central counterparty

European Commission Adopts Delegated Regulation on RTS on Risk Mitigation Techniques for Uncleared OTC Derivative Contracts under EMIR

Posted on

 

On October 4, 2016, the European Commission adopted a Delegated Regulation supplementing EMIR (the Regulation on OTC derivatives, CCPs and trade repositories) (Regulation 648/2012) with regulatory technical standards (“RTS”) on risk mitigation techniques for uncleared OTC derivative contracts, together with related Annexes (C(2016) 6329 final).

The Delegate Regulation sets out the levels and types of collateral that OTC derivatives counterparties must exchange bilaterally if the transaction is not cleared through a central counterparty (“CCP”). In the event that one counterparty to the transaction defaults, the margin collected will protect the non-defaulting counterparty against resulting losses.

The Joint Committee of the European Supervisory Authorities (ESAs) submitted the final draft RTS to the Commission in March 2016. In July 2016, the Commission informed the European Banking Authority that it intended to endorse the draft RTS with some amendments, including in relation to the concentration limits for pension scheme arrangements and the timeline for.

The Council of the EU and the European Parliament will now consider the Delegated Regulation. If neither of them objects to it, the Delegated Regulation will enter into force 20 days after its publication in the Official Journal of the EU.

SEC Proposed Clearing Agency Standards for Operations and Governance

Posted on

On March 3, the SEC proposed rules, as required under the Dodd-Frank Act, regarding the operation and governance of clearing agencies. Under the proposed rules, clearing agencies would be required to: (i) maintain standards with respect to risk management and operations; (ii) have adequate safeguards and procedures to protect the confidentiality of trading information; (iii) have procedures to identify and address conflicts of interest; (iv) require minimum governance standards for their boards of directors; (v) designate a chief compliance officer; and (vi) disseminate pricing and valuation information if they are a central counterparty for security-based swaps. The SEC also reopened the public comment period for rules proposed in October to mitigate conflicts of interest for security-based swap clearing agencies and execution facilities and national securities exchanges that post or make available for trading security-based swaps. Comments on the proposed rules must be submitted by April 29. SEC Release. SEC Proposed Rule. SEC Proposed October Rules.