ESMA Publishes Draft Technical Standards on the Implementation of EMIR

On September 27 ESMA published its final draft regulatory technical standards (RTS) which detail how the requirements of EMIR are to be implemented. The draft RTS have been developed through a consultation process which began in February 2012 with the publication of ESMA’s discussion paper and continued in June 2012 with the publication of ESMA’s consultation paper. The final draft RTS incorporate several changes to the initial version, and set out:

  • the details of derivative transactions that need to be reported to trade repositories, including confirming that:
    • that the reporting of collateral can be done on a portfolio basis; 
    • the reporting of mark to market values is only applicable to those counterparties under the obligation to calculate those on a daily basis;
  • clarification on how clearing thresholds will operate, including that employee’s benefits and acquisitions would be covered by the hedging definition;
  • the risk mitigation techniques for OTC derivatives that are not centrally cleared (including timely confirmation, portfolio compression and reconciliation); and
  • a set of organisational, conduct of business and prudential requirements for CCPs to ensure sound and resilient counterparties.

The final draft RTS have been submitted to the European Commission who have until December 31 to decide whether to endorse them. The RTS, once endorsed, will be directly applicable across the European Union.