AIMA

The Alternative Investment Management Association

Alternative Investment Management Association Representing the global hedge fund industry

EMIR

Regulation (EU) No. 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR) introduces new requirements to improve the transparency of and reduce the risks associated with the derivatives market, including the requirements to:

  • clear eligible over-the-counter (OTC) derivative contracts entered into between a financial counterparty and certain non-financial counterparties through an authorised central counterparty (CCP);
  • implement risk mitigation techniques for OTC derivative contracts not cleared by a CCP;
  • report the details of all derivative contracts to an authorised trade repository.

EMIR entered into force on 16 August 2012, however, the application of its requirements is dependent upon the entry into force of relevant 'Level 2' technical standards.

On 15 March 2013, the regulatory technical standards on OTC Derivatives, Reporting for Trade Repositories and Central Counterparties entered into force. These level 2 measures provide that:

  • from 15 March 2013:
    • a non-financial counterparty is required to notify its competent authority if it exceeds or subsequently falls below certain clearing thresholds; and
    • details of OTC derivatives transactions should be confirmed by counterparties within a specific timeframe (determined on the basis of derivatives asset class). A market participant is also required to notify its competent authority where trades remain unconfirmed for a certain period of time;
  • from 15 September 2013, counterparties are required to put in place risk mitigation techniques relating to portfolio reconciliation, dispute resolution and portfolio compression; and
  • from 12 February 2014, both counterparties to a derivatives transaction are required to report the details of such transaction to an authorised trade repository. Members should be aware that, this reporting start date applies to both OTC and exchange traded derivatives (whether executed on a EU or non-EU market).

The EMIR reporting requirement is subject to the authorisation of relevant trade repositories by the European Securities and Markets Authority (ESMA). Currently, the following trade repositories are authorised by ESMA:

  •     DTCC Derivatives Repository Ltd;
  •     Krajowy Depozyt Papierów Wartosciowych S.A.;
  •     Regis-TR S.A.; and
  •     UnaVista Ltd..

The following level 2 measures are currently outstanding:

  • margin requirements for non-cleared derivative transactions. The consultation process in relation to the Level 2 measures is expected to commence soon now that the final BCBS-IOSCO report on margin requirements for non-centrally cleared derivatives has been published;
  • the determination of those contracts with a direct, substantial and foreseeable effect within the EU and  cases where it is necessary or appropriate to prevent the evasion of provisions of EMIR. ESMA has completed its consultation on draft regulatory technical standards. The deadline for comments from stakeholders was 16 September 2013. ESMA published its final report on 18 November 2013; and
  • the clearing obligation procedure. ESMA undertook a consultation in 2013 on the relevant Level 2 measures. The deadline for comments from stakeholders was 12 September 2013. The first clearing obligation is likely to arise in Q2, 2014, subject to the timing of the authorisation by ESMA of the relevant CCP (likely Q1/2, 2014).

Equivalence assessments to enable the mutual recognition of other jurisdictions' rules for certain cross-border transactions are currently being undertaken by ESMA and the European Commission. ESMA has provided its first round of technical advice to the European Commission, which now has discretion to issue specific implementing acts.

ESMA has also published Level 3 guidelines and recommendations in relation to establishing, consistent, efficient and effective assessments of interoperability arrangements between CCPs. It has also published several updated versions of its EMIR Questions and Answers which seek to clarify certain key areas of the regime for industry participants.

 


Key legislative documents

Level I

Regulation (EU) No.648/2012 on OTC derivatives, CCPs and trade repositories (July 2012)

Level II

Regulatory Technical Standards

Delegated Regulation (EU) No 285/2014 regulatory technical standards on direct, substantial and forseeable effect of contracts within the Union and to prevent the evasion of rules and obligations (March 2014)

Delegated Regulation (EU) No.148/2013 Regulatory technical standards on the minimum details of the data to be reported to trade repositories (February 2013)

Delegated Regulation (EU) No.149/2013 Regulatory technical standards on indirect clearing arrangements, the clearing obligation, the public register, access to a trading venue, non-financial counterparties, risk mitigation techniques for OTC derivatives contracts not cleared by a CCP (February 2013)

Delegated Regulation (EU) No.150/2013 Regulatory technical standards specifying the details of the application for registration as a trade repository February 2013)

Delegated Regulation (EU) No.151/2013 Regulatory technical standards specifying the data to be published and made available by trade repositories and operational standards for aggregating, comparing and accessing the data (February 2013)

Delegated Regulation (EU) No.152/2013 Regulatory technical standards on capital requirements for central counterparties (February 2013)

Delegated Regulation (EU) No.153/2013 Regulatory technical standards on requirements for central counterparties (February 2013)

Implementing Technical Standards

Implementing Regulation (EU) No.1247/2012 implementing technical standards on the format and frequency of trade reports to trade repositories (December 2012)

Implementing Regulation (EU) No.1248/2012 laying down implementing technical standards on the format of applications for registration of trade repositories (Decemebr 2012)

Implementing Regulation (EU) No.1249/2012 laying down implementing technical standards with regard to the format of the records to be maintained by central counterparties (December 2012)

 


Guidance

ESMA Questions and Answers on EMIR (March 2014) 

ESMA Questions and Answers on EMIR (February 2014)

ESMA Questions and Answers on EMIR (November 2013)

ESMA Questions and Answers on EMIR Implementation (updated August 2013)

ESMA Questions and Answers on EMIR Implementation (June 2013)

ESMA Questions and Answers on EMIR (March 2013)

European Commission FAQs on EMIR (February 2013)


Equivalence Assessments

ESMA technical advice

Commission Implementing acts (tbc)


Consultations, legislative process and related AIMA documents

Level 1

Level 2


Member State implementation

UK


Other AIMA documents

AIMA submission - EMIR Q&As (September 2013)

AIMA submission - EU/US dialogue on cross-border regulation of OTC derivatives (August 2013)

Response - EMIR Reporting Start Dates (July 2013)

Addressing overlaps between EMIR and CFTC OTC derivatives regulation (May 2013)

AIMA-MFA Joint Letter to ESMA on EMIR FAQs (March 2013)

Update Note - EMIR (February 2012)

EMIR Update Note (October 2011)

EMIR Update Note (6 July 2011)

EMIR Update Note (4 July 2011)

Position Paper (December 2010)

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      5. Venture Capital
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