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European Markets Infrastructure Regulation (EMIR) - Updates & Relevant News:

The calculation framework towards the clearing thresholds and the procedure to notify ESMA and the NCAs when counterparties exceed or cease to exceed the clearing threshold (Q&A OTC 3)

The notifications to be made by market participants to their competent authorities to apply an intragroup exemption from reporting (Q&A TR 51)

Financial counterparty clearing threshold notification (Article 4a)

Non-financial counterparty clearing threshold notification (Article 10)

Intragroup transaction reporting exemption notification (Article 9)

Disputes notifications (Article 11)

Intragroup exemptions from the clearing requirements (Article 4)

Both RTS will come into effect on the date following the UK’s withdrawal from the EU if the UK leaves the EU without the conclusion of a withdrawal agreement. They will provide a 12-month window for EU firms to novate certain OTC derivatives from the UK into the EU without triggering the EMIR bilateral margining and clearing obligations respectively.

In its statement ESMA confirms that, under the new EMIR REFIT regime, where they choose to exploit the thresholds, both FCs and NFCs should start calculating their relevant aggregate month-end average position of outstanding over-the-counter (OTC) derivatives for the previous 12 months. This is to allow these counterparties to determine whether they are above or below the clearing thresholds when EMIR REFIT enters into force. Should they exceed the relevant clearing thresholds, FCs and NFCs must notify the relevant National Competent Authorities (NCAs) and ESMA on the day EMIR REFIT enters into force. 

ICE Trade Vault Europe Limited

UnaVista Limited       

CME Trade Repository Limited

DTCC Derivatives Repository Plc

REGIS-TR UK Limited (intended)

In amending UK law to incorporate the EU exemption from the clearing obligation for PSAs under EMIR REFIT, the Treasury intends for this exemption to apply to both UK and EEA PSAs.

The amendments to the existing Trade Repositories Q&A 34 on Contracts with no maturity date confirms that counterparties may report a derivative with Action Type “P” if the derivative is included in a position on the same day that it is reported.

The amendments to the existing Trade Repositories Q&A 38 further clarifies when reports should be submitted with Action Type “N” and when with Action Type “P” in relation to reporting derivatives that are terminated before the reporting deadline.

A new Trade Repositories Q&A 50 was added to clarify the approach counterparties should take for reporting the field “Confirmation Means”. Following the amendment of the EMIR Reporting Validation Rules on 9 August 2018, scenarios may be reported where a derivative is traded on a trading venue then confirmed on a different platform or not confirmed.

The Q&As clarify that reporting entities are not obliged to update all the outstanding trades upon the application date of the revised technical standards and that they are required to submit the reports related to the old outstanding trades only when a reportable event takes place (e.g. when the trade is modified).

ESMA’s consultation relates to future guidelines on the transfer of data between trade repositories (TRs) authorised under the European Market Infrastructure Regulation (EMIR).

The guidelines focus on two main areas where the need to transfer data from one TR to another would arise. The first would be due to a withdrawal of registration and the second when the transfer is done on a voluntary basis and under normal market conditions. The incentives and motivations for the relevant parties in each of the two cases would be different and therefore there is a need for a specific approach in each particular situation.

The proposed guidelines establish high-level principles that would need to be followed by TR participants, reporting entities, counterparties and central counterparties as well as principles for the TRs themselves. All are encouraged to respond to this consultation.

Financial counterparties in Category 2 must have cleared relevant OTC interest rate derivative contracts entered into or novated on or after 21 May 2016 by this date.

The European Commission’s report provides a summary of the areas where consultation responses and specific input received from EU bodies and authorities have shown that action could be necessary to ensure that the objectives of EMIR are met in a more proportionate, efficient and effective manner. In addition the report sets out issues that stakeholders have identified, relating to the implementation of those requirements which already apply as well as issues encountered in preparing for the clearing and margin requirements. Noted within the report is that a “REFIT” revision of EMIR is planned for early 2017.

ICE Clear Europe Limited has now been authorised by the Bank of England as a UK authorised central counterparty under EMIR.

In particular, the European Supervisory Authorities opinions reject some of the Commissions proposed amendments to the RTS.

The EC endorsed the draft RTS, (with amendments), upon risk-mitigation techniques for OTC derivative contracts not cleared by a CCP under Article 11 of EMIR. The RTS detail the requirements for firms to exchange margins on non-centrally cleared OTC derivatives.

The EC published the EU Commission Delegated Regulation which imposes a clearing mandate in respect of certain classes of OTC interest rate derivatives contracts denominated in non-G4 currencies (SEK, NOK and PLN),including:

The rules that come into effect on 9th August 2016 supplement EMIR and form part of the implementation of the agreement by the G20 leaders from 2009 that standardised OTC derivative contracts should be cleared through CCPs.

ESMA published a consultation paper that proposes to postpone the phase-in date for central clearing of OTC derivatives applicable to Category 3 firms under EMIR.

ESMA proposes to amend the Delegated Regulations on the clearing obligation under EMIR to postpone the phase-in date for Category 3 firms by two years.

Certain Designated Contract Markets (DCMs) in the US , that operate under the regulatory oversight of the CFTC, were granted equivalence in accordance with EMIR. This decision comes into effect on the 22 July 2016.

This will meant that certain products traded on equivalent third-country markets (in this case DCMs subject to CFTC regulatory oversight) will no longer fall under the OTC derivative definition of EMIR and therefore will no longer be subject to the EMIR obligations relevant to OTC derivatives. For example, the inclusion within the calculation of the clearing threshold for non-financial counterparties).

 The letter expressed the ESAs concerns about the delayed calendar for the adoption of the regulatory technical standards on bilateral margins and suggested that any delay should be kept as short as possible.

Clearing Obligations start for Category 1 Firms: Financial counterparties in Category 1 must have cleared relevant OTC interest rate derivative contracts entered into or novated on or after 21 February 2016 by this date.

The final draft of the non-G4 IRS Regulatory Technical Standards on the clearing of certain interest rate OTC derivatives settled in SEK, PLN or NOK were adopted by the European Commission (the EC). The final draft must now be accepted by the European Parliament and the Council and published in the Official Journal of the EU before it takes effect.

This MoU founded the cooperation agreements regarding recognised Central Counterparties (CCPs) that are:

The European Commission adopted a delegated regulation amending the regulatory technical standards (RTS) for requirements for CCPs in relation to the Margin Period of Risk (MPoR) for client accounts.

The RTS introduce the possibility for EU CCPs to reduce the MPoR from two-day to one-day for individual segregated accounts and gross omnibus accounts for exchange traded securities and derivatives.

The RTS are now subject to a period of non-objection by the Council of the EU and the European Parliament.

Now published in the European Union’s Official Journal, the EU Commission Delegated Regulation (that imposes a clearing mandate in respect of certain types of credit derivative contracts) covers the following types of contract:

The start date for the mandatory clearing of the relevant credit derivative contracts has been confirmed as from 9 February 2017 onwards, subject to phase-ins that are detailed in the Delegated Regulation.

Particular firms will also be subject to the frontloading requirement from 9 October 2016.

Proposing a set of changes to the standard released in January 2014, of particular relevance is the discussion of the impact of the leverage ratio on client clearing. The proposed changes to the framework are an important aspect of the regulatory reform programme that the Basel Committee has committed to finalise by the end of 2016.

This was in respect to the population of the clearing obligation in the reporting section. The new Question TR 42 covers how to populate this field during the front-loading period and how long counterparties are allowed to report value "X" for "not available".

Final report on the review of Article 26 of Commission Delegated Regulation 156/2013 published by ESMA  with regard to Regulatory Technical Standards on requirements for CCPs on the time horizons for the liquidation period under EMIR.

The margin period of risk (MPOR) for CCP client accounts  is detailed within the amended RTS along with the reduction of the MPOR from two-day to one-day for gross omnibus accounts and individual segregated accounts for exchange traded derivatives and securities.

ESMA released a final report for an amended RTS as referred to in Article 81 of EMIR. This report covers the frequency and details of the information to be made available to relevant authorities and the information to be published as well as the operational standards required in order to aggregate and compare data across repositories.

It also covers the responses received and ESMA's consideration of them. The amendments will address some of the data issues experienced by relevant regulators when the EMIR reporting obligation came into effect and should also offer legal certainty to current and new entrants to the trade repository market

The European Commission adopts new rules (Delegated Regulation) making it mandatory for certain over-the-counter (OTC) credit default derivative contracts to be cleared through central counterparties. These rules supplement EMIR and form part of the implementation of 2009’s G20 agreement on the central clearance of standardised derivative contracts through CCPs.

The new rules will cover the following types of contracts:

European Securities and Markets Authority ("ESMA") published its updated EMIR Q&As which included additional guidance on:

The European Commission and the CFTC published a joint statement to announce that a common approach regarding requirements for central clearing counterparties (CCPs) in the EU and the US had been reached.

The European Securities and Markets Authority (ESMA) published the responses received to their Consultation on indirect clearing under EMIR and MiFIR

ESMA published a Consultation Paper (CP) seeking stakeholders’ views on proposed draft regulatory technical standards amending Article 26 of Delegated Regulation No 153/2013 with regard to regulatory technical standards (RTS) on requirements for central counterparties on the time horizons for the liquidation period which ESMA has drafted under EMIR. The Consultation is open until 1 February 2016

This imposes the first clearing mandate in respect of certain classes of OTC interest rate derivatives contracts denominated in the G4 currencies (EUR, GBP, USD and JPY). These classes are set out in the Annex to the Delegated Regulation, and include the following types of contract: Fixed-to-float interest rate swaps (IRS), Basis swaps, Forward Rate Agreements and Overnight Index Swaps

The EC adopts equivalence decisions for CCPS in Mexico, Switzerland, Canada, South Africa and the Republic of Korea .

In accordance with EMIR, ESMA finalised and submitted to the EC draft RTS for the central clearing of OTC fixed-to-float interest rate swaps and forward rate agreements denominated in NOK (Norwegian Krone), PLN (Polish Zloty) and SEK (Swedish Krona).

The draft RTS lays out proposals in terms of the structure of the classes that are within scope, the types of counterparties covered, and the dates from which mandatory clearing (and frontloading, where applicable) will apply per category of counterparty.

This consultation covers the draft RTS on indirect clearing arrangements for ETDs as well as draft amendments to Commission Delegated Regulation No 149/2013 with regard to the RTS on indirect clearing arrangements for OTC Derivatives under EMIR.

In accordance with EMIR, ESMA finalised and submitted a draft regulatory technical standard (RTS) to the European Commission related to the central clearing of certain types of Credit Default Swap.

ESMA updated its guidance including for the procedure followed by firms and repositories to update the counterparty’s identifier where a counterparty obtains an LEI or its LEI changes due to acquisition or merger.

The European Commission publishes Delegated Regulation relating to clearing of interest rate derivatives denominated in the G4 currencies, thus confirming it has adopted proposals to make the clearing of interest-rate derivatives mandatory next year.

The European Commission adopted an implementing act that will extend the transitional period from 15 June 2015 to 15 December 2015 for capital requirements for EU banking groups’ exposures to CCPs under the Capital Requirements Regulation.

The European Commission has published a consultation asking for input on the implementation of, and first experience with, EMIR. All interested parties are encouraged to complete the questionnaire which has been provided for this purpose – comments are due by 13 August 2015. As part of the review, the Commission has also arranged for a public hearing on 29 May 2015 at the Commission's offices in Brussels.

ESMA has published a consultation paper that seeks stakeholders’ views on proposed regulatory technical standards (RTS) on the clearing obligation under EMIR. his consultation paper (No.4) follows three previous consultation papers on the clearing obligation on interest rate derivative (IRD) classes, credit derivative classes, foreign-exchange non-deliverable forward (NDF) classes, as well as the publication of a final report on the clearing obligation on IRD classes and a feedback statement on NDF classes. The consultation paper provides explanations on the draft RTS establishing a clearing obligation on the following classes of OTC IRD, which were not included in the first RTS on the clearing obligation for interest rate swaps:

The input from stakeholders will help ESMA in finalising the relevant technical standards to be drafted and submitted to the European Commission for endorsement in the form of Commission Regulations. This includes input regarding the analysis of the costs and benefits that those legal provisions will imply. Comments are due by 15 July 2015.

The recognition by ESMA allows third country CCPs to provide clearing services to     clearing members or trading venues established in the EU.

This update includes additional guidance on the authorisation of CPP services, the clearing obligation and the Regulatory Technical Standards (RTS) on direct, substantial and foreseeable effect of contracts within the EU.

A delay of 9 months has been agreed, which will push the start of the phase-in period for posting and collecting margin from 1st December 2015 to 1st September 2016.

This is a feedback statement on the consultation on the clearing obligation for NDFs. ESMA is not proposing a clearing obligation on NDFs based on the feedback received.

from central requirements for their over-the-counter derivative transactions.

This recommendation would look to extend upon the current EU legislation that provided a temporary exemption from the clearing obligation for pension scheme arrangements until August 2015.

This was in relation to  the clearing obligation on interest rate swaps in response to the European Commission’s notification to adopt ,with amendments, these Draft RTS.

This report sets out nine standards aimed at mitigating the risks in the non-centrally cleared OTC derivatives markets.

Athens Exchange Clearing House was added to the list of authorised CCPs under EMIR.

and oil production industry, review results

positions and on collateral value

substantial and forseeable effect within the EU, apply from today


risk mitigation

trade compression

within specified timelines

 and Central Counterparties entered into force from today

What’s New: EMIR

Developments in UK Financial Services Regulation

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