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Version date: 2 October 2019 - onwards
Version 3 of 3

General Question 1: Funds, counterparties [Last update: 12 July 2018. This version is applicable until 17 June 2020]

(a) Should the funds (e.g. UCITs, AIF, unincorporated funds) be considered as the counterparty to a derivative transaction in the context of EMIR, or should it be the fund manager?

(b) Do entities with a charitable nature or otherwise a non-profit profile have to report under EMIR?

(c) Should an umbrella fund that is a UCITS or an AIF be considered as the counterparty to a derivative transaction in the context of EMIR, or should the sub-funds thereof be considered as the counterparties?

General Answer 1:

(a) The counterparty to the derivative transaction is generally the fund. When a fund manager executes a transaction for different funds at the same time (e.g. block trade), it should immediately allocate the relevant part of that transaction to the relevant funds and report accordingly. In rare circumstances, the fund manager executes trades on its own account and not on behalf of the funds it manages, in this last case the counterparty would be the fund manager. When the counterparty to the derivative transaction is the fund, it has the following consequences:

1. When the Regulation refers to a number of trade or to a threshold, this should be assessed at the level of the fund (or in case of umbrella funds, at the level of the sub-fund), and not at the level of the fund manager. It will be the case for example to assess the frequency of portfolio reconciliation or the scope of the portfolio compression requirement.