Hedge fund managers trading derivatives with an E.U. counterparty are subject to the European Market Infrastructure Regulation (EMIR).  However, the classification of the hedge fund may affect the clearing, reporting and/or risk mitigation provisions of EMIR to which the trade is subject.  See “Comparing and Contrasting EMIR and Dodd-Frank OTC Derivatives Reforms and Their Impact on Hedge Fund Managers,” Hedge Fund Law Report, Vol. 6, No. 36 (Sep. 19, 2013).  Thus, it is important for hedge fund managers and other asset managers to understand how their funds are classified under EMIR, as well as to communicate that status to counterparties.  The International Swaps and Derivatives Association, Inc. (ISDA) recently issued a sample form of classification letter that a party to an OTC derivative subject to EMIR may use to advise counterparties of the party’s classification under EMIR.  In addition, ISDA issued an explanatory memorandum that provides line-by-line guidance for completing the classification letter.  This article summarizes the essential requirements of the classification letter and the key provisions of the memorandum.  For more on EMIR, see “EMIR Offers Three Models of Asset Segregation to Fund Managers That Trade OTC Derivatives,” Hedge Fund Law Report, Vol. 8, No. 15 (Apr. 16, 2015).