June 11, 2015

EMIR : Latest news on IRS Clearing Obligation

Dear All,

As I was a bit lost regarding the starting date of the IRS Clearing obligation in Europe, I sent a mail to ESMA two days ago to get more information on the implementation calendar. I received an answer yesterday, and I would like to share the response with you, it could be helpful.

I had 2 specific questions:

  • What is the link between the Final draft RTS (published the 1st of October 2014) and the new consultation launched on May the 11th?
    • ESMA:
      • The first draft RTS on the clearing obligation, covering some OTC interest rate derivative classes denominated in the G4 currencies is independent from the current consultation paper No.4, which covers OTC interest rate derivative classes denominated in some other currencies.
      • Coming back to the consultation paper No.4, this document includes some additional OTC interest rate derivative classes that are currently under consultation. ESMA will analyze the responses from stakeholders to the consultation before deciding on the next steps. It is thus too early to determine what will happen with these classes.
      • Beginning with the first set of classes proposed to become subject to the clearing obligation, here is a quick reminder on the process with regard to the first draft RTS so far:
      • ESMA submitted to the European Commission a final report on 1 October 2014 containing the first draft RTS on the clearing obligation (covering some OTC interest rate derivative classes denominated in the G4 currencies);
        • The European Commission then communicated in December their intention to endorse the draft RTS but with amendments;
        • ESMA then published an opinion on the proposed amendment on 29 January 2015 (and a revised opinion soon after, in response to a corrigendum letter from the European Commission, but without changes to the draft RTS).
        • The next step after the opinion from ESMA is for the European Commission to amend or adopt the draft RTS with the amendments it considers relevant. This step is not complete, the draft RTS is still with the European Commission at this stage. And, following that step, a period of review of the draft RTS by the European Parliament and the Council, as defined in the regulation, will then start.
  • Could you please provide me with an estimate regarding the entry into force of the IRS Clearing Oblgiation(s) or a quick calendar detailing the next steps?
    • ESMA:
      • There are still a few steps to take place before the first RTS on the clearing obligation enters into force, and thus to be able to know the exact start dates. However, although the dates are not known, please refer to the speech from Commissioner Hill on 29 May for an indication on possible start dates. Extract from the speech: “the first clearing rules for certain Interest Rate products might be in place as soon as April of next year”.

Best regards,

Benjamin Baron, Senor Consultant at Equinox Cognizant, Paris.

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