side are made by UK legislation. For that reason, the EU's EMIR amendments from 2024 onward cannot be applied as they stand to the UK text.

What the UK text requires

Who is covered

The FCs are as follows¹⁶.

An investment firm is a person with permission under Part 4A of the Financial Services and Markets Act (FSMA) that carries on, in the UK, regulated activities relating to investment services and investment activities. A person with permission as an exempt investment firm is excluded. Only a person that would need authorization under the EU's investment services directive (MiFID) if its head office were in the EEA is covered. A UCITS or AIF set up only for employee share schemes is excluded, and so is an AIF that is a securitization special purpose entity.

An NFC is an entity established in the UK other than an FC¹⁶.

Clearing obligation

The clearing obligation covers the classes of OTC derivatives declared subject to the clearing obligation. A contract is covered when it is entered into between the following combinations. Here, "an FC subject to the obligation" and "an NFC subject to the obligation" mean an FC or NFC that has exceeded the clearing threshold or has not calculated its positions¹⁷.

• Two FCs subject to the obligation
• An FC subject to the obligation and an NFC subject to the obligation
• Two NFCs subject to the obligation
• An FC or NFC subject to the obligation and a third-country entity that would be subject to the clearing obligation if it were established in the UK
• Two third-country entities that would each be subject to the clearing obligation if established in the UK, but only where the contract has a direct, substantial, and foreseeable effect within the UK or where the obligation is necessary to prevent evasion of the regulation

On the date the contract is entered into or novated, both parties must meet the conditions set out in one of the items above¹⁷.

A covered contract in a class on the BoE's register is cleared at a central counterparty authorized by the BoE or a third-country central counterparty recognized by the BoE. Clearing members and clients that provide clearing services must do so on fair, reasonable, non-discriminatory, and transparent terms, and must manage conflicts of interest between the trading and clearing functions¹⁸.

The classes subject to the clearing obligation are as follows¹⁹.

The clearing threshold is compared with the average of month-end positions over 12 months, counted for each asset class. For an NFC, the threshold is set on gross notional value, at EUR 1 billion for credit and equity, EUR 3 billion for interest rate and foreign exchange, and EUR 6 billion for commodities¹³. The contracts left out of the threshold calculation are those that objectively reduce risks directly relating to the NFC's commercial activity or treasury financing activity, in a measurable way²⁰.

A party that exceeds a threshold notifies the FCA immediately and puts clearing arrangements in place within four months of the notification. Contracts entered into or novated after the four months are subject to the clearing obligation. An FC clears all of the classes subject to the clearing obligation. An NFC clears only the asset classes in which it has exceeded the threshold. An NFC that has not counted its positions clears all of the classes subject to the clearing obligation²⁰. A small FC below a threshold is exempt from the clearing obligation¹⁹.

The BoE can suspend the clearing obligation temporarily. The first suspension lasts for up to three months and can be extended, up to a total of 12 months¹⁹.

The following trades are outside the clearing obligation, or are outside it subject to conditions.

For an intragroup trade between two parties established in the UK, a written notice is given to the FCA at least 30 calendar days before use. The FCA can object within 30 calendar days. For a UK party and a third-country party, the FCA permits use within 30 calendar days of the UK party's notice⁷.

For intragroup trades between the UK and a third country, there is also a temporary regime (TIGER). According to the FCA, for OTC derivative contracts between group companies in the UK and in a third country for which there is no equivalence decision, the clearing and margin exemptions obtained by the end of the transition period continue until December 31, 2026. Exemptions of the same kind obtained afterward also last until that date. This does not apply where an equivalence decision for that third country is made first. The Treasury may extend the TIGER period in certain cases (the FCA page was last updated on November 27, 2025)²¹.

Order of questions for the clearing obligation, with examples

For an over-the-counter derivative between two parties established in the UK, the conditions in the text above can be taken in the order of the questions in Figure 1.

Figure description

The figure covers only an OTC derivative between two parties established in the UK, and checks three things in order: the class on the register, the category of the parties, and whether the trade is exempt. For the first two, a "No" takes the contract outside the obligation; for the last, a "Yes" (an exempt trade) does. A contract that passes all three is, as a rule, subject to the clearing obligation. Combinations that include a third-country party, the four-month period after a threshold is exceeded, the exemption for a small FC, and a suspension by the BoE are covered in the text.

Consider a hypothetical example in which two companies that are not in the same group and fall under no other exemption enter into a yen-denominated fixed-to-floating interest rate swap. The swap is in a class subject to the clearing obligation. Bank A (fictional) is a credit institution that is an FC established in the UK. It is assumed to have exceeded the clearing threshold or not to have counted its positions, so that it is an FC subject to the obligation¹⁹. Company B (fictional) is an NFC established in the UK. The threshold is counted as the 12-month average of month-end gross notional value of interest rate derivatives, excluding contracts that are left out of the threshold calculation. Company B is assumed to enter into the contract more than four months after the notification, if it has exceeded the threshold.

Reporting obligation

Counterparties and central counterparties report the details of the conclusion, modification, and termination of derivative contracts by the next business day to a trade repository registered by the FCA or a third-country trade repository recognized by the FCA. The obligation covers exchange-traded derivatives as well as OTC derivatives²²²³.

Responsibility for reporting depends on the type of counterparty⁷.

In a contract between an FC and an NFC that has not exceeded the clearing threshold and calculates its positions, the NFC gives the FC the details the FC does not hold. An NFC that has already invested in reporting arrangements can report itself, after informing the FC²².

For an intragroup contract where one side is an NFC, the reporting obligation falls away if the conditions are met and the FCA is notified. If the FCA has not agreed within three months of the notification that the conditions are met, the exemption does not take effect. Records of reported contracts are kept for at least five years after the contract ends²². A UK counterparty that reports must have a legal entity identifier (LEI)²⁴.

Risk management and margin for uncleared trades

For OTC derivatives that are not cleared, the following is required. The persons covered differ from one paragraph to another, and "NFCs above the threshold or similar" in the table means NFCs that must notify the FCA, for example because they exceeded the clearing threshold²⁵.

The details of the procedures for exchanging collateral are set in technical standards, by the PRA for an FC authorized by the PRA and by the FCA for all others²⁵.

The margin to be exchanged is of two kinds. Variation margin (VM) covers current exposure and is calculated on the mark-to-market position. Initial margin (IM) covers future exposure over the period expected to run from the last VM exchange until the position is closed out on the counterparty's default. The covered parties are FCs and NFCs that have exceeded the clearing threshold, and the rules apply to new trades only. VM started in 2017, and IM was phased in from February 2017 to September 2022, with the last phase being parties whose group notional amount exceeds EUR 8 billion²¹.

Authorization and recognition of central counterparties and trade repositories

A central counterparty established in the UK is authorized by the BoE. A third-country central counterparty can provide clearing services to UK clearing members and trading venues only if the BoE has recognized it²⁶.

The BoE classifies a third-country central counterparty that applies for recognition as systemically important or likely to become so for the financial stability of the UK (Tier 2), or not (Tier 1). Recognition as Tier 1 has conditions, such as authorization and effective supervision in the third country. For Tier 2, in addition to these, there are conditions such as compliance with the requirements for central counterparties that the regulation sets, and consent to provide information to the BoE and to on-site visits²⁶. Where the BoE judges that a central counterparty is so significant that recognition is not appropriate, the Treasury, on the BoE's recommendation, can make provision (a location rule) limiting some clearing services to central counterparties authorized in the UK²⁶.

A trade repository is registered with the FCA. A third-country trade repository can provide services to UK entities for the reporting obligation only after the FCA has recognized it²⁷. The FCA limits where reports can be sent to registered or recognized trade repositories²⁴.

Schedule of reporting framework amendments

The amendments to the reporting framework are being brought into force in stages. The dates are as follows²⁴.

The 2023 technical standards set the minimum details to be reported and the standards, format, frequency, and method of reporting²⁸.

Impact on Japanese financial institutions

UK EMIR covers persons established in the UK, and reaches persons not established in the UK only indirectly⁴.

In a contract with a UK counterparty, the counterparty's category decides who reports²². Whether collateral must be exchanged depends mainly on the counterparty's category and the date the contract was entered into²⁵. For an NFC, the exchange of collateral applies to contracts entered into on or after the day it exceeded the threshold, so treatment differs depending on the date the contract was entered into and the date the counterparty's category changed²⁵.

The eight countries and regions are Japan, the United States, Australia, Canada, Hong Kong, Mexico, Singapore, and Switzerland.

Japan's domestic obligations are covered in the Mandatory Clearing article.

Notes

1. The title on the legislation.gov.uk page and the opening sentence of the FCA's "UK EMIR" page. Both retrieved on October 5, 2026. ↩

2. European Union (Withdrawal) Act 2018, section 3(1). The time of IP completion day is on the FCA's "Reporting obligation" page. Retrieved on October 5, 2026. ↩ ↩²

3. The FCA's "UK EMIR" page, on onshoring. The example order is SI 2019/335 (the 2019 EU Exit regulations), by title. ↩

4. The FCA's "UK EMIR" page: the description of the three requirements and of the indirect application to firms outside the UK. Retrieved on October 5, 2026 (the page was last updated on January 10, 2023). ↩ ↩²

5. "Changes to legislation" on the legislation.gov.uk page for the regulation and Part 1 of Schedule 1 to the Financial Services and Markets Act 2023. Retrieved on October 5, 2026. ↩

6. FCA, "About the FCA", "Our role" and "How we operate". BoE, "Prudential regulation", opening text. Retrieved on October 5, 2026. ↩

7. The UK version of the provisions on legislation.gov.uk, retrieved on October 5, 2026. The articles are those in the "Article" column or the numbers given in the cells. ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷ ↩⁸ ↩⁹ ↩¹⁰

8. Article 12(1) of the regulation leaves penalties to Article 9 of the 2013 order made under the Financial Services and Markets Act 2000 (the OTC derivatives, central counterparties and trade repositories regulations). See the UK version on legislation.gov.uk. ↩

9. ESMA's EMIR provision "Article 14 Authorisation of a CCP" (retrieved on October 5, 2026), paragraphs 1 and 2. ↩

10. ESMA's EMIR provision "Article 55 Registration of a trade repository" (retrieved on October 5, 2026), paragraphs 1 to 3. ↩

11. The table of contents of the regulation on legislation.gov.uk (retrieved on October 5, 2026), in which Article 7 is followed by Article 8 and then Article 9. ↩

12. ESMA's EMIR provision "Article 7a Active account" (retrieved on October 5, 2026), paragraph 1. ↩

13. FCA, "UK EMIR for non-financial counterparties", "Step 2: Clearing thresholds" (retrieved on October 5, 2026; the page was last updated on May 29, 2026). ↩ ↩² ↩³ ↩⁴ ↩⁵

14. ESMA, "Clearing thresholds" table. Retrieved on October 5, 2026. ↩ ↩²

15. Article 4a of the regulation. The thresholds are set by Article 10(4)(b). See the UK version on legislation.gov.uk. ↩

16. The definitions of FC and NFC in Article 2 of the regulation. See the UK version on legislation.gov.uk. ↩ ↩²

17. Article 4(1)(a) and (b) and Article 5(2) of the regulation. An FC subject to the obligation is set by Article 4a(1), and an NFC by the second subparagraph of Article 10(1). See the UK version on legislation.gov.uk. ↩ ↩² ↩³ ↩⁴

18. Article 4(3) (authorized or recognized central counterparties and the register) and Article 4(3A) (terms of clearing services and conflicts of interest) of the regulation. See the UK version on legislation.gov.uk. ↩

19. FCA, "Clearing obligation" (last updated on May 29, 2026; retrieved on October 5, 2026): the classes covered, the "UK EMIR REFIT" section (small FCs), and the "Suspension of the clearing obligation" section (length of suspension). ↩ ↩² ↩³ ↩⁴ ↩⁵

20. Articles 4a and 10 of the regulation (exceeding a threshold and notification are in paragraph 1, and contracts left out of the calculation are in paragraph 3 of Article 10). See the UK version on legislation.gov.uk. ↩ ↩² ↩³ ↩⁴ ↩⁵

21. FCA, "Margin requirements for uncleared derivatives" (last updated on November 27, 2025; retrieved on October 5, 2026): the description of VM and IM, the covered parties and transactions, the implementation timetable, and the TIGER sections. ↩ ↩² ↩³

22. Article 9 of the regulation (reporting in paragraph 1, division of responsibility in paragraphs 1a to 1d and 1f, and record-keeping in paragraph 2). See the UK version on legislation.gov.uk. ↩ ↩² ↩³ ↩⁴

23. FCA, "UK EMIR for non-financial counterparties", "Reporting to trade repositories". ↩

24. FCA, "Reporting obligation" (last updated on April 16, 2026; retrieved on October 5, 2026): the transition period, reporting to trade repositories, LEIs, and notification of errors and omissions. ↩ ↩² ↩³ ↩⁴ ↩⁵

25. Article 11 of the regulation (exchange of collateral in paragraph 3, technical standards in paragraph 15). "NFCs above the threshold or similar" are the NFCs that fall under the second subparagraph of Article 10(1). See the UK version on legislation.gov.uk. ↩ ↩² ↩³ ↩⁴ ↩⁵

26. Articles 14 and 22 (authorization) and Article 25 (recognition; Tier 2 in paragraph 2a, location rule in paragraph 2c) of the regulation. The Tier 2 requirements are Article 16 and Parts 4 and 5. See the UK version on legislation.gov.uk. ↩ ↩² ↩³

27. Article 55 (registration) and Article 77 (recognition of third-country trade repositories) of the regulation. See the UK version on legislation.gov.uk. ↩

28. EMIR Technical Standards on the Minimum Details of the Data to be Reported to Trade Repositories 2023. Published on the FCA's "Reporting obligation" page. ↩ ↩²