Regulatory currency transactions

Introduction

EU financial regulations were introduced governing which types of FX transactions need to be treated as financial instruments (regulated currency transactions), with the intention of bringing greater consistency to the way regulated currency transactions are treated in all EU countries, resulting in enhanced protection for investors. All foreign exchange forward contracts with EU banks now need to comply with EMIR and MIFID2 obligations unless the client can provide a representation that the transactions are entered into for the purposes of payment for goods or services (see below). All other derivatives contracts will always be classified as financial instruments and subject to EMIR and MIFID2 requirements.

Payments facilitation eligibility criteria

Foreign exchange forward contracts which are exempt from the regulatory reporting requirements are those which meet all of the following criteria:

  1. You are classified as a non-financial corporate entity as per EMIR definitions 
  2. The contract is entered into for the procurement / sale of identifiable goods or services i.e. to directly pay an invoice
  3. The contract is traded bilaterally rather than on a regulated trading venue (note that MarketOn-Line is not a regulated trading venue).
  4. You do not wish to classify the FX forward contract as a regulated currency transaction.

If you are unsure whether an FX Forward contract is subject to the requirements for Regulated Currency Transactions please contact your branch. 

Procedure for contracts classified as financial instruments

If you have entered into a FX forward contract that does not meet the Payments Facilitation Eligibility Criteria, or entered into any other type of derivatives contract, then you will need to comply with the following steps when dealing with Handelsbanken Capital Markets. 

  1. You will need to obtain a Legal Entity Identifier (LEI) number before dealing. For more information see here (link to LEI page)
  2. You must read and agree to Handelsbanken Capital Market’s terms of business before entering into any regulated currency transactions
  3. Any financial instruments contracts that you enter into must be reported to a trade repository. Handelsbanken Capital Markets is able to report these on your behalf if you enter into a Delegated Reporting agreement with us.