December 19th, 2013 by Michael Beaton

On 18 December 2013, the EU Commission published an updated FAQ document on EMIR (last updated on 8 February 2013).

Two new questions have been included in Part II of the FAQs:

Question 14: “What does the concept of ‘undertaking’ in the definition of ‘non-financial counterparty’ cover?”

A “non-financial counterparty” is defined in Article 2 of EMIR as “an undertaking established in the Union other than the entities referred to in points (1) and (8)” (i.e. other than a CCP or a financial counterparty).  Unfortunately, the concept of an “undertaking” is not defined.

The EU Commission has confirmed that, whether an entity qualifies as an “undertaking” depends entirely on the nature of the activities the entity carries out, rather than on the nature of the entity itself.  An entity will qualify as an “undertaking” if it engages in any kind of “economic activity”.  This will include the offering of goods and services, even by non-profit organisations or individuals.  However, the exercise by a public authority of its powers will not be considered as an “economic activity”.  Furthermore, where authorities emanating from the State act in their capacity as public authorities they would not be considered “undertakings”.

Question 15: “Are municipalities subject to EMIR requirements?”

The EU Commission has confirmed that municipalities which:

  • can be considered as Union public bodies charged or intervening in the management of the public debt would fall outside the scope of application of EMIR[1]; and
  • fulfil all the conditions of “public sector entities”[2] would only be subject to the reporting obligation pursuant to Article 9 of EMIR.

Beyond this, a municipality would be considered to be a non-financial counterparty if it carries out economic activities.


[1] on the basis of Article 1(4)(a) of EMIR

[2] within the meaning of Article 1(5)(b) of EMIR

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