TR Question 34: Contracts with no maturity date [this version shall apply from 1 November 2017, Last update: 04 February 2019]
Article 9 of EMIR - Contracts with no maturity date
Some derivative contracts, like Contracts For Difference (CFDs), may not have any specified maturity date and at the moment of their conclusion the termination date is also not specified. Counterparties may at any moment decide to close the contract, with immediate effect. They can also close it partially as counterparties may terminate only a part of the volume on one day and the other part or parts of the contract on any other day. How should these contracts be reported under EMIR?
TR Answer 34
Each opening of a new contract should be reported by the counterparties to the TR as a new entry. This means that each transaction has to be reported with a Unique Trade Identifier and action type “New” or if the trade is included in a position on the same day it can be reported with action type “Position Component", even if they are executed and then netted or terminated for other reasons during the same day. Furthermore, transactions have to be reported even if they are concluded with a counterparty that is not subject to the reporting obligation, such as an individual not carrying out an economic activity and who is consequently not considered as undertakings.
Subsequent transactions do not have to be compressed in a position, however, it is strongly recommended to do so. As these transactions have no maturity, it would imply that without compression each individual transaction by a financial counterparty would need to receive daily valuation updates until either 1) the transaction is cancelled or 2) infinity. Outstanding transactions need valuation updates, but when compressed the valuation can be provided at position level in accordance with the TR Q&A 17.