May 23, 2012
A&O Seminar on Dodd Frank and EMIR
Allen and Overy provided one of their lunchtime seminars on Monday with a comparison between Dodd Frank and EMIR. Below are my notes from their presentation and a PDF of the slides.
You should follow up with the very knowledgeable A&O staff on this:
Key points:
- Entity definitions for SD & MSP are done
- Product definitions are not, once they are, the rest of the regulations will lock into place
- EMIR final text not yet published, still being finalised
- Regulatory and Implementing Technical Standards are being prepare for Sept 30th European Commission
- First text of MIFIR out 9th May ‘first compromise text’
- Trading
- Transparency
- Position limits
- Mandatory clearing of certain contracts
- Now goes into trialogue before final text
- SEC & CFTC product exceptions (page 7)
- Insurance
- Consumers
- Fx forwards and Swaps but not NDFs
- Page 8, definitions of an OTC product sources for Europe
- No carve out in Europe for FX contracts, MIFID doesn’t capture physically settled FX forwards
- Page 9: Not clear if trades with non-US parties count in aggregation towards SD threshold of $8bn
- Page 10
- Branches not yet clear
- Is a branch of a non-EU entity included?
- Intra-group exemptions for clearing and reporting
- Page 11
- Pre-enactment swaps
- Designation of clearable trades coming in the autumn
- Will probably be an exemption for inter-affiliate trades in the US
- Page 12: Exemption must be invoked on a trade by trade basis, to show they are hedging or mitigating commercial risks
- Page 13: LSOC implementation Nov 8th 2012
- Page 14: April 9th LSOC rule published, Compliance by Nov 8th 2012
- Page 16:
- A trade struck between a CCP offering it for clearing and ESMA agreeing it should be mandatory, should be back-loaded (front loading)
- Group assessment criteria need working through in detail to get group exemptions
- Page 21: Once mandatory clearing rules finalised (product definitions), then trading is 30 days after
- Page 24
- All swaps must be reported regardless of exemptions
- Regulators seem unconcerned whether swaps get reported to multiple repositories
- Who regulates the repositories?
- Trades struck on a SEF or at a CCP can be reported by the SEF of CCP, you need to provide valuation data on an on-going basis
- Page 25: Reporting is either July 16th or 60 days after the product definitions of swap
- Page 30
- If no repository available, then report to ESMA
- Reporting will be retrospective
- Page 36: Trades with NFCs don’t require collateral unless threshold reached
- Page 37:
- Once the product definitions are issued, registration will be required
- ISDA protocol project on business conduct standards
The full presentation can be downloaded as a PDF here.