On March 1, the European Commission adopted a Delegated Regulation supplementing the European Union regulation on derivatives, central counterparties and trade repositories (“EMIR”).

EMIR requires mandatory clearing of certain over-the-counter (“OTC”) derivatives. The European Securities and Market Authority (ESMA) is required under EMIR to propose the classes of OTC derivatives that should be subject to clearing, as well as the different dates from which the clearing obligation will take effect for the different types of counterparties identified.

OTC derivative contracts concluded between the first authorisation of a central counterparty under EMIR and the later date on which the clearing obligation actually takes effect are also subject to clearing, unless they have a remaining maturity lower than the minimum remaining maturities which are to be laid down in the regulatory technical standards (Frontloading Requirement).

The Delegated Regulation determines the classes of the credit default swaps OTC derivative contracts that are subject to the clearing obligation and four different categories of counterparties for which different phase-in periods apply.

The Delegated Regulation also lays down the minimum remaining maturities for the purposes of the Frontloading Requirement as well as the dates on which the frontloading should start.  Delegated Regulation.