EMIR

ESMA Updates Q&A on EMIR Implementation

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On March 20, ESMA published an updated version of its questions and answers document (Q&A) on the implementation of EMIR (the Regulation on over-the-counter (OTC) derivatives, central counterparties (CCPs) and trade repositories (TRs)) (Regulation 648/2012).  The updated Q&A includes a table of questions on pages 6 and 7, setting out which questions have been updated as of March 20, 2014, and to which article(s) in EMIR the updated questions relate.  They include:

    • Intragroup transactions;
    • Notional amounts;
    • Risk mitigation techniques for OTC derivative contracts not cleared by a CCP;
    • Reporting of outstanding positions following the entry into force of EMIR (backloading); and
    • Various issues relating to TR reporting requirements.  ESMA Q&A.

European Commission Endorses EMIR RTS Relating to Non-EU Counterparties

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On February 13, the European Commission updated its webpage on EMIR (the Regulation on OTC derivative transactions, central counterparties (CCPs) and trade repositories) (Regulation 648/2012) to announce that it has adopted regulatory technical standards (RTS) specifying the contracts that are considered to have a direct, substantial and foreseeable effect within the EU, and to prevent the evasion of rules and obligations. Webpage.

FCA Publishes EMIR Reporting and Non-Financial Counterparties Factsheets

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On February 10, the FCA published two factsheets, both dated February 7, 2014, concerning EMIR.

    • A factsheet for EMIR compliant counterparties. Reporting started for such entities on February 12, 2014, following an FCA review on reporting obligations and subsequent discussions with counterparties.  Reporting Factsheet.
    • A factsheet for EMIR compliant non-financial counterparties calculating the clearing threshold and which are part of a group containing entities that are financial counterparties. The factsheet details the results of an additional FCA review on how such entities define their hedging activities and monitor their statuses in relation to the clearing threshold.  Non-financial Counterparties Factsheet.

Speech on FCA Priorities Relating to Asset Management, MiFID II and EMIR

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On September 12, the FCA published a speech by Martin Wheatley, FCA Chief Executive, on the FCA’s plans for 2014, which focus on issues relating to asset management, MiFID II and EMIR (the Regulation on OTC derivatives, central counterparties and trade repositories) (Regulation 648/2012).  Speech.

FCA Factsheets on EMIR

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On October 28, the FCA published the following factsheets relating to EMIR (the Regulation on OTC derivatives, central counterparties and trade repositories) (Regulation 648/2012):

  • A factsheet for financial counterparties (FCs) subject to the EMIR requirements for timely confirmation and bilateral risk mitigation; and
  • A factsheet for non-financial counterparties (NFCs) subject to EMIR to understand how NFCs are defining their hedging activity and monitoring their status against the clearing threshold between June and September 2013.

ESMA Publishes Advice on Equivalence of Regulatory Regimes

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On October 2, ESMA published its second round of advice on the equivalence of regulatory regimes under EMIR (the Regulation on OTC derivative transactions, central counterparties and trade repositories) to the European Commission.

The advice includes equivalence assessments of the regulatory regimes of India, Canada and South Korea and the existing equivalence assessments of Australia, Switzerland, Hong Kong and Singapore.

Comparisons were made between the third-country rules and EMIR requirements for trade repositories and/or central clearing, CCPs, reporting, non-financial counterparties and risk mitigation techniques for uncleared trades.

ESMA Publishes Advice to the Commission on Equivalence of Certain Non-EU Countries’ Regulatory Regimes Under EMIR

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On September 3, the European Securities and Markets Authority (ESMA) published its advice to the European Commission (the Commission) on the equivalence of the regulatory regimes of Australia, Hong Kong, Japan, Singapore, Switzerland and the United States under EMIR.  EMIR is the Regulation applicable to OTC derivative transactions, central counterparties (CCPs) and trade repositories (TRs) (Regulation 648/2012)).

The rules of these countries, covering central clearing, CCPs, TRs and non-financial counterparties and risk mitigation techniques for uncleared trades, were compared with the requirements under EMIR.  The supplementary press release proposes conditional equivalence for the following regimes:

  • CCPs – Honk Kong, Singapore and the United States;
  • Central clearing, requirements for non-financial counterparties and risk mitigation techniques for uncleared trades – Japan and the United States; and
  • TRs – the United States.

ESMA’s technical advice should be used by the Commission when preparing any possible equivalence decisions.

ESMA will deliver advice on areas it has not yet covered for Australia, Canada, Hong Kong, India, Singapore, South Korea and Switzerland by October 1.  A letter dated September 2 from ESMA Chair Steven Maijoor to Commission Director General of Internal Market and Services Jonathan Faull includes further guidance and detail on the technical advice for certain countries, including the United States.

ESMA Publishes Q&As on EMIR

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On August 8, the European Securities and Markets Authority (ESMA) published Questions and Answers on the implementation of Regulation (EU) No 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR).

ESMA’s statutory role is to build a common supervisory culture by promoting common supervisory approaches and practices.  The Q&As were published to achieve a consistent application of EMIR.  The first version of this document was published on March 20, and the second version on June 6.  This document is expected to be updated and expanded as and when appropriate.

This version of the Q&As provides guidance on a number of issues including clarification on calculation of the clearing threshold, the nature of segregation and portability and the requirements for registration of trade repositories.  Q&As.

EMIR Regulatory Technical Standards: Delegated Regulations Published

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On February 23, six delegated regulations containing regulatory technical standards relating to EMIR (Regulation 648/2012) were published in the Official Journal of the European Union.  The regulatory technical standards provide detailed information of requirements relating to OTC derivatives, central counterparties and trade repositories in the following areas:

  • clearing obligation;
  • reporting obligation;
  • risk mitigation requirements; and
  • registration requirements for central counterparties and trade repositories.

The regulatory technical standards will enter into force on March 15, 2013, (being 20 days from their publication in the Official Journal) and trigger the effective date of several key EMIR obligations, such as the requirement for financial and non-financial entities to confirm their non-centrally-cleared OTC derivative transactions on a timely basis.

ESMA has not yet released draft technical standards relating to the margin and capital requirements for non-centrally cleared trades.

Derivatives Reform in Europe: European Market Infrastructure Regulation and the Regulatory Technical Standards

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The European Market Infrastructure Regulation (EMIR) will transform the clearing and reporting of derivative contracts in the EU.  While the process for finalizing the requirements has been ongoing for some time, the regulatory and implementing technical standards were adopted last month and a number of obligations are intended to come into force in 2013.  With firms engaged in the implementation process, our regulatory team has prepared a summary Client Alert (which includes a link to a more detailed analysis of these provisions).  Click here to read more.