EMIR

The final text of EMIR (European Market Infrastructure Regulation), agreed on 9th February 2012, entered into force on 16th August 2012.

EMIR is one part of the history-making global effort to reduce systemic risk through increased transparency of the OTC derivatives market and re-engineering of the market infrastructure.

EMIR implementation is intended to bring Europe closer to meeting the G20 commitment: “all standardised OTC derivatives contracts should be traded on exchanges or electronic platforms, where appropriate, and cleared through central counterparties by end-2012 at the latest …”

Obligations apply to financial institutions and to industrial companies dealing in derivatives. The US equivalent of EMIR is Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act which aims to provide a comprehensive framework for the regulation of the OTC swaps markets.

EMIR introduces:

  • a reporting obligation for all derivatives contracts
  • a clearing obligation for eligible OTC derivatives
  • measures to reduce counterparty credit risk and operational risk for bilaterally cleared OTC derivatives
  • common rules for CCPs and for trade repositories
  • rules on the establishment of interoperability between CCPs

Completion of the regulatory and implementing technical standards took place in December 2012, in line with the G20 deadline, and the Level 2 standards for EMIR implementation entered into force on 17th March 2013. ESMA approved the registration of a number of Trade Repositories under EMIR and reporting obligations for all classes of derivative contracts (including OTC and exchange-traded) took effect from 12th February 2014. ESMA continues to add to the list of CCPs authorised to provide services under EMIR and the first wave of clearing obligations is to be phased in from 2016. Margin requirements for non-cleared trades will apply to non-centrally cleared contracts entered into after 1st December 2015. The requirement to exchange two-way initial margin on non-centrally cleared contracts will be phased in between 1st December 2015 and 1st December 2019.

Last updated 18th August 2015

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