The Collateralisation Category field should always reflect what is in the agreement between counterparties, irrespective of what collateral is exchanged in practice.
It is our expectation that any collateral exchanged should be consistent with the collateral agreement in place between the counterparties.
Nevertheless, the entity responsible for reporting should report the collateral that has been exchanged in practice in the initial and variation margin fields, even if it is contrary to the collateral agreement. In this case:
a. Where the collateral agreement states that margin should be exchanged, but margin is not exchanged, the relevant margin fields should be populated with zero and the associated currency fields with GBP.
b. Where the collateral agreement states that margin should not be exchanged, but margin is exchanged, the associated margin fields should be populated (unless the value is netted off).
We are consulting on corresponding changes to the UK EMIR Validation Rules (applicable from 30 September 2024) to allow the initial and variation margin fields to be populated when collateral is exchanged contrary to what is stipulated in the collateral agreement.