March 5, 2014

EMIR after Reporting | What comes next?

Just to start warming up for our next steps and in case you haven't had the time to notice, being fully occupied with EMIR Reporting after-implementation effects, there is another deadline fast approaching.

The 15th of March 2014, just ten days ahead, is the date by which NCAs are expected to authorise CCPs to clear under the EMIR regime, based on their applications submitted by 15th September 2013. This is the so called "bottom-up" approach. Once a CCP has been authorised under EMIR to clear a certain class of OTC derivative contracts, ESMA is required, within six months (by 15 September 2014 the latest according to the official timeline), to develop and submit to the Commission for endorsement draft RTS specifying 

  1. the class of OTC derivative contracts that should be subject to the clearing obligation
  2. the date or dates from which the clearing obligation takes effect, including any phase in and the categories of counterparties to which the obligation applies and
  3. the minimum remaining maturity of the OTC derivative contracts.
ESMA, as required by EMIR, will consider the following criteria in determining whether a class of OTC derivative contracts should be subject to the clearing obligation 
  1. the degree of standardisation of the contractual terms and operational processes of the relevant class of OTC derivatives
  2. the volume and liquidity of the relevant class of OTC derivatives and
  3. the availability of fair, reliable and generally accepted pricing information in the relevant class of OTC derivatives
As foreseen by Article 4(1)(b)(ii) of EMIR, Counterparties shall clear all OTC derivative contracts pertaining to a class of OTC derivatives that has been declared subject to the clearing obligation entered into or novated either
  • on or after the date from which the clearing obligation takes effect; or
  • on or after notification as referred to in Article 5(1) but before the date from which the clearing obligation takes effect if the contracts have a remaining maturity higher than the minimum remaining maturity determined by the Commission in accordance with Article 5(2)(c)
known as frontloading. 
Last but not least, after the date on which the first class of OTC derivatives is notified to ESMA and published in the Public Register, notifications for the exemptions from the clearing obligation for intragroup transactions and for pension scheme arrangements may be submitted, according to Article 18 of the RTS. In case you haven't done already, check Article 3 of EMIR to find out which transactions qualify as "intragroup" transactions.
Let's see what the 15th March will bring us!
Maria L.

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