Statement from FCA on treatment of physical forwards under EMIR

Finally, an official statement from the FCA on physical forwards under EMIR, which is here.

In general they are confirming that any physical forward executed via an MTF is an OTC derivative from an EMIR perspective. However, they are allowing room for manoeuvre, in that they may  permit the same broker to run an MTF and non MTF platform, so long as certain changes are made. These changes must satisfy the FCA by 16th December, which is not very long before the reporting deadline. 

When building a reporting solution therefore, a flexible mechanism needs to be in place to identify where the trades were executed. 

It would be in order to conduct a capital simulation exercise if that has not already been done.

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