General Question 1: Funds, counterparties [Last update: 15 July 2019, this version shall apply from 18 June 2020]
(a) Should the funds (e.g. UCITs, AIF, unincorporated funds, IORP) be considered as the counterparty to a derivative transaction in the context of EMIR, or should it be the fund manager [The reference to fund manager here covers the UCITSs management company, the AIFM and the authorised entity that is responsible for managing and acting on behalf of an IORP]?
(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: